The Supply Chain Metrics Group LMARS Support for Pipeline Measurement Performance Paul Blackwell Office of the Deputy Assistant Secretary of Defense for Supply Chain Integration March12, 2013

Supply Chain Metrics Strategy Agenda Supply Chain Metrics Group and Contributing Efforts OSD Priorities for Pipeline Measurement Supply Chain Metrics Center Measurable Supply Chain Attributes “DNA” Chart for each Metric Upgrading Supply Chain Metrics Center Way Ahead Supply Chain Metrics Strategy Purpose: Integrate the metrics originating from several Department-level supply chain metrics efforts into a comprehensive set of metrics monitoring the health of the DoD supply chain. Objectives: Establish a framework of enterprise metrics for managing with measurements Develop definitions, secure data sources, and establish data collection procedures for selected metrics. Expand or enhance metrics as pipeline measurement improvements are incorporated Incorporate enterprise metrics into the OSD supply chain metrics center along with enhanced analytical and reporting capabilities.

Supply Chain Metrics Group and Contributing Efforts Validate the effectiveness of measures Standardize definitions, measurements &computations Ensure consistent approaches Integrate into performance framework Collaborate with related metrics efforts Enable new measures Ongoing Efforts Comprehensive Inventory Management Improvement Plan Joint Supply Chain Architecture DPO Distribution Management (Distribution Performance Reviews) Pipeline Measurement Strategic Network Optimization Business Process Improvements CWT LRT TDD Compliance

OSD Priorities for Enhancement of Pipeline Measurement Addressing weaknesses identified as supply chain high risks: Unmet delivery standards and timelines for cargo shipments Incomplete delivery data for surface shipments Inadequate RFID to track cargo shipments to and within theater Lack of common operating picture for integrated distribution data Development of guidance on implementing performance management Alignment to enterprise-wide supply chain performance metrics Lack of performance measures across the enterprise Tracking of retrograde of materiel Retrograde Team Report– Sent to the Acting, USD(AT&L) on April 1, 2012

Supply Chain Metrics Center Metrics to be incorporated (F) Order Response Time (N) First Pass Effectiveness (S) Retrograde Asset Write- Offs (S) Retrograde Over-Aged Due-Ins (C) Demand Forecast Error (C) Total Supply Chain Management Costs (C) Customer Price Change (S) NMC Rates (S) Customer Wait Time (CWT) (L) Order Fulfillment (C) Procurement Lead Time (C) Value of Inventory (C) Excess On-Hand (C) Excess On-Order (B) Logistics Cost Baseline (LCB) (C) Supply Availability (C) NMCS Backorders (L) Logistics Response Time (LRT) (S) Repair Turnaround Time (B) Inventory Turn (D) Denial Rates (S) Retrograde Time (DATA SOURCES) LEGEND (C) Military Services & DLA (S) Military Services (B) Working Capital Fund Budgets (L) Logistics Metrics Analysis Reporting System (LMARS) (N) Navy (F) Air Force (D) DLA CWT Tool Drill down into Service CWT records. LRT Tool Drill down into LMARS and DLA/TRANSCOM LRT records. LCB Tool Drill down into LCB records. Strat & SSIR Tools Drill down into Component inventory records Analysis Tools

Metrics Structure DoD Supply Chain Metrics by Measurable Attributes Attribute/ Outcome Definition Currently Collected Metrics Proposed Additional Metrics Standard Not Standard Across DOD Materiel Readiness The ability of the supply chain to support weapon systems in undertaking and sustaining their assigned missions at planned peacetime and wartime utilization rates NMC Rates NMCS Backorders Responsiveness The ability of the supply chain to respond to customer materiel requests according to priority by providing the right support when it is needed and where needed Customer Wait Time (O Level) Logistics Response Time Response Time Effectiveness (e.g. Air Force Order Response Time, Navy First Pass Effectiveness) Reliability The dependability and consistency of the supply chain providers in delivery of required material support at a time and destination specified by the customer Denial Rates TDD Compliance Wholesale Perfect Order Fulfillment (DLA) Wholesale Supply Availability Planning and Precision The ability of the supply chain to accurately anticipate customer requirements and plan, coordinate and execute accordingly. Excess On-Hand Excess On-Order Repair Turnaround Time (D Level) Retrograde Time Procurement Lead Time Demand Forecast Error /Bias Retrograde Over-Aged Due-Ins Lead Time Variance Cost The amount of supply chain resources required to deliver a specific performance outcome Value of Secondary Item Inventory Inventory Segmentation (No Demand 5 or More Years) ($) Total Supply Chain Cost (Log Cost Baseline) Total Supply Chain Management Costs Tiered Inventory Turns Price Change Retrograde Asset Write-Offs Same slide you have seen with a couple exceptions ORT and FPS are rolled under response time effectiveness under Responsiveness as we sort out the outcome of ORT and alternatives

