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

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

The practice of ordering parts one at a time must be fixed. Two options are available to address that: either ZTM can switch to a lean manufacturing process, or DLA can develop a predictive model to order parts in batches. As the predictive model is probably cheaper and easier to implement, that's what McMahon should pursue. DLA should start by assessing existing data as well as querying both ZTM and users to determine the frequency of need for the various spares. With this model, McMahon (and ZTM) will know the real need for consumable spares--which parts, how many, and how often. Together they should determine the minimum acceptable ordering quantities and automate the ordering when inventory levels merit it (with DLA intervention possible to account for fluctuations in actual usage, such as S & S situations). ZTM would maintain the inventory and use commercial shipping practices to deliver directly to the user.

A Web-based ordering system would cut down on both customer and DLA processing time but still allow DLA the insight capability to monitor the process and take corrective action as necessary. Finally, ZTM should develop and maintain a database that monitors all parts and all subcontractors/vendors so that obsolescence issues can be addressed before they become critical.

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Measures of Success

Although a reduction in the turnaround time from user request to parts receipt would be a good indicator for McMahon, an increase in the operational readiness level is the ultimate measure of success for the system. A DLA customer satisfaction survey would help to determine further opportunities for improvement. And continued communication with ZTM will allow for informal assessments of the government/contractor relationship.

Jim Carter

The advantages of modern information technology (IT) weren't employed for Mustang at DLA/ZTM. The improvements in turnaround time offered by modern IT would be a paradigm change for ZTM and DLA. ZTM and its subcontractors didn't use lean administration and Six Sigma. Should McMahon institute a massive change in the process, a lean administration transformation? Or should he simply work within the boundaries of the existing process to eliminate bottlenecks and accelerate it?

Issues

The time to get a requisition from the user to DLA to ZTM to a subcontractor is 140 days and could be reduced to five days with Web-enabled processes. When inventory reaches reorder point, parts could be ordered with normal lead time.

The use of IMPAC cards removes DLA and ZTM from the process and doesn't ensure purchase of certified (quality) parts. Furthermore, the Department of Defense (DoD) and the program management offices lose potential quantity discount savings.

The five-year service support contract awarded by TACOM to ZTM could influence and diminish any potentially out-of-the-box options McMahon may discover. It could be business as usual.

And finally, wartime operations tempo will multiply consumable spare parts use requirements by factors of 10 to 40 times. Without a Web-enabled process surge spares have to be maintained as inventory.