1 Manufacturing Technical Assistance Production Program (MTAPP) Pilot TACOM Industrial Base Operations (AMSTA-LC-IO) As of 16 July 2009

2 Background  Adapted from Air Force MTAPP Program Model  Army’s Objective: Strong Industrial Base across Small Businesses  Pilot Program scheduled to launch in July 2009, 1-year effort  Fully-funded for FY09, up to 29 suppliers can be assisted within next 12 months  Pilot’s Focus:  Current TACOM small business contractors  Manufactured parts and assembled components (kits)  Consideration of other-Army contractors and services  Supplier Identification and Selection in collaboration with Army Contracting Commmand (ACC) and Office of Small Business Programs (OSBP)

3 TACOM Supplier Nomination for AF MTAPP MTAPP History Air Force MTAPP Initiated TACOM Research Study TACOM Supplier Nomination For AF MTAPP TACOM MTAPP Pilot Development TACOM MTAPP Pilot Implementation Air Force & Department of Commerce Integration Air Force MTAPP initially focused on women-owned businesses. Its focus grew to encompass all sectors of small businesses. 90+ AF MTAPP Companies

4 TACOM MTAPP Vision & Mission Vision Become a core competency within the US Army Industrial Base solution portfolio to enhance the production performance of small businesses in support of Army, Department of Defense (DoD) and Prime Contractor requirements. Mission Provide expert technical assistance to resolve supply chain constraints, enhance production capabilities, improve quality assurance, and incorporate the Lean Six Sigma core principles within small business suppliers to ensure readiness and sustainment support for critical defense systems.

5 Management & Process Overview Transfer of Continuous Process Improvement Ownership Corrective Action Implementation Technical Assistance Comprehensive Assessment & Contract Corrective Action Plan Contract Constraint Identification & Supplier Selection SCOR: Plan, Source, Make Deliver & Return process and capability assessments Process mapping & root cause analysis Contract impact review: MRP, Quality, Production scheduling TA Examples: Sourcing Support Lean Implementation MRP Improvements Technical skills support Exit Assessment Develop performance sustainment requirements Full transition to continuous process improvement phase Identify long-term operational improvement requirements TACOM LCMC supplier / contract nomination Preliminary Supplier & Contract Analysis Determination of Likely Impact Company acceptance and notification PEO/PM GCSCS&CSS TACOM LCMC Contracting Center ILSC Depots & Arsenals RDECOM ARDEC TARDEC NSRDEC INDUSTRY Soldier STAKEHOLDERS PROCESS TACOM MTAPP Program Management

6 Identification Evaluation Selection Step 1: Contract Constraint Identification & Supplier Selection Contract Constraint Identification & Supplier Selection 1  TACOM LCMC supplier / contract nomination Support supplier engagements per year Goal: 60 supplier engagements over 3-year effort  Preliminary Supplier & Contract Analysis Develop supplier profile and pre-qualify supplier for program Identify affected weapons systems and contracts  Determination of Likely Impact Determine criticality and risk of source Evaluate impact to associated systems  Company acceptance and notification Engage supplier and stakeholder Requested Assistance Examples: Prototype Support Testing & Evaluation Tech Data Creation Reverse Engineering Secondary Sources Financial Management Quality Escapes Unmet Deliveries Surge Activity Project Management Technical Drivers } Industrial Base Operations Army Contracting Command Office of Small Business Programs

7 Supplier Selection Criteria Most Value from:  Longer Term Contracts  Critical Components  Hard-to-Obtain Parts  High Dollar Valued Components Most Value from:  Longer Term Contracts  Critical Components  Hard-to-Obtain Parts  High Dollar Valued Components Considerations:  Dun and Bradstreet Profile  Economic Impact to Supply Chain  Past Performance with other agencies Considerations:  Dun and Bradstreet Profile  Economic Impact to Supply Chain  Past Performance with other agencies Additional Factors:  Type of Buy  Legacy vs. Newer/Future Systems  Sourcing Constraints Additional Factors:  Type of Buy  Legacy vs. Newer/Future Systems  Sourcing Constraints

8 Step 2: Comprehensive Assessment & Contract Corrective Action Plan  SCOR®: Plan, Source, Make, Deliver & Return Assessment  Process Mapping & Root Cause Analysis Interactive, event-driven activities to identify problematic areas and contributing factors  Contract Impact review: i.e. MRP, Quality, Production Scheduling Develop solutions to meeting contract requirements TACOM MTAPP On-Site Supplier Assessment SCOR Model - Root Cause Determination Report of findings (RoF) & Corrective Action Plan Comprehensive Assessment & Contract Corrective Action Plan 2

9 Process Factors Impacting Contract Impact Priority (1 = Highest) Comment Level 1Level 2 ConstraintObservations Process resource coordination No resource requirement or planning visibility across processes or functions 2Urgent Manager sign-off for >$500 Management sign off represents a bottleneck that can take days 1Urgent Subassembly labor and set up time efficiency Inadequate assembly labor resources, multiple changeovers and inefficiencies in machine set up times 3 Dependent upon Above Limited Some concern for ability of outgoing logistics to adjust to increased flows 4CPI Limited High level of capability and solid execution within this function 5CPI PLAN SOURCE MAKE DELIVER RETURN Assessment Scorecard = Direct & Immediate impact= Indirect impact or linger term = No material impact

