1 Pipeline Measurement Process Review Committee Kickoff Session Paul Blackwell Office of the Deputy Assistant Secretary of Defense for Supply Chain Integration 2 August 2011

2 Supply Chain Metrics Group Purpose of this Group: To monitor the efficiency and effectiveness of supply chain management through evaluation of the performance and cost of supply chain management operations. Membership: Chair: Office of the Deputy Assistant Secretary of Defense, Supply Chain Integration Each Military Service and the Defense Logistics Agency United States Transportation Command Joint Staff (JS) J4 Other OSD and JS representatives as required Specific Tasks: Evaluate and monitor the performance of the DoD supply chain Recommend enhancements to the DoD-wide supply chain metrics to monitor the inherent reliability, effectiveness, and the costs Resolve and formulate multi-Component problems through direct coordination among members Recommend policy changes to the DUSD(L&MR), as necessary Address supply chain metrics performance issues to the Supply Chain Executive Steering Committee Relationship to the Pipeline Measurement Process Review Committee: Identifies and obtains measures to enhance performance monitoring Describes the intent of new measures to be enabled with transactions to be developed by the PRC Serves as an evaluator of the data used in the measurement of supply performance and related reports

3 Comprehensive Supply Chain Metrics Plan Defining Enterprise Metrics: Criteria and Metrics

4 What are the strategic objectives for supply chain materiel management? Supply Chain Strategic Objectives Accurately forecast customer materiel needs Work with suppliers to ensure timely acquisition of materiel Effectively and efficiently manage materiel Sustain weapon system materiel readiness Control costs Goals 1. Provide Logistics Support in accordance with warfighters’ requirements 2. Institutionalize Operational Contract Support 3. Ensure supportability, maintainability & costs are considered throughout the acquisition cycle 4. Improve supply chain processes, synchronizing from end-to-end & adoption challenging but achievable standards for each element of the supply chain Logistics Strategic Plan Mission: Provide globally responsive, operationally precise, and cost effective joint logistics support for the projection and sustainment of America’s warfighters. Vision: A logistics enterprise ready to support any combination of combat, security, engagement, and relief and reconstruction operations.

5 Enterprise metrics under strategic objectives Strategic ObjectivesEnterprise Metrics Accurately forecast customer materiel needsDemand forecast accuracy Work with suppliers to ensure timely acquisition of materiel Procurement lead time Repair cycle time Retrograde time Effectively and efficiently manage materielCustomer wait time Perfect order fulfillment Fill rate Tiered inventory turn Excess on-hand inventory Excess on-order Denial rates In-transit visibility Sustain weapon system materiel readinessNot mission capable rates NMC backorders Control costsValue of inventory Materiel acquisition prices Total supply chain costs

6 Do they reinforce the desired behavior? Abbreviated strategic objective Desired behaviorMetric(s) - How it supports desired behavior Forecasting demand Work towards more accurate forecasts to drive less excess stock and better supply support Forecast Accuracy - Provides a baseline for improvement and focuses management attention on more accurate forecasts Acquiring materiel Work towards shorter cycle times to reduce inventory and provide a more agile supply system. Procurement lead time, repair cycle time, and retrograde time - Provide baselines for improving cycle times for three major sources of resupply and focus management attention on reducing those times. Managing materiel Work towards right-sizing and improving the productivity of DoD inventories while maintaining high levels of customer satisfaction. Customer wait time - Measures responsiveness of the DoD supply chain to its customers and focuses management attention on timely customer support. Perfect order fulfillment - Measures how well wholesale suppliers are responding to customers and focuses attention on timeliness and quality. Fill rate - Measures customer satisfaction for wholesale inventories and serves as a gauge for efforts to improve inventory productivity. Tiered inventory turn - Provides a sizing of inventory relative to customer demand and serves as a measure of success in reducing inventory levels. Excess on-hand inventory and excess on-order - Measures how much of inventory on-hand and on-order is not needed. Denial rates – Is an indicator of the effectiveness of distribution depots in supporting customer satisfaction with inventory they store. In-transit asset visibility – Is an indicator of how effective the supply chain is keeping customers informed on status of their orders.

7 Do they reinforce the desired behavior? Abbreviated strategic objective Desired behaviorMetric(s) - How it supports desired behavior Sustaining readiness Work to ensure that the DoD supply chain continuously supports the needs of operating forces. Not mission capable rates - Indicators of how the DoD supply chain is accomplishing its primary mission of supporting the operating forces. NMC backorders – Measures the responsiveness of the DoD supply chain in satisfying shortfalls in materials needed to sustain operations. Controlling costs Work to reduce materiel, operations and management costs while not adversely affecting performance. Value of inventory – Measures the DoD investment in inventory. Materiel acquisition prices – An indicator of how the prices that the supply system is paying for inventory is changing relative to expected price changes. Total supply chain management costs – Measures how much it is costing the Department to perform its supply chain mission.

8 Questions On-Hand Excess Inventory On-Order Excess Tiered Inventory Turn Denial Rates In-Transit Asset Visibility Fill Rate Procurement Lead Time Repair Cycle Time Retrograde Time Forecast Accuracy Materiel Acquisition Prices Value of Inventory Total Supply Chain Cost NMC Rates Backorders Downing Systems Forecasting Demand Acquiring Material Managing Material Sustaining Readiness Controlling Cost POF CWT