“DNA” Chart for Each Metric Customer Wait Time Organizational Maintenance (CWTOM) Guidance & pending action Official definition for metric Computational rules Relates metric to a supply chain attribute Identifies data source(s) Reporting procedures Business value of the metric Applicable goals Proposed SC Metrics Center display Viewing options A single information resource for all metrics related data

Logistics Response Time (LRT) Definition A measurement of the total elapsed time (in days) from customer requisition to receipt of materiel ordered from a DoD organic or commercial source of supply. Supply Chain Attribute Responsiveness: Timely receipt of materiel demanded from wholesale sources of supply to retail activities and end-use customers is key to DoD supply chain performance. Business Value This metric: indicates how timely the wholesale echelon of supply and distribution system is responding to their customers – the largest segment being retail activities links DoD supply chain performance to negotiated standards for responsiveness (e.g., TDD Standards) Status of SCMG Actions Completed Pending Working Future Definition in Policy Definition approved for insertion in draft DoD 4140.01-M. Business Rules The measurement of LRT is from the date the retail supply activity requisition is submitted to a DoD or designated commercial source of supply until the date the requisitioned materiel is received and posted in the materiel management system of the requisitioner. Data Source Logistics Metrics Analysis Reporting System (LMARS) OSD Data Requirement DLA Transaction Services submits LMARS records to SCI on a monthly basis. Goals or Objectives TDD standards are used by supply chain providers to evaluate their performance in delivering ordered materiel and do not consider backorder time. However, no consensus exists on how to measure backorder time. Display Current display shows Total Pipeline Times and CONUS Segment Times by source of supply, Geographic COCOM, and a myriad of other options. CIMIP Orient Slide – 2nd from bottom purple line is the DoD LRT. Uptick is always expected due to Medical Prime Vendor data lagging. Should drop ~3 days after receiving that data Use of TDD standards are goal is a challenge. TDD do not include backorder time. TDD standards differ based on location. Exploring use of weighted TDD standards as goal We are analyzing how to measure the backorder time and display it Backorder time is not a data element of LMARS, our data source for LRT data.  Moreover, dates needed to computed backorder time are not always in the file.  The question is what is the best estimate. Challenges and Way Ahead Analyzing alternatives for measuring backorder time and to evaluate LRT from a customer’s viewpoint versus a provider’s viewpoint. Discussing how to handle new LMARS records resulting from BRAC-directed transfer of retail supply to DLA at maintenance depots. Current Metric Performance There were no negative trends or anomalies in this performance period. 7

TDD Compliance Status of SCMG Actions Definition in Policy The concept that, within a specified degree of probability, the logistics system is capable of delivering required materiel to the customer within a given period of time. As a metric, it measures the count and percentage of shipments that meet the time definite delivery (TDD) standards for a given combatant command and transportation mode. For this metric, backorder time is excluded. Supply Chain Attribute Reliability: The DoD TDD standards provide delivery performance target by combatant command, region within COCOM and transportation mode as dictated by the customer’s priority. Business Value This metrics quantifies the reliability of the DoD supply chain in meeting negotiated times when responding to customer requisitions. Status of SCMG Actions Completed Pending Working Future Definition in Policy To be documented in emerging DoD 4140.01-M Business Rules U.S. TRANSCOM rules Data Source U. S. TRANSCOM Strategic Distribution Database OSD Data Requirement Monthly submission of DPO JDDE Metric Executive Dashboard statistics Goals or Objectives 85% of deliveries meet TDD standard Display DPO JDDE Metric Executive Dashboard Challenges and Way Ahead (U.S. TRANSCOM) Velocity-focused metric…must be balanced against other efficiency metrics Efficiency improvements may reduce the velocity causing TDD compliance decrease Future initiatives must be analyzed as they may alter future TDD Standards or compliance goals. Clarified definition to note that backorder time is not included. Business rules were provided to SCMG. We continue to track this metric but note that it must be compared to other metrics to get the big picture. Still below goal. CONUS Mil Air – Afghanistan, Kuwait and Kyrgyzstan are struggling; hurricane Sandy affected perfomance on East Coast. Hurricane Sandy affected performance Current Metric Performance Current global performance is below goal.