10 Step 3: Corrective Action Implementation Technical Assistance  TA Examples: On-site technical assistance provided, based on Corrective Action Plan. Some solutions may include Kaizen Events, Lean Implementation, MRP Training or Improvements  Exit Assessment Perform exit assessment to measure actual vs. planned improvement Capture elements for integration into Continuous Process Improvement plan to sustain technical assistance gains Corrective Action Implementation Technical Assistance 3 Collaborative corrective action plan implemented Measurable improvement of contract adherence Transition of corrective action plan to CPI

11 Program Metrics Contract Impact Metric (Examples) As-Is Baseline Exit Assessment Contract Closeout Improvement to-date Delivery & Schedule Delivery % to commit date Fill Rates Fulfillment lead times 50% 60% 55 Days 75% 80% 45 days N/A 25% 14% 18% Productivity Setup Time Non-value Added Time % Capacity utilization 8 Minutes 30% 60% 4 Minutes 15% 80% N/A 50% 20% Material Management Work-in-Process Inventory Inventory Days of Supply Sourcing cycle time $50K 30 6 Weeks Weeks N/A - 50% 33% Warehousing & Logistics % of costs Storage and handling cost Shipping cycle time 19% 15% 10 Days 10% 6% 5 Days N/A 9% 50% Safety # of incidents/month Avg. days without incident Cost of incidents % % N/A 60% 100% 50% MTAPP Exit Assessment - Metrics Example

12 Step 4: Transfer of Continuous Process Improvement Ownership  Develop performance sustainment requirements Evaluate overall performance improvement Develop methods for maintaining performance  Full transition to Continuous Process Improvement Phase Deliver self-sustaining plan for supplier to implement beyond MTAPP  Identify long-term operational improvement requirements Discuss trends and potential future requirements Identify long-term strategies and/or high-dollar capital investments for competitiveness Transfer of Continuous Process Improvement Ownership 4 Shift to Continuous Process Improvement focus Identify longer term improvement requirements Integrate requirements into single operational plan

13 High Level Management Process PROCESS FACTORS IMPACTING CONTRACT BaselineCurrentCPI Impact FactorConcernRecommendation / Corrective Action Leadership / Strategy Strategic objectives aligned to management direction Operational strategy workshop with cross- functional management team Process Development / Management Process Design Value stream mapping using TACOM LCMC requirements Process Coordination Time-based enterprise analysis of resource utilization and smoothing Decision Making Document procedures and decision criteria to expand decision capacity Human Resources Capability & SkillsProcurement 101 training Technical /engineering resource capacity Temporary staffing of engineer for bid & quote to free internal eng on TACOM Manual / labor efficiency Work order documentation and traveler development InfrastructureInformation Systems Expand excel based tool to cover scheduling of production and material on TAOCM LCMC orders External Processes & Resources Sub-tier suppliers & Outsourced process (Ex. Heat treating) Identify alternative sources and meet with current provider to determine possible improvements PLAN Exit Assessment Scorecard CPI = Direct & Immediate impact= Indirect impact or linger term = No material impact

Supplier/ Contract Info Intake IBO Preliminary Assessment MTAPP No MTAPP Yes Communication to Stakeholders Supplier No Comprehensive Assessment & Contract Corrective Action Plan Supplier Decision Report of Findings & Corrective Action Plan Technical Assistance Proposal Corrective Action Implementation Technical Assistance Exit Assessment Report Transition to Supplier Owned Continuous Process Improvement Supplier Owned Continuous Improvement Plan Qualified Supplier Contact Letter requesting participation Notification IBO Review 234 Selection Review Supplier Yes Contract Constraint Identification & Supplier Selection 1 Request for Action to The Asaba Group Information & Document Flow Stakeholder Nominations

15 MTAPP Benefits & Measures of Success Significantly reduced adverse impact of small business supplier performance on readiness and sustainment efforts Small business suppliers with enhanced ability to self-sustain optimal production performance Network of small business suppliers with proven performance and capability as preferred suppliers for current and future weapons systems programs. Favorable Return on Investment, measurable impact on TACOM programs and a solid program management model for program expansion across the Army Materiel Command (AMC) enterprise. A responsive, reliable small business industrial base meeting the needs of the warfighter! Suppliers: Reduction of non-value added activities Improved operational performance (quality, productivity, logistics) Enhanced ability to meet cost, quality, schedule requirements Stakeholders: Improved Technical Data Reduction of shortages Strengthened supply chain Increased readiness and sustainment support Department of Army / HQ Army Materiel Command: Domestic sources of supply for critical components Proven network of small businesses for defense program support Effective leverage of assistance in small business development Expected Benefits: Measures of Success: