A Two-Front Effort

Defense Supply Centers are DLA’s focal point for supplying almost every consumable the services need in the global war on terror and serving as active proponents for innovation across the logistics enterprise.

By Martin Kauchak

While the Defense Logistics Agency manages 5.2 million items, supports 1,312 weapons systems and is projected to have $33.5 billion in fiscal year 2008 sales and services, it is also transforming its processes and systems. The Defense Supply Centers (DSCs) are DLA’s focal point for supplying almost every consumable the services need in the global war on terror and serving as active proponents for innovation across the logistics enterprise.

CENTER SNAPSHOTS

While a common perception is that there are three DLA purchasing centers—the DSCs at Philadelphia (DSCP), Richmond (DSCR) and Columbus (DSCC)—there are, in fact, four. “Though not a ‘supply center’, Defense Energy Support Center provides the fuel and other energy needs for the military services, but also includes many of the federal civilian agencies, such as the Postal Service, Department of State, Department of Interior, NASA and others,” said Jack Hooper, DLA spokesman.

The centers at Philadelphia, Richmond and Columbus have extensive portfolios. For its part, DSCP annually supplies and manages more than $12.4 billion worth of material. The center’s Clothing and Textiles Directorate alone manages over 31,000 line items when individual sizes are factored into the item mix. DSCP’s Medical Directorate generates close to $4.14 billion in annual sales.

DSCR, the aviation supply and demand chain manager for DLA, is DoD’s primary source for 1.2 million repair parts and operating supply items. The center’s personnel are stationed at aviation sites across the United States and in other strategic forward locations alongside its military customers. DSCR also operates an industrial plant equipment repair facility in Mechanicsburg, Pa.

DSCC is responsible to DLA for the demand and supply chains of land and maritime weapon systems. The center manages 2.3 million repair parts for land and ship support equipment, land vehicles, maritime vessels and military electronic items. DSCC’s business profile is diverse with fiscal 2007 sales totaling $3.6 billion, including $240 million in foreign military sales that support 90 nations. DSCC, on an annual basis, fills seven million orders and supports nearly 1,400 weapon systems for over 23,000 customers.

WARFIGHTER SUPPORT

The DSCs are helping DoD achieve its number one goal—win the war. One of the centers’ wartime efforts helps to enhance warfighters safety; another builds the morale of deployed personnel.

DoD is taking unprecedented steps to get mine resistant ambush protected (MRAP) vehicles to deployed troops as quickly as possible—from fast-tracking the acquisition process to airlifting models as they roll off the assembly line. MRAP vehicle procurement is one of the department’s priority acquisition programs. DSCC’s Land Customer Operations Directorate is providing critical support to the fielding and sustainment of nine variants of MRAP vehicles in Southwest Asia.

“The Joint Program Office has established initial parts lists, known as push packages, to coincide with each MRAP delivery to theater,” explained Deborah Perry, spokesperson, DSCC. “Defense Distribution, Red River ships each push package to fielding sites in Iraq. Approximately 10,000 parts have been rapidly catalogued by DLA’s Defense Logistics Information Service, from four original equipment manufacturers since September 2007.” Procurement actions are underway across the DLA enterprise to build inventory levels in order to sustain high MRAP readiness. “Establishing the right-sized inventory and partnering with industry to accomplish this task are at the top of our priority list,” Perry said.

Deployed service members’ morale is largely dependent on how logisticians provide for their care and feeding. One recent DSC-level success that dramatically enhanced the well being of soldiers in the field was DSCP’s implementation of the Army Direct Ordering (ADO) project. The effort mirrors e-commerce processes at leading commercial clothing enterprises and promptly gets regulation uniforms into servicemembers’ hands.

The technology supporting ADO is based on the development of a Web-based ordering system at the Kentucky Logistics Operations Center, which interfaces with the soldier’s Army Knowledge Online account. Scott Miller, DSCP spokesman, said after a soldier obtains approval from the supply sergeant to place an order then logs online, the soldier “finds the item that is needed and places the pre-authorized order. The order is received and processed stateside as a DSCP site,” he said. Items are then shipped via postal service to the individual soldier. “This process saves time by allowing the soldier direct access to the items that he or she needs to complete the mission,” Miller added.

DSCP’s ADO project was the recipient of the department’s 2006 Supply Chain Excellence Award.

MANAGING SUPPLIERS - NOT JUST SUPPLIES

The centers’ programs and processes are also rapidly evolving to better meet the needs of its industry counterparts and suppliers. One representative DLA enterprise program is DSCR Business Development Office’s (BDO) efforts to “use non-binding partnering agreements to establish our direct sale partnering relationships with the defense aerospace industry companies in support of their maintenance, repair, overhaul and performance- based logistics contracts with the military services,” said Navy Commander Steve Morgan, deputy director of BDO “The BDO also develops kitting solutions for our military service customers. As the value of direct sale partnering with DSCR gains greater support within the defense aerospace industry, BDO anticipates significantly increasing DSCR sales to our commercial customers,” he added.

