Navy 2004 Logistics Conference Logistics Transformation at DoD Mr. Brad Berkson Acting Deputy Under Secretary of Defense (L&MR) May 18, 2004

DoD would be like Wal-Mart . . . . . . if Wal-Mart's 3000+ stores moved . . . if a Wal-Mart stockout meant that everyone inside the store could die. . . . if associates had to wear a different kind of vest . . . if Christmas was a random event every 5 years 11/10/2018 12:58 PM

2001 QDR Direction Project and sustain the force with minimal footprint Implement performance-based logistics to improve readiness for major weapon systems and availability of commodities Reduce cycle times to industry standards 11/10/2018 12:58 PM 04pm12-3

Opening Observations We have many supply chains to manage Commercial Commodities (food, fuel, pharma, clothing) Weapon Systems Deployed Land Forces Each has different characteristics and requirements . . . Need to be tailored to optimize performance . . . Consist of multiple chains where the actual tailoring has to take place DoD’s scale, complexity, and coordination needed, provide challenges to fundamental improvements 11/10/2018 12:58 PM

Joint Logistics Board Priorities Support current operations Ensure success of the DPO Streamline material flows Explore and implement Customer Pay opportunities Accelerate Performance-Based Logistics (PBL) Develop a way ahead for achieving maintenance excellence (e.g., Lean) Implement a balanced scorecard and performance metrics Ensure Logistics Enterprise Integration efforts are coordinated and interoperable Deployed Forces Commercial commodity flows Weapons Systems Infrastructure Memo to Acting Under Secretary of Defense (AT&L) February 10, 2004 11/10/2018 12:58 PM

Comparison Matrix Chain Commercial Equivalent Inventory Key Data Flow Commercial commodities Sears Wal-Mart True-Value $12 B Fast moving Lower value Shelf demand ITV High Continuous One way Major System End items Repairables GE turbine Caterpillar dealer IBM mainframe $66 B Slower moving Higher value Readiness critical UID Lower System dependent Bi-directional Deployed Forces NO direct Process industry indirectly $??? DoD Sequence Real-time system status Enormous Intermittent Multi- Directional 11/10/2018 12:58 PM

“Major Land Force Deployment” Deployed Ground Unit Use to close and sustain major ground forces into AOR Metric: Time to close forces Transformation example: RFID ITV* Leverage point: Improve trust in flow capability to allow smaller footprint in theater Service ICP AOR Organic Port AOR Organic Move CONUS Organic Port Intercon Organic Move Garrison Ground Unit Deployed Ground Unit PMO Intercon Commercial Move AOR Commercial Port AOR Commercial Move CONUS Commercial Port Deployed Ground Unit Vendor * RFID tags being seized and reprogrammed by in country forces – need more! 11/10/2018 12:58 PM

