1. Navy 2004 Logistics Conference Logistics Transformation at DoD
Mr. Brad Berkson
Acting Deputy Under Secretary of Defense (L&MR)
May 18, 2004

2. DoD would be like Wal-Mart . . .
. . . if Wal-Mart's stores moved
. . . if a Wal-Mart stockout meant that everyone inside the store could die.
. . . if associates had to wear a different kind of vest
. . . if Christmas was a random event every 5 years
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3. 2001 QDR Direction
Project and sustain the force with minimal footprint
Implement performance-based logistics to improve readiness for major weapon systems and availability of commodities
Reduce cycle times to industry standards
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04pm12-3

4. Opening Observations We have many supply chains to manage
Commercial Commodities (food, fuel, pharma, clothing)
Weapon Systems
Deployed Land Forces
Each has different characteristics and requirements
Need to be tailored to optimize performance . . .
Consist of multiple chains where the actual tailoring has to take place
DoD’s scale, complexity, and coordination needed, provide challenges to fundamental improvements
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5. Joint Logistics Board Priorities
Support current operations
Ensure success of the DPO
Streamline material flows
Explore and implement Customer Pay opportunities
Accelerate Performance-Based Logistics (PBL)
Develop a way ahead for achieving maintenance excellence (e.g., Lean)
Implement a balanced scorecard and performance metrics
Ensure Logistics Enterprise Integration efforts are coordinated and interoperable
Deployed Forces
Commercial commodity flows
Weapons Systems
Infrastructure
Memo to Acting Under Secretary of Defense (AT&L)
February 10, 2004
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6. Comparison Matrix Chain Commercial Equivalent Inventory Key Data Flow
Commercial commodities
Sears
Wal-Mart
True-Value
$12 B
Fast moving
Lower value
Shelf demand
ITV
High
Continuous
One way
Major System
End items
Repairables
GE turbine
Caterpillar dealer
IBM mainframe
$66 B
Slower moving
Higher value
Readiness critical
UID
Lower
System dependent
Bi-directional
Deployed Forces
NO direct
Process industry indirectly
$???
DoD
Sequence
Real-time system status
Enormous
Intermittent
Multi- Directional
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7. “Major Land Force Deployment”
Deployed
Ground Unit
Use to close and sustain major ground forces into AOR
Metric: Time to close forces
Transformation example: RFID ITV*
Leverage point: Improve trust in flow capability to allow smaller footprint in theater
Service ICP
AOR
Organic Port
AOR
Organic Move
CONUS
Organic Port
Intercon
Organic Move
Garrison Ground Unit
Deployed
Ground Unit
PMO
Intercon Commercial Move
AOR Commercial Port
AOR Commercial Move
CONUS Commercial Port
Deployed
Ground Unit
Vendor
* RFID tags being seized and reprogrammed by in country forces – need more!
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8. Deployment/Distribution Operations Center-Forward (DDOC-FWD) Pilot
TACON TO COCOM
- Air (CJ4)
- Land
- Sea
Sustainment
DPO National
Partners
Service Reps
Unity of Effort
Joint Effects
DDOC-FWD Mission Statement:
executes CENTCOM deployment and distribution priorities
validates/directs mode selection of intra-theater with CFLCC, CFACC & CFMCC
adjudicates identified CENTCOM distribution and intra-theater shortfalls
coordinates for additional USTRANSCOM support
provides TAV and ITV for inter and intra-theater forces and materiel
synchronizes effective theater retrograde
DEPLOYMENT DISTRIBUTION OPERATIONS CENTER FORWARD (DDOC-FWD) WAS CONCEIVED BY USTRANSCOM TO BRING CURRENT STRATEGIC TRANSPORTATION CAPABILITIES AND DISTRIBUTION PROCESSES TO THE THEATER TO ASSIST THE WARFIGHTER WITH THEIR THEATER CHALLENGES. TRANSCOM KNEW WE COULD NOT BRING THIS CAPABILITY TO THE WARFIGHTER WITHOUT THE EXPERIENCES OF OUR NATIONAL PARTNERS TO INCLUDE DLA, ARMY AND AIR FORCE MATERIEL COMMANDS AND THE SERVICES. WE ALSO NEED WARFIGHTER SUPPORT.
