Managing the Numbers
Written by Kelly Fodel
MLF 2009 Volume: 3 Issue: 9 (October)
Improving The Process That Ensures A
Transparent And Efficient Contracting System Is
The Only Way To Properly Serve The Warfighter.
The Defense Logistics Ageny is the Department of Defense's largest logistics combat support agency, supplying approximately 95 percent of the military services' parts and 100 percent of the services’ subsistence, fuels, medical, clothing and textile, and construction and barrier material.
Take a look at the numbers, and you get an idea of the sheer size of this agency’s reach. DLA manages 6.4 million items over eight supply chains, issuing 114,000 requisitions and 11,200 contract actions each day. Those numbers illustrate why DLA and its supply chains must continually work to improve and enhance contracting processes, to better serve the military customer.
All contracting is executed at the field sites. DLA lays out the expectations, and the field sites set about executing those guiding principles. “We actually work the mechanics of executing it into a contract, but the actual strategy of developing contracts that are tailored to support our customers is something really driven by the DLA enterprise,” said Stephen Rodocker, director, Strategic Programs Directorate at the Defense Supply Center Columbus (DSCC).
Rodocker said the DSCC has a very high volume business. DSCC manages more than 2 million different items and accounts for more than $3 billion in annual sales. The DSCC generally deals with hardware, spare parts, and electronic components on behalf of the military customer. They also are responsible for procuring depot level reparables, such as new transmissions and engines. The services still maintain responsibility for writing contracts for the repair of those reparables.
The DSCC has been heavily involved in supporting the military customer in the war efforts in Iraq and Afghanistan. According to Rodocker, “It is really important that we look beyond the contracting processes we have used in the past in supporting our customers, because we are in a wartime situation, so our primary mission is supporting those combat situations. We definitely have employed some unique contracting processes.”
One example of a unique process would be the Integrated Logistics Partnership. The ILP focused on improving parts support and the rebuild and refurbishment activity at the Red River Army Depot and the Letterkenny Army Depot. The initiative aimed to better link the suppliers to the demand, and as a result of the initiative, they have been able to drastically improve the support on the production line in respect to rebuilding and refurbishing up-armored HMMWVs.
Rodocker said the leaders of these depots have been pleased with the improvements. One noted that they had previously gone three months without producing a single vehicle that had 100 percent of its parts. Now, as a result of the initiative, they can go three months without a single vehicle missing a single part. It also reduced the costs of refurbishing a vehicle by $4,500 at Red River, and at Letterkenny, costs were cut by $3,400. This cost-savings allowed for the refurbishment of an additional 690 vehicles.
“That is one real good example of a program that came about as a result of collaborating with a customer, really understanding their requirements, and doing something other than just supporting them out of stock that DLA would normally manage,” Rodocker said.
The DSCC is always looking to reduce the number of requisitions coming directly into the activity and engage the supplier base to help manage the workload. They strive to identify segments of the business for someone else to manage on their behalf. Within the last year, they awarded two contracts: one to a small business and one to a large business. These contracts provide complete supply chain management of parts for tactical wheeled vehicles. It is engaging a separate entity to help forecast the parts, manage parts, stock parts and distribute them to customers.
One of these contractors now provides on-time support for 98 percent of the requisitions, what Rodocker calls a phenomenal level of support. Additionally, the price of parts has lowered by $16 million annually under this contract.
Given the huge amount of business being conducted by the DSCC and DLA, maintaining a good level of transparency and communication is of high concern. Rodocker said they have a number of ways to allow companies to engage the DSCC. The DSCC holds a suppliers’ conference every year. This year, 2,000 participants attended the conference to dialogue with the government, learn about doing business with DSCC, and network with larger companies.
Rodocker said it is worth mentioning that they maintain a strong industrial base. It is very concerning when they see companies struggling. It is a never-ending challenge to engage companies into working with DLA and DSCC. That is why DSCC holds capability assessment seminars, to provide opportunities for DLA to learn more about companies and their goods, and help those companies learn how to do business with the federal government. They also have TKO—training knowledge and opportunity—seminars, which draw 200 to 300 companies that want information on working with DLA and DSCC.
The DSCC employs a high level of automation to ensure transparency, fairness, speed and accountability. In most instances, when they are soliciting something under $100,000, that solicitation is not touched by anyone’s hands. It automatically flows out of the system onto a bid board. Any companies interested in bidding that part are automatically notified that the solicitation has been issued. It allows the DSCC to get solicitations out quickly and offer every company the opportunity to bid.
A large part of the awards processing is automated as well. Rodocker said on the land supply side of the house, 73 percent of dollars spent was automated in 2008. Eighty-nine percent of the actions were completely handled via automation. On the maritime side, 53 percent of dollars obligated was automated, and 72 percent of the actions. Rodocker claims if DSCC was compared with other businesses, you would be hard pressed to find anyone with those types of numbers. But, warns Rodocker: “Don’t compare us to a Wal-Mart or something, because most of what we buy is made to order. These are items that you can’t find at [a regular store]. There are just not a lot of companies that stock what we buy.”
Serving the customer is the focus of DSCC and their contracting processes. “The faster you can award a requirement and cut into that lead time, it does a number of things. It enables us to stock less materials, because we need less on our shelves. By reducing that lead time we can better forecast our requirements of what the customer needs,” Rodocker said.
Getting products to the customer as quickly as possible is not easy. Rodocker said they are in a challenging business. Dealing with combat operations is difficult, and most weapons systems are used well beyond their original intended lifespan, and for purposes beyond their original intent. When that happens, parts start to break. DLA is always trying to figure out what parts are going to break next, and what will be needed. Today, DLA representatives may be found at many customer sites to provide information to DLA offices and stay ahead of the curve.
While programs like the Integrated Logistics Partnership are improving service and efficiency on the land supply side, DSCC is working to bring the maritime sector up to the same level. To that end, there is a DSCC location in Mechanicsburg, Pa. They are working with the Navy to reduce the number of components that are used in supporting ships. One issue the Navy has is that the variety of parts used on ships is vast, so DSCC is attempting to reduce the variation of products and standardize the process. Rodocker said DSCC recently awarded five contracts for 355 valves. They expect those valves to replace approximately 6,500 valves used on the Navy fleet today.
The work certainly can be tough, thanks to the challenges of wartime and the size and scope of DLA’s reach. However, Rodocker said he finds it satisfying to continue improving contracting processes and better serve the customer.
“It is a never-ending challenge. Our primary focus is making sure we take care of that warfighter, and if you work in this business every day, you get to see some of the paybacks for your efforts.” ♦