Deployment/Distribution Operations Center-Forward (DDOC-FWD) Pilot TACON TO COCOM - Air (CJ4) - Land - Sea Sustainment DPO National Partners Service Reps Unity of Effort Joint Effects DDOC-FWD Mission Statement: executes CENTCOM deployment and distribution priorities validates/directs mode selection of intra-theater with CFLCC, CFACC & CFMCC adjudicates identified CENTCOM distribution and intra-theater shortfalls coordinates for additional USTRANSCOM support provides TAV and ITV for inter and intra-theater forces and materiel synchronizes effective theater retrograde DEPLOYMENT DISTRIBUTION OPERATIONS CENTER FORWARD (DDOC-FWD) WAS CONCEIVED BY USTRANSCOM TO BRING CURRENT STRATEGIC TRANSPORTATION CAPABILITIES AND DISTRIBUTION PROCESSES TO THE THEATER TO ASSIST THE WARFIGHTER WITH THEIR THEATER CHALLENGES. TRANSCOM KNEW WE COULD NOT BRING THIS CAPABILITY TO THE WARFIGHTER WITHOUT THE EXPERIENCES OF OUR NATIONAL PARTNERS TO INCLUDE DLA, ARMY AND AIR FORCE MATERIEL COMMANDS AND THE SERVICES. WE ALSO NEED WARFIGHTER SUPPORT. GEN ABIZAID, COMMANDER, CENTCOM, APPROVED THE DDOC CONCEPT FOR HIS AOR ON 12 DEC 03. WORKING WITH MEMBERS OF HIS STAFF, A DDOC MISSION STATEMENT WAS APPROVED FOR THE CENTCOM AOR AND THE NAME CHANGED TO CDDOC. THE MISSION STATEMENT GIVES THE CDDOC POWER TO VALIDATE AND DIRECT INTRA-THEATER LIFT REQUIREMENTS, IMPROVE TAV/ITV AND DEVELOP AN EFFECTIVE RETROGRADE PROCESS. 63 MILITARY PERSONNEL, DOD CIVILIANS AND CONTRACTORS DEPARTED ON 16 JAN 04 FOR THE THEATER. THESE MEMBERS ARE EXPERIENCED IN TRANSPORTATION, DISTRIBUTION AND TAV/ITV PROCESSES AND SYSTEMS AND THE USE OF COLLABORATION TOOLS TO REACH BACK TO THEIR CENTERS OF EXCELLENCE. BY “PLUGGING” IN THESE CAPABILITIES FROM THE NATIONAL PARTNERS TO THE WARFIGHTER, WE ARE ABLE TO SYNCHRONIZE DEPLOYMENT AND DISTRIBUTION OF FORCES AND MATERIEL FROM ORIGIN TO FINAL DESTINATION, OPTIMIZE STRATEGIC AND THEATER LIFT THROUGH IMPROVED COLLABORATION, PRIORITIZATION, AND VALIDATION WHILE IMPROVING END-TO-END TAV/ITV TO SUPPORT THE WARFIGHTERS’ OPERATIONAL GOALS. The missing Theater link until now… 11/10/2018 12:58 PM

DDOC–FWD Pilot Immediate Impact – 1st Month Synchronized strategic air/sea & intra-theater lift: Increased throughput Improved readiness by diverting theater assets (track & DLRs) Improved customer confidence – collaborative theater environment Improved quality and availability of enterprise information Reduced operational costs with improved ITV & TAV (19 containers of track located & re-directed; over one hundred Class IX containers diverted) Accelerated 101st AA div redeployment by weeks Accelerated retrograde of DLRs by 900% Improved strategic delivery of critical materiel directly to forward units (pure pallets to forward warehouses) 11/10/2018 12:58 PM

Set the foundation for future supply chain improvements…TODAY! Why RFID now? Improve business processes now Drive the direction and cost of technology development Drive the standards to work for us Facilitate the implementation of Unique Identification (UID) Set the foundation for future supply chain improvements…TODAY! 11/10/2018 12:58 PM

Passive RFID Requirements Tagged cases and pallets shipped to DoD receiving points beginning Jan 2005 Tagged packaging for items that require a Unique Identification (UID) shipped to DoD receiving points beginning Jan 2005 Pilots will help determine pace of expansion Tags will be EPC-compliant Initial Implementations: currently available Class 0 and Class 1, V1 EPC tags When available: Class 1, Generation 2 EPC tags 11/10/2018 12:58 PM

“Commercial Commodity” Use to flow “consumer goods” (e.g., food, fuel, clothing) to ground forces in garrison, sea and air forces, and depots Metrics: Availability, customer wait time, inventory turns, log cost % sales Transformation example: Prime Vendor contracts for fuel, pharma, and bin stock at Depots Leverage point: Consolidate inventory upstream, vendor direct delivery of goods to shelf vendor Army Force Navy Marines Air

Current State: Background Thousands of DoD CONUS locations initiate freight movements using commercial freight carriers with thousands of destinations. Dozens of DoD receiving, storage, and shipment activities across the United States consume personnel, funding, inventory and time. Multiple systems are employed to execute and manage shipment activity and operations there is no centralized planning or control systems require stronger linkage and significant resources to operate Over the last fifteen years, organizations and processes have been aggregated and consolidated without the benefit of a holistic analysis which leverages today’s IT processes, commercial capabilities, and proven best practices. 11/10/2018 12:58 PM

Defense Transportation Coordination Initiative (DTCI) Consolidation Points Break Bulk Points National coordinator manages DOD transportation, including dedicated truck service to leverage “best practices” Regional Shipping Cluster Regional Receiving Cluster 11/10/2018 12:58 PM