GEN ABIZAID, COMMANDER, CENTCOM, APPROVED THE DDOC CONCEPT FOR HIS AOR ON 12 DEC 03. WORKING WITH MEMBERS OF HIS STAFF, A DDOC MISSION STATEMENT WAS APPROVED FOR THE CENTCOM AOR AND THE NAME CHANGED TO CDDOC. THE MISSION STATEMENT GIVES THE CDDOC POWER TO VALIDATE AND DIRECT INTRA-THEATER LIFT REQUIREMENTS, IMPROVE TAV/ITV AND DEVELOP AN EFFECTIVE RETROGRADE PROCESS.
63 MILITARY PERSONNEL, DOD CIVILIANS AND CONTRACTORS DEPARTED ON 16 JAN 04 FOR THE THEATER. THESE MEMBERS ARE EXPERIENCED IN TRANSPORTATION, DISTRIBUTION AND TAV/ITV PROCESSES AND SYSTEMS AND THE USE OF COLLABORATION TOOLS TO REACH BACK TO THEIR CENTERS OF EXCELLENCE.
BY “PLUGGING” IN THESE CAPABILITIES FROM THE NATIONAL PARTNERS TO THE WARFIGHTER, WE ARE ABLE TO SYNCHRONIZE DEPLOYMENT AND DISTRIBUTION OF FORCES AND MATERIEL FROM ORIGIN TO FINAL DESTINATION, OPTIMIZE STRATEGIC AND THEATER LIFT THROUGH IMPROVED COLLABORATION, PRIORITIZATION, AND VALIDATION WHILE IMPROVING END-TO-END TAV/ITV TO SUPPORT THE WARFIGHTERS’ OPERATIONAL GOALS.
The missing Theater link until now…
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9. DDOC–FWD Pilot Immediate Impact – 1st Month
Synchronized strategic air/sea & intra-theater lift: Increased throughput
Improved readiness by diverting theater assets (track & DLRs)
Improved customer confidence – collaborative theater environment
Improved quality and availability of enterprise information
Reduced operational costs with improved ITV & TAV (19 containers of track located & re-directed; over one hundred Class IX containers diverted)
Accelerated 101st AA div redeployment by weeks
Accelerated retrograde of DLRs by 900%
Improved strategic delivery of critical materiel directly to forward units (pure pallets to forward warehouses)
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10. Set the foundation for future supply chain improvements…TODAY!
Why RFID now?
Improve business processes now
Drive the direction and cost of technology development
Drive the standards to work for us
Facilitate the implementation of Unique Identification (UID)
Set the foundation for future supply chain improvements…TODAY!
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11. Passive RFID Requirements
Tagged cases and pallets shipped to DoD receiving points beginning Jan 2005
Tagged packaging for items that require a Unique Identification (UID) shipped to DoD receiving points beginning Jan 2005
Pilots will help determine pace of expansion
Tags will be EPC-compliant
Initial Implementations: currently available Class 0 and Class 1, V1 EPC tags
When available: Class 1, Generation 2 EPC tags
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12. “Commercial Commodity”
Use to flow “consumer goods” (e.g., food, fuel, clothing) to ground forces in garrison, sea and air forces, and depots
Metrics: Availability, customer wait time, inventory turns, log cost % sales
Transformation example: Prime Vendor contracts for fuel, pharma, and bin stock at Depots
Leverage point: Consolidate inventory upstream, vendor direct delivery of goods to shelf
vendor
Army
Force
Navy
Marines
Air

13. Current State: Background
Thousands of DoD CONUS locations initiate freight movements using commercial freight carriers with thousands of destinations.
