Optimizing the supply process at the Defense Logistics Agency: a case study

Defense AT&L, Nov-Dec, 2004 by John F. Horn

On April 14, 2000, Jerry McMahon, a Defense Logistics Agency (DLA) weapon system support manager (WSSM) at the Defense Supply Center in Columbus, Ohio, was reviewing March 2000 supply support metrics for the U.S. Army's Mustang scout vehicle. The average turnaround time for purchases of consumable spares had remained at 320 days, showing that his recent efforts to improve response time hadn't worked. In addition, the fully mission-capable operational readiness of the fleet was at 88 percent (below the critical 90 percent secretary of the Army reporting level) and a recent Army audit had spotlighted consumable spares as a significant contributor to the problem. McMahon decided that the current supply support process at the DLA Defense Supply Center was broken and the relationship with a primary defense contractor needed improvement. But what was the best approach to fix the problems? [Editor's note: The identities of the program and the players have been changed.]

[ILLUSTRATION OMITTED]

The History of DLA

In 1952, a joint Army, Navy, and Air Force organization was formed to control the management of supply items. This marked the first time the military services bought, stored, and issued items using a common, cross-Service nomenclature. By 1961, it was apparent that additional benefits could be gained by this consolidation. Secretary of Defense Robert McNamara ordered the consolidation of the three Service agencies into a single entity and established the Defense Supply Agency (renamed the Defense Logistics Agency in 1977). In 1986, the Gold-water-Nichols Act established DLA as a combat support agency. Today the supply chain support mission extends worldwide. DLA manages consumable spares for the military services' 1,400 weapon system end-items, food and subsistence for troop sustainment, medical supplies, and bulk fuel and petroleum. In 1997, DLA adopted a more weapon system-centric support posture.

Team Mustang Partnership Forms

During September 1999, the U.S. Army Tank-Automotive and Armaments Command (TACOM) awarded a 13-month, $49.7 million base service contract with four one-year options to Zemora-Tudis Motors (ZTM). ZTM would provide logistics support for the Mustang scout vehicle. This contract, known as the Team Mustang Partnership (TMP), enabled TACOM to provide support of unique reparable electronic components and provided the potential to realize improved readiness rates. The benefits to be gained included reduced cycle times and associated reduction in pipeline/costs, no upfront customer funding requirement with 15 percent surcharge reduction, a standard retail supply system transparent to the soldier, and direct vendor delivery.

The Defense Supply Center, Columbus Land Group manages the consumables supply chain for approximately 600 land-based weapon systems. McMahon, as the Mustang WSSM, was responsible for ensuring that supply support issues didn't degrade the readiness of the Mustang weapon systems. He was the direct link to the Mustang program manager (PM). McMahon's responsibilities were to:

* Gather, analyze, and interpret Service and DLA readiness data; develop key issues and detailed action plans as necessary

* Maintain weapon and troop support system readiness metrics (external and internal)

* Recommend appropriate investment and acquisition strategies that enhance support of weapon and troop support systems

* Understand and disseminate weapon system configuration, technical, and safety issues impacting DLA support requirements

* Provide input to DLA Weapon System Support Branch on potential Service contractor logistic support initiatives that might impact any weapon and troop support systems

* Represent assigned PM/system program office (SPO)/industrial activity-type customers in resolving fleet-wide, program-impacting, critical national stock number (NSN) issues that diminish the readiness of an assigned weapon system [NSN is the number assigned to a specific part by DLA for identification purposes]

* Coordinate with other DLA supply centers to resolve multiple supply chain support issues.

McMahon's Dilemma

WSSMs used metrics to track the support posture of weapon systems. The metrics included system readiness, weapon system special purchase requests (SPRs), DLA-delayed parts readiness drivers, backorders, and supply materiel availability (SMA) for common and unique stocked NSNs. McMahon's quarterly report on March 15, 2000, showed a fully mission-capable (FMC) rate of 88 percent. He knew any FMC rate below 90 percent would require a "get well" action plan.

The supply problems had started two years earlier when the lead time to administer and award purchase requests began to creep upward. The turnaround time (time from receipt of requisition to delivery of goods to customer) for unique consumable spares purchase requests rose to 320 days, and efforts to improve that response time appeared ineffective. The purchase requests were being generated manually and forwarded to ZTM, the prime contractor and sole source for the Mustang system. The ZTM response (quote) would arrive on average 120 days later by mail or fax. The delivery time averaged 200 days.