Regional Inventory & Material Management Project Pilot Location: San Diego A pilot program designed to optimize inventory, reduce material handling and reduce customer wait time through streamlining delivery of parts to end users. The pilot will ultimately seek to deliver the same or better mission capability at lower cost. Improved repair cycle time on DLRs can potentially reduce spare requirements, resulting in inventory optimization and cost savings. Identify opportunities to minimize touches Identify opportunities to streamline processes Optimize inventory by relying on rapid wholesale response (vice multiple layers of inventory) Identify alternative organizational structures (organic and/or contracted) to execute the streamlined process 11/10/2018 12:58 PM

“Weapons System Service Provider” User Depot Local ICP System Hours Vendor Use to provide weapons systems availability Metric: Mission capability, operating $/hour Transformation examples: Navy APU Cherry Point, JSTARs, C-17 Leverage point: Have each PM design system’s supply chain to optimize its flow given the significant inherent variations (e.g., submarine vs. radar) 11/10/2018 12:58 PM

Weapon System Sustainment Roadmap Number Number of Partnerships (1998 & 2002) PM accountable for life cycle JROC established sustainment requirements Enabling Depot legislation Revised Maintenance Policy Industry Supply Chains Reengineered Training Joint Strike Fighter Future Combat System Advanced Amphibious Assault Vehicle Historic Suppressed Readiness Marginal reliability Fractionated Accountability $67B/year Huge footprint Warfighter-driven readiness Ultra-reliability Clear PM accountability Minimal Footprint s Financial Reform (PR05) Single-line Accounting Life Cycle Cost Management Operational requirements synchronized with PBBS 2000 2005 2015 11/10/2018 12:58 PM

DoD Vision for Item Marking: UID To implement a policy establishing a strategic imperative for uniquely identifying tangible items relying to the maximum extent practical on international standards and commercial item markings and while not imposing unique government data requirements. Uniquely identified (UID) tangible items will facilitate item tracking in DoD business systems and provide reliable and accurate data for management, financial, accountability and asset management purposes. 11/10/2018 12:58 PM

Performance-Based Logistics JACG Oversight via DAB/DAES Oversight via R-TOC Forum DoD 5000 Policy New program implementation 30 Pilot Programs Quadrennial Defense Review Second major topic for today was status of PBL Currently preferred sustainment strategy for new systems in 5000.2- R Endorsed by QDR for application to legacy systems 03 DPG included requirement for Service Implementation Schedules to be submitted by March 2002 Performance-Based Logistics Legacy Systems FY03 DPG Service Implementation Schedules Reengineer Product Support Lessons Learned Operational Demonstrations Adjustments CY02/03 PEO/SYSCOM PM Roundtables AIA Product Support Industry/Government Tiger Team A joint, disciplined program to successfully implement PBL! 11/10/2018 12:58 PM

PBL Programs & Partnerships in Support of GWOT PBL Performance F-117 AWACS Common Ground Station C-17 F/A-18 E/F JSTARS B-2 Delivering Capability NOW! 11/10/2018 12:58 PM

Why does the warfighter like PBL programs? F/A-18 SMS - Availability Was 65% ... Now 98% Tires - Availability Was 81% ... Now 98% ARC-210 Radio - Availability Was 70% ... Now 85% APU - Availability Was 65% ... Now 90% F-14 LANTIRN - Availability Was 73% ... Now 90% H-60 Avionics - Availability Was 71% ... Now 85% F/A-18 C/D - 67% Availability ... F/A-18 E/F FIRST - 85% PBL WORKS! Improves Readiness Lowers Total Ownership Costs 11/10/2018 12:58 PM

PBL Vs. Organic Repair Cost per hour: $167 Cost per hour: $411 PBL Parts Cost: $300,000 Labor & Admin Costs: $34,000 Total Cost: $334,000 Average Life: 2,000 hours Cost per hour: $167 Organic Repair Used Parts: $120,000 Labor & Admin Costs: $34,000 Total Cost: $154,000 Average Life: 375 hours Cost per hour: $411 11/10/2018 12:58 PM

Future System Sustainment Real-Time System Status (CBM+) Industry/Government Performance- Based Logistics Weapon System Manager Force Provider Partnerships Ensure system is sustained at optimum level Performance Agreement Performance Agreement Provide continuous, reliable, affordable support Acquisition Visibility into cost/risk decisions across life cycle Sustainment Disposal 11/10/2018 12:58 PM Providing operational availability; not parts.