Dozens of DoD receiving, storage, and shipment activities across the United States consume personnel, funding, inventory and time.
Multiple systems are employed to execute and manage shipment activity and operations
there is no centralized planning or control
systems require stronger linkage and significant resources to operate
Over the last fifteen years, organizations and processes have been aggregated and consolidated without the benefit of a holistic analysis which leverages today’s IT processes, commercial capabilities, and proven best practices.
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14. Defense Transportation Coordination Initiative (DTCI)
Consolidation
Points
Break Bulk
Points
National coordinator manages DOD transportation, including dedicated truck service to leverage “best practices”
Regional Shipping Cluster
Regional Receiving Cluster
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15. Regional Inventory & Material Management Project
Pilot Location: San Diego
A pilot program designed to optimize inventory, reduce material handling and reduce customer wait time through streamlining delivery of parts to end users.
The pilot will ultimately seek to deliver the same or better mission capability at lower cost.
Improved repair cycle time on DLRs can potentially reduce spare requirements, resulting in inventory optimization and cost savings.
Identify opportunities to minimize touches
Identify opportunities to streamline processes
Optimize inventory by relying on rapid wholesale response (vice multiple layers of inventory)
Identify alternative organizational structures (organic and/or contracted) to execute the streamlined process
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16. “Weapons System Service Provider”
User
Depot
Local
ICP
System
Hours
Vendor
Use to provide weapons systems availability
Metric: Mission capability, operating $/hour
Transformation examples: Navy APU Cherry Point, JSTARs, C-17
Leverage point: Have each PM design system’s supply chain to optimize its flow given the significant inherent variations (e.g., submarine vs. radar)
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17. Weapon System Sustainment Roadmap
Number
Number of Partnerships (1998 & 2002)
PM accountable for life cycle
JROC established sustainment requirements
Enabling Depot legislation
Revised Maintenance Policy
Industry Supply Chains
Reengineered Training
Joint Strike Fighter
Future Combat System
Advanced Amphibious Assault Vehicle
Historic
Suppressed Readiness
Marginal reliability
Fractionated Accountability
$67B/year
Huge footprint
Warfighter-driven readiness
Ultra-reliability
Clear PM accountability
Minimal Footprint s
Financial Reform (PR05)
Single-line Accounting
Life Cycle Cost Management
Operational requirements synchronized with PBBS
2000
2005
2015
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18. DoD Vision for Item Marking: UID
To implement a policy establishing a strategic imperative for uniquely identifying tangible items relying to the maximum extent practical on international standards and commercial item markings and while not imposing unique government data requirements.
Uniquely identified (UID) tangible items will facilitate item tracking in DoD business systems and provide reliable and accurate data for management, financial, accountability and asset management purposes.
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19. Performance-Based Logistics
JACG
Oversight via
DAB/DAES
Oversight via
R-TOC Forum
DoD 5000
Policy
New program
implementation
30 Pilot
Programs
Quadrennial
Defense Review
Second major topic for today was status of PBL
Currently preferred sustainment strategy for new systems in R
Endorsed by QDR for application to legacy systems
03 DPG included requirement for Service Implementation Schedules to be submitted by March 2002
Performance-Based Logistics
Legacy Systems
FY03 DPG
Service Implementation Schedules
Reengineer
Product Support
Lessons
Learned
Operational
Demonstrations
Adjustments
CY02/03 PEO/SYSCOM
PM Roundtables
AIA Product Support
Industry/Government Tiger Team
A joint, disciplined program to successfully implement PBL!
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20. PBL Programs & Partnerships in Support of GWOT
PBL Performance
F-117
AWACS
Common Ground Station
C-17
F/A-18 E/F
JSTARS
B-2
Delivering Capability NOW!
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21. Why does the warfighter like PBL programs?
