BRAC 2005 Change Overview The BRAC 2005 directives made by the Defense Base Realignment and Closure (BRAC) Committee dictate that Retail supply, storage and distribution functions and associated infrastructure supporting depot-level maintenance will transfer from repair depots to DLA. The objectives of BRAC are: Integrate Industrial Activity material support with DLA’s Supply Chain Process improvements …eliminate redundancy Better utilization of inventory …stage inventory close to the Industrial Activity Visibility of planned Maintenance Requirements to support material forecasting …position material “Just - In - Time” Provide “equal to or better” material support

NAVY SDR Process Overview Due to BRAC 2005 changes, the industrial customer will not have resources to submit Supply Discrepancy Reports, thus DLA’s Supply Department (Former SY and FISC employee’s) will continue to submit and respond to Supply Discrepancy Reports as they have in the Past. Point of Sale is the physical exchange of materiel Submission System will change from PEDREP/JDRS/WEBSDR to DSS. 2 touch points for submission of SDR’s Receipt into the industrial activity After Issue to the Artisan Worksheet title: 20090305_SDR_v4.doc Flow title: 20090305_SDR_v4.ppt

NAVY SDR Process Changes DSS will implement submissions of Type 6 and 7 SDR’s WebSDR will need to provide info copies to the PEDREP/JDRS system for submissions and responses. PEDREP/JDRS system will accept submission and response info copies so that a replacement demand signal can be transmitted from MAT/MRPII. (Manual input to MAT/MRPII today, will be the same in the future) Implementation date targeted for Jan 2011

NAVY SDR At Receiving High Level Process Flow WEBSDR INFO Material Manager/Owner 2a Receiving Process Discrepancy found Shipping Activity ACTION 1 Type 7 or R 2c1 3a RESPONSE 4a 3a1 SDR Submit Local DSS 1b 2 ACTION Type 6, 7, 8, 9 2c2 Action Activity 3b 1a RESPONSE 4b 3b1 RDO/order 6 5a Type 7, 8 or R INFO 2b PDREP RESPONSE Discrepancy is discovered at the time of receiving. 1a. DSS determine the type of SDR required based on the material origin. DSS creates the SDR. 1b.DSS transmits the SDR to WEBSDR. 2. WEBSDR receives the SDR. 2a. WEBSDR sends info copies to Material Manager/Owner. 2b. WEBSDR sends info copies to PEDREP 2c1. For Type 7 or R SDR, WEBSDR sends action copies to Shipping Activity OR 2c2. For Type 6, 7, 8, 9, WEBSDR sends action copies to Action Activity. 3a. Action Activity receives applicable SDR. Action Activity processes the SDR, and creates disposition. 3b. Shipping Activity receives applicable SDR. Shipping Activity processes the SDR, and creates the disposition. 3a1. Action Activity transmits the disposition response to WEBSDR. 3b1. Shipping Activity transmits the disposition response to WEBSDR. 4a, 4b. WEBSDR receives the disposition from Action Activity or Shipping Activity. WEBSDR provides info copies to all applicable systems that were the recipients of the original SDR. 5a. WEBSDR transmit the disposition response to DSS. 5b. DLA personnel manually enter the disposition info from PDREP into MAT and MRP II. 6. DSS receives the disposition response and carries out the disposition 7. For Discrepant material received in the Local DSS, a SDR will be created and the material will be placed in a NRFI condition.  Replacement material needs to be reordered by DLA. (See technical issue regarding the method to be used on the reorder).  5b 5c Vendor Manual Entry Replacement Demand Signal Type 6 MAT/MRP II 7 Contract Type 9 4