Enterprise Integration Logistics Balanced Scorecard Synchronized to DoD BSC Warfighting Perspective Warfighting Perspective Warfighting Perspective Provide optimum responsive logistics Provide optimum responsive logistics Provide optimum responsive logistics support to the joint warfighter to ensure: support to the joint warfighter to ensure: support to the joint warfighter to ensure: • • • An immediately employable force option An immediately employable force option An immediately employable force option • • • A rapidly deployable capability A rapidly deployable capability A rapidly deployable capability • • • A sustainable total force A sustainable total force A sustainable total force Innovation & Learning Perspective Innovation & Learning Perspective Innovation & Learning Perspective Logistics Process Perspective Logistics Process Perspective Logistics Process Perspective Ensure a capable workforce responsible Ensure a capable workforce responsible Ensure a capable workforce responsible Vision Vision Provide effective logistics chain Provide effective logistics chain Provide effective logistics chain for meeting the warfighter logistics for meeting the warfighter logistics for meeting the warfighter logistics performance and capacity while reducing performance and capacity while reducing performance and capacity while reducing support requirements to include: support requirements to include: support requirements to include: and and the logistics footprint to include: the logistics footprint to include: the logistics footprint to include: • • • Introduction of leading edge advanced Introduction of leading edge advanced Introduction of leading edge advanced Strategy Strategy concepts concepts concepts • • • R&M, Leveraging Global Industry, IT R&M, Leveraging Global Industry, IT R&M, Leveraging Global Industry, IT • • • Organization adaptability Organization adaptability Organization adaptability Improvements, and Commercial Improvements, and Commercial Improvements, and Commercial • • • Workforce shaping Workforce shaping Workforce shaping Advances Advances Advances Resource Planning Perspective Ensure affordable logistics support through resources and choices that enable effective joint warfighter capability to include: • Accurately forecast and identify logistics requirements Enterprise Architecture • Identify and understand the risks associated with logistics resource allocation Portfolio Management DUSD(L&MR) DUSD(L&MR) DUSD(L&MR) Memo Memo Memo DUSD (L&MR) Guidance & Oversight/Integration DUSD (L&MR) Guidance & Oversight/Integration • • • Achieve FLE Achieve FLE Achieve FLE • • • Streamlined Systems Streamlined Systems Streamlined Systems • • • Efficient Systems Efficient Systems Efficient Systems • • • Integrated Knowledge Integrated Knowledge Integrated Knowledge Base Base Base Component Component Component July 2002 • • • Interoperable Interoperable Interoperable July 2002 Execution Plans Execution Plans Execution Plans Execution Execution Execution Systems Systems Systems And And And FLE FLE • • • Milestones Milestones Milestones Modernization Modernization Modernization • • • Schedules/Brown Out Schedules/Brown Out Schedules/Brown Out • • • Critical System/ Critical System/ Critical System/ Database Information Database Information Database Information Component Component (IT meta data) (IT meta data) (IT meta data) • • • Evaluate Logistics AISs Evaluate Logistics AISs Evaluate Logistics AISs Strategies Strategies and Databases and Databases and Databases • • Management Approach Management Approach January 2003 January 2003 January 2003 • • • Identify Systems to be: Identify Systems to be: Identify Systems to be: • • CIO Interface CIO Interface • • Evaluation Criteria Evaluation Criteria Ø Ø Ø Eliminated Eliminated Eliminated • • Process Methodology Process Methodology Ø Ø Ø Sustained Sustained Sustained • • Metrics Metrics Ø Ø Ø Integrated Integrated Integrated • • POM Considerations POM Considerations 11/10/2018 12:58 PM Leading DoD Enterprise Integration August 2002 August 2002 Streamlined Portfolio Management

Enterprise Integrated Data Environment (EIDE) Provide an enhanced environment that enables the DoD Logistics Enterprise to execute practices, processes, applications and decision support tools to achieve logistics interoperability and allow for information exchange within and between internal and external DoD business partners. - Non-system dependent transactions - Consolidation and reuse of Interfaces - Data integration/sharing - Leverage Modernization Efforts - Data Standards not Standard Data 11/10/2018 12:58 PM