DLA’s Strategic Plan emphasizes moving organizational support forward to the point of military customers’ demand and managing suppliers. Both DSCC and DSCR are in the process of placing employees at key customer locations. These employees “would handle both transactional DLA workload for that site such as order fulfillment and demand planning, as well as handling customer service issues that haven’t been resolved through self-help and the DLA Customer Interaction Center,” pointed out DSCR’s Bingham.

TECHNOLOGY - DRIVEN INNOVATION

A number of DSC-level process upgrades and new technology applications support innovation across the logistics enterprise.

The Customer Support Module (CSM) (formerly known as Customer Relationship Management) is a program for interacting with customers, which has corresponding system modules within the SAP Order Fulfillment system. CSM modules include customer service, customer outreach and account management. “Within the CSM customer service program, we are expanding its internal use to the supplier operations organizations across the enterprise,” said Gus Liggon, deputy director, DSCR’s Aviation Customer Operations Directorate. “While CSM service was initially handled within the DLA Customer Interaction Center and customer operations organizations, expanding its use will allow an end-to-end tracking of customer contacts. While this should be transparent to DLA customers, it will increase internal operational efficiencies by eliminating most of the Outlook emails and telephone calls required to resolve a customer issue, and also provide managers with key performance indicators and reports to manage their operations,” added Liggon.

Upgrades are planned for the Enterprise Business System (EBS), DLA’s commercial material management system. “EBS is scheduled to be upgraded as of October 2008, however, I cannot say whether this will be a visible or noticeable change for our customers,” said Robert Prillaman, deputy director, Business Process Support Directorate, DSCR. Beyond EBS, he noted, “eProcurement implementation is scheduled to begin in fiscal year 2010. eProcurement replaces the Defense Pre-Award Contracting System and brings procurement into the SAP suite of COTS programs. This will streamline the procurement process for our customers. However, it should be an invisible implementation to our customers.”

DSCC’s Joint Regional Inventory Materiel Management (JRIMM) initiative is a department-sponsored program commissioned to improve warfighter support by improving efficiencies and cost effectiveness of the DoD Logistics Enterprise. DSSC’s Perry pointed out the fundamental objectives to reach this goal will “minimize logistics infrastructure within a geographic region, consolidate DLA-managed materiel and reduce and eliminate intermediate retail stocks and unnecessary ‘touches.’” JRIMM also seeks to reduce transportation costs and decrease customer wait time. It remains DLA’s intent that JRIMM will deliver equal or better performance than current wholesale and retail support at reduced costs to DoD.

INDUSTRY PERSPECTIVES

Many of the DSCs’ successes can be attributed to their partnering efforts with industry vendors.

Boeing and DLA have had a strategic supplier alliance (SSA) since 2002 with Richmond as the lead center for the alliance. “Our relationship with the DLA is governed by the terms of the SSA and we have a DLA-Boeing Joint Steering Group (JSG) that establishes challenges for improvements in our joint supply chain support to the Army, Navy and Air Force,” said Jane Becker, aviation support systems program manager, Boeing Support Systems. As the SSA was forming, the alliance jointly developed long- term direct vendor delivery (DVD) style contracts for Boeing sole source parts. “These contracts allow Boeing to forecast, stock and deliver parts in support of the ultimate customer, the warfighter, and the men and women supporting them. As trust and collaboration has grown, our joint performance has also improved,” added Becker.

Boeing’s efforts to operate in the DVD-style contract environment included reworking its One Pass Pricing Process to streamline the company’s DVD contract growth process. The company’s traditional transaction-based business is decreasing as it transitions to the DVD style contracts. “Our JSG goal is to streamline our operations, reduce cost and improve support using these DVD style contracts,” concluded Becker. DSC-industry partnerships have drawn on other private sector lessons learned to initiate other efficiencies. “Since the first Gulf War, DSCP has transitioned from a completely internal depot-supported supply system for DoD medical treatment facilities to one supported completely by commercial medical supply distributors,” said Jim Dillon, Owens & Minor’s director of government relations and corporate accounts. Over the last two decades, civilian health care has been under extraordinary cost pressures, which have required their prime vendor partners to develop the most efficient and cost-effective supply chain distribution processes. “DoD and DSCP have embraced and accepted those practices and have challenged Owens & Minor to assist in making them more efficient,” added Dillon.

DSCP has developed and implemented the full array of ANSI EDI (American National Standards Institute Electronic Data Interchange) transaction documents including some not used in civilian health care. “An automated electronic and paperless business practice is the most efficient and cost effective way to do business for both parties,” Dillon said. “DSCP’s use of electronic commerce is unsurpassed by such a large organization in civilian health care. DSCP has also been very progressive in partnering with Owens & Minor to support deploying and deployed combat units and field hospitals, customers unlike the fixed hospital facilities we are accustomed to. We have co-developed and implemented several programs designed specifically to support the warfighter in the global war on terrorism,” added Dillon.

With an eye on the future, DSCP is discussing how to develop and implement radio frequency identification technology in the Class VIII (medical materiel) supply system. “DSCP and DOD appear to be ahead of civilian health care in their interest in this new technology. We look forward to exploring this and other new creative supply solutions with DSCP,” Dillon said. ♦