NAVY SDR Discovery After Issue High Level Process Flow Action Activity (Material Owner) Type 5 submit Swap materiel, DAC to “J” and submit type 5 to owner. Type 5 submit 3a3 3a1 DAASC 3a2 Type 5 reply Type 5 reply 3a6 3a5 3a4 3a Type 7 submit WEBSDR ACTION Local DSS (Shipper) ISDR Inbound SDR Local DSS (ADRS) Outbound SDR 5a Yes 4 5 ACTION 7a Disposition Instr. 6 Good DLA asset available to swap? 9b Disposition Instr. Credit customer 3b No 9a1 9a Source of Supply 3 5c INFO EBS ACTION 7b 7c 1Industrial customer discovers supply discrepancy after issue. 2QA and DLA personnel go into warehouse to check for good stock for possible exchange. They may also identify additional discrepant material as a side effect of the process. 3If exchange is available, go to 3a. If NO exchange is available, go to 3b. 3a. Industrial customer exchanges for like item in ‘A’ condition from local stock if available. NRFI is transferred to appropriate DLA condition code. Type 5 SDR is generated to owner for discrepant assets found at issue and also at location. (NOTE: For SMS Materials, transaction is electronic, for all other owners, type 5 must be printed and mailed/faxed to the applicable Material Owner). (NSY requirements to manual input SDR after the fact into Defective Material Tracking System (DMTS)) 3a1. DSS transmits Type 5 SDR to DAASC 3a2. DAASC passes Type 5 to action activity 3a3. Action activity (Material Owner) receives Type 5 and Processes SDR Disposition 3a4. Action Activity (Material Owner) transmits Type 5 SDR to DAASC 3a5. DAASC passes Type 5 to DSS 3a6. DSS receives Type 5 response (disposition) and carries out disposition and closes Type 5 3b. If there is no good DLA asset available to swap, the material is receipted in DLA custody storage in Navy ownership. 4 DSS creates the Type 7 SDR and sends type 7 SDR is to WEBSDR. WEBSDR receives the type 7 SDR from DSS. 5a. WEBSDR sends an action copy to the shipper 5b. WEBSDR sends info copies to the Source of Supply (SOS) 5c WEBSDR sends info to PDREP 6. Local DSS (Shipper) validates type 7 SDR and passes recommendation for credit to Action activity. Local DSS (Shipper) then transmits type 7 response to WEBSDR 7a. WEBSDR receives the Type 7 SDR 7b. WEBSDR sends Type 7 to the Source of Supply (SOS) 7c Source of Supply receives Type 7 SDR and processes disposition instruction (NOTE: This will be the credit generation for the discrepant material). 7d. Source of Supply transmit Type 7 SDR response back to WEBSDR 8. WEBSDR receives Type 7 response 9a. WEBSDR transmit Type 7 response to Local DSS 9b. WEBSDR transmit Type 7 response to Shipper 9c. WEBSDR transmit Type 7 response to PDREP 9a1. Local DSS receives Type 7 response and carries out disposition. 9a2. If transaction generates credit, Local DSS creates a material ownership transfer from Navy to DLA for credited material. 10. DLA personnel manually enters info from PDREP to MAT and MRP II 11. MAT and MRP II generates a new demand signal for stock replacement 9a2 8 Disposition Instr. Site QA checks local DSS for good asset 2 MATERIEL MOVES 7d Other than DLA Ex: N32 (NSDRS) INFO 5b Custody Storage Nav acct. (other than Short) PDREP 9c Disposition Instr. SDR issue Discovery 1 10 Manual Entry Replacement Demand Signal MAT/MRP II 11 5

USAF SDR Overview The Air Force (AF)/DLA issue process is twofold, AF purchases materiel using a FB___ Document and resells to the AF Industrial customer using a M__ Document. The Point of sale/ swap (DZC) transaction is systemic, no human involved for ownership transfers, this results in denials on M__ document requisitions. (resales) Solution is for AF to submit a SDR to DLA for total nonreceipt on denial materiel so credit can be processed.

USAF SDR Overview (continued) DSS will validate the SDR against the denial and forward to EBS (DLA) recommending credit EBS will provide 100% credit and respond to the SDR WebSDR is tasked with supplying info copies to AF (D035K system) for all forwarding and response actions. Implementation date targeted for Aug 2009

IMSP AF Warehouse Denials Proposed SDR Process DAAS 1. Requisition – A0_ (FB ODN) EBS Sales Order created Maintenance requisition received by D035K and placed on backorder. D035K generates FB requisition to fill requirement. AF D035K 2. Status – AE_ DSS 3. MRO – A5_ Inventory washed to AF ownership 5. Receipt – D6_ (FB ODN) MRO processed upon receipt Post Goods Issue – Sales Order complete 4. MRO Confirmation – AR_ 6. MRO – A5_ (M ODN) Partial or full Denial of AF owned stock if not enough stock on shelf - No link to FB transaction 7. Denial – A6_ (M ODN) 10. Recommend Credit – 842 9. SDR – 842 WebSDR 8. SDR – 842 (FB ODN) Denied M ODN linked back to FB requisition ODN Provide 100% credit in this scenario – EBS and DSS records will appear “clean” 12. SDR - 842 11. Email notification (SDR Forward) AF will not build inbound 842 for this release 13. SDR reply - 842 14. Email notification (SDR Reply)