DoD Logistics Strategic Objectives Provide optimum responsive logistics support to the joint warfighter to ensure: Immediately employable force options A rapidly deployable capability A sustainable total force Warfighter Perspective* Ensure a skilled capable workforce responsible for meeting the warfighter logistics support requirements to include: Introduction of leading edge advanced concepts Organization adaptability Workforce shaping Workforce Provide effective logistics chain performance and capacity while reducing the logistics footprint to include: Reducing cycle time, improving effectiveness, improve product quality, leveraging IT improvements and Commercial Advances Logistics Process Perspective Vision and Strategy Ensure affordable logistics support through resources and choices that enable effective joint warfighter capability to include: Accurately forecast and identify logistics requirements Identify and understand the risks associated with logistics resource allocation Improved cost predictability and constrained cost growth. Resource Planning Perspective JLB Approved Aug 03 11/10/2018 12:58 PM

Logistics Transformation Mass-Based Just-in-Time Sense and Respond FSB More is better Mountains of stuff measured in days of supply Uses massive inventory to hedge against uncertainty in demand and supply Mass begets mass and slows everything down Precision is better Reduce Inventory to a minimum and keep moving Use precise demand prediction and optimization to reduce uncertainty Works great, except when it doesn’t Agile is better Dynamically positioned Inventory throughout Use transportation flexibility and robust IT to handle uncertainty Supports adaptive operations Prime Metric: Days of supply Prime Metric: Flow Time Prime Metric: Effects Migrating to the Force-centric Logistics Enterprise 11/10/2018 12:58 PM

Ubiquitous, cost-effective capability to project and sustain power. The End Game Ubiquitous, cost-effective capability to project and sustain power. 11/10/2018 12:58 PM 04pm12-28

Backup/unused slides 11/10/2018 12:58 PM

Single Point of Entry (SPOE) A common way to exchange information with the Logistics Domain from modern weapons platforms and it’s suppliers via an Integrated Data Environment (IDE) at the process level not the system interface. ALIS - OEM 11/10/2018 12:58 PM

Where NAVICP Is Today Awarded PBLs NAVAL SUPPLY SYSTEMS COMMAND 42K Items, 12% of total obs Covered $M NAVICP PBL Obligations Awarded PBLs # of Contracts Awarded Aviation Maritime Total # of PBLs $ Value # of PBLs $ Value # of PBLs $ Value FY98 7 $21.0M 10 $14.0M 17 $35.0M FY99 11 $51.0M 29 $34.0M 40 $85.0M FY00 28 $146.5M 44 $98.2M 72 $244.7M FY01 44 $228.6M 60 $102.8M 104 $331.4M FY02 52 $306.1M 68 $179.7M 120 $485.8M FY03 62 $361.5M 76 $163.9M 138 $525.5M FY04(to 1-31) 65 $366.3M 81 $57.9M 146 $424.2M Types of PBLs in FY03 Total: Philadelphia: Total: 62 Full: 31: Partnership: 9 (Partnership same as full with organic depot involvement); Mini Stock Point: 10; Organic: 8; CLS: 2; Commercial: 2 Mechanicsburg: Total: 76 Full: 12; Mini Stock Point: 11; Organic: 26; CLS: 1; Commercial: 26 A Reengineering Tool to Improve Readiness/Sustainment 11/10/2018 12:58 PM 6

F/A-18 E/F USN/Industry Partnership Configuration Control System Safety Organizational and Intermediate Maintenance (Ashore/Afloat) GFE and E/F, C/D Common Spares GFE Support Equipment Component Repair Program Management Systems Engineering Information Systems Fleet Support Life Cycle Management Support Planning Teaming Material Management E/F Unique Reparables All E/F Consumables Transportation Retail and NADEP Support Reliability Improvement Configuration Management Component Repair Obsolescence Management Design Engineering Tech Data Deployed 6 months early to meet OEF/OIF requirements 99% Range and Depth of Spares Deployed to OIF 70%-89% of demands met in 48 hours 97.1% successful launch rate Industry/Gov’t distribution Seamless support to warfighter Web-based asset visibility Leverage commercial and DoD best practices 11/10/2018 12:58 PM