Customer Wait Time Organizational Maintenance (CWTOM) Definition A measurement of the total elapsed time between submission of a customer order from organizational maintenance and receipt of that order by organizational maintenance. Supply Chain Attribute Responsiveness: Timely receipt of replacement parts by organizational maintenance is key to reducing the time to replace failed parts that are causing a not-mission-capable condition for weapon systems. Business Value Customer wait time for organizational maintenance (CWTOM): indicates how responsive the DoD supply chain is from an end user’s perspective links supply chain performance to the operational availability of weapon systems as the mean logistics delay time (MLDT) factor Status of SCMG Actions Completed Pending Working Future Definition in Policy Definitions for CWTOM , CWT for performance budget reporting, and CWT for depot maintenance approved for insertion in draft DoD 4140.01-M. Business Rules Excludes the 1% of the observations that represent the longest fulfillment times, which may be attributable to data errors and/or extraordinary circumstances. Data Source All Military Services have established data sources except Marine Corps. OSD Data Requirement Military Services submit CWTOM records to SCI on a monthly basis and will discontinue submission of aggregate data to DLA Transaction Services for DD2829 report. Goals or Objectives FY2013 performance goals are: 15 days for Army and Navy, and 7.5 days for Air Force. Display In addition to current display capability, the Supply Chain Metrics Center is being changed to reflect military service year-to-date performance against goals as well as monthly performance. Additional recommendation made by Components. CIMIP Navy Nov is 17.5 days. Highest its been that we have on record ( since FY2004). Aviation count decreased and Orient Slide…year to date average. All within goal for FY12 Received initial input from USMC – processing data to determine if data captures CWT for OM. Metrics Center will show both year to date performance as well as monthly performance… Challenges and Way Ahead Complete Marine effort to provide an accurate and complete process for collecting its CWT data. Current Metric Performance Air Force is performing within their goal, while the Army and Navy are above their goal.

Inventory in Pipeline Overview DEFINITION Measures the average value of inventory that has been shipped but not yet received by the customer DEFINITION SOURCE SNO Working Definition SUPPLY CHAIN ATTRIBUTE Investment Cost: The amount of supply chain resources required to deliver a specific performance outcome BUSINESS VALUE Average Inventory in Pipeline: Allows SNO to estimate a monetary value to apply to LRT measurements DATA SOURCE LMARS BUSINESS RULES (DRAFT) Inventory in Pipeline is calculated on a quarterly basis, using data from LMARS. The monthly reported value of items shipped (filtered by SOS, customer, Class IX, and IPG) is divided by 90 to get a daily average value of items shipped, and then multiplied by the average quarterly LRT. DATA REPORTING ORGANIZATION Logistics Metrics Analysis Reporting System (LMARS) LEVEL OF DETAIL Data filtered to include only Class IX, DLA sourced goods, excluding DVDs. LRT numbers are reported by CONUS/OCONUS and by Service. ITEM POPULATION LRT and inventory value numbers are reported by CONUS/OCONUS and by Service. CALCULATION Monthly reported value of items shipped is divided by 90, then multiplied by the average LRT for the respective month REVIEW PERIOD October 2009-present BASELINE FY10 Challenges None

Metrics Center Upgrade UPGRADING CENTER A unified platform for: Enhanced metric reporting Greater spreadsheet integration Advanced and flexible data analysis Improved information displays & data visualization Streamlined user interface Simplified customization Reduced update cycle

Way Ahead Update POA&M for responsiveness and reliability metrics as LMARS is enhanced with pipeline measurement improvements: Expand or complete metrics Update procedures for collecting and reporting measurements Establish or revisit goals for metrics