Des Newman, Chairman Kenneth W. Sullivan, Vice-Chairman Jamie Damsker, Secretary August 14, 2008 DoD Supply Network Management Committee 2008 Proposed Goals DoD Supply Network Management Committee 2008 Proposed Goals

2 DoD Supply Network Management Charter: To promote the development of a more robust Defense Industrial Base and Supply Chain Network Process in order to increase the strength and diversity of the Defense Manufacturing Enterprise in support of the Warfighter.

3 DoD Supply Network Management Goal #1 - Complete supplier survey Status Draft survey on NDIA website Committee will provide comments “Roll out” planned for October 2008

4 DoD Supply Network Management Goal #2 - Develop list/database of DoD Supply Chain “Best Practices” Status Research indicates limited published material and best reference is found in Supply Chain Integration Report (IMTI, Inc., NACFAM, UAH). The committee suggest that pursuing best practices at this time would be inappropriate given the changes taking place between current and future complex supply networks. `

5 DoD Supply Network Management Goal #3 - Development of a DoD Roadmap of Future State Supply Network Concept Status Identify options and criteria for project to develop the “Supply Network of Tomorrow” –B3 Die: Dennis Thompson –AMCOM: Kenneth Sullivan –MRAP: Jamie Damsker –Global Collaboration: Eric Mittelstadt Steve Melnyk: Develop criteria for projects for committee to evaluate October: Down select projects

6 DoD Supply Network Management The honorable gentleman from Canada defers the remainder of his time to the distinguished gentleman from Michigan State

REMEMBER! Today’s supply chain is a result of actions taken in the past. Tomorrow’s supply chain will be the result of actions that we take today. 7

Today and Tomorrow’s Supply Chains Today’s Supply Chain –Strategically Decoupled, Price-Driven –Relatively simple –Unidimension –Focused Driven by –Supply chain risks –Supply chain disruptions –Timely delivery 8

Today and Tomorrow’s Supply Chains Tomorrow’s Supply Chain –Strategically Coupled, Value-Drive –More complex –A Supply network –Driven by: Performance alignment Product design Supply network design Environmental performance Power/influence –Global –Highly adaptive –Ultimately based on VALUE 9

Keys to Success Diversity of Outcomes –Efficiency is no longer enough –Additional Outcomes Responsive/flexible Resilient Secure Sustainable Innovative –Note Not all outcomes can be achieved at the same time Infrastructure, metrics, practices vary by which outcome you pick! 10

Keys to Success - 2 Fit –Supply chain has to fit with its environment Industry Geographic/Cultural Economic Development –Time horizon Project/finite life –Critical resource - people Evergreen –Critical resource - systems –Critical drivers Demand/Supply/Customer/Technology 11

Keys to Success - 3 Understanding the nature of innovation –Product –Process –Service –Supply Chain Innovation Spectrum –Incremental innovation –Radical innovation Impact of metrics –On innovation 12

Other Issues Supply chain design –Integrated vs Modular Modular  reduced cost; enhanced responsiveness Integrated  visibility; control –The challenge of the “time-delayed disruption” Mattel Toys – November 2007 Culture –Taught, collective problem-solving –A force of stability in a world of change –Multiple levels –Affects the ability of the system to “see” alternatives 13

Challenges Before Us Identifying the critical, current outcomes needed by Defense. Efficiency supply chain management systems are not appropriate when dealing with the responsive supply chain. What works for Lean does not work for Radical Innovation! To properly measure the desired outcomes, you need to develop and implement the right metrics. Need to measure the impact of supply chain design on performance? 14

15