F/A-18 SMS - Availability Was 65% ... Now 98%
Tires - Availability Was 81% ... Now 98%
ARC-210 Radio - Availability Was 70% ... Now 85%
APU - Availability Was 65% ... Now 90%
F-14 LANTIRN - Availability Was 73% ... Now 90%
H-60 Avionics - Availability Was 71% ... Now 85%
F/A-18 C/D - 67% Availability ... F/A-18 E/F FIRST - 85%
PBL
WORKS!
Improves Readiness
Lowers Total Ownership Costs
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22. PBL Vs. Organic Repair Cost per hour: $167 Cost per hour: $411 PBL
Parts Cost: $300,000
Labor & Admin Costs: $34,000
Total Cost: $334,000
Average Life: 2,000 hours
Cost per hour: $167
Organic Repair
Used Parts: $120,000
Labor & Admin Costs: $34,000
Total Cost: $154,000
Average Life: 375 hours
Cost per hour: $411
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23. Future System Sustainment
Real-Time System
Status (CBM+)
Industry/Government
Performance-
Based Logistics
Weapon System
Manager
Force Provider
Partnerships
Ensure system is
sustained at optimum
level
Performance Agreement
Performance Agreement
Provide continuous,
reliable, affordable
support
Acquisition
Visibility into cost/risk decisions across life cycle
Sustainment
Disposal
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Providing operational availability; not parts.

24. Enterprise Integration
Logistics Balanced Scorecard Synchronized to DoD BSC
Warfighting Perspective
Warfighting Perspective
Warfighting Perspective
Provide optimum responsive logistics
Provide optimum responsive logistics
Provide optimum responsive logistics
support to the joint warfighter to ensure:
support to the joint warfighter to ensure:
support to the joint warfighter to ensure: • • •
An immediately employable force option
An immediately employable force option
An immediately employable force option • • •
A rapidly deployable capability
A rapidly deployable capability
A rapidly deployable capability • • •
A sustainable total force
A sustainable total force
A sustainable total force
Innovation & Learning Perspective
Innovation & Learning Perspective
Innovation & Learning Perspective
Logistics Process Perspective
Logistics Process Perspective
Logistics Process Perspective
Ensure a capable workforce responsible
Ensure a capable workforce responsible
Ensure a capable workforce responsible
Vision
Vision
Provide effective logistics chain
Provide effective logistics chain
Provide effective logistics chain
for meeting the warfighter logistics
for meeting the warfighter logistics
for meeting the warfighter logistics
performance and capacity while reducing
performance and capacity while reducing
performance and capacity while reducing
support requirements to include:
support requirements to include:
support requirements to include:
and
and
the logistics footprint to include:
the logistics footprint to include:
the logistics footprint to include: • • •
Introduction of leading edge advanced
Introduction of leading edge advanced
Introduction of leading edge advanced
Strategy
Strategy
concepts
concepts
concepts • • •
R&M, Leveraging Global Industry, IT
R&M, Leveraging Global Industry, IT
R&M, Leveraging Global Industry, IT • • •
Organization adaptability
Organization adaptability
Organization adaptability
Improvements, and Commercial
Improvements, and Commercial
Improvements, and Commercial • • •
Workforce shaping
Workforce shaping
Workforce shaping
Advances
Advances
Advances
Resource Planning Perspective
Ensure affordable logistics support through
resources and choices that enable effective
joint warfighter capability to include: •
Accurately forecast and identify logistics
requirements
Enterprise Architecture •
Identify and understand the risks associated
with logistics resource allocation
Portfolio Management
DUSD(L&MR)
DUSD(L&MR)
DUSD(L&MR)
Memo
Memo
Memo
DUSD (L&MR) Guidance & Oversight/Integration
DUSD (L&MR) Guidance & Oversight/Integration • • •
Achieve FLE
Achieve FLE
Achieve FLE • • •
Streamlined Systems
Streamlined Systems
Streamlined Systems • • •
Efficient Systems
Efficient Systems
Efficient Systems • • •
Integrated Knowledge
Integrated Knowledge
Integrated Knowledge
Base
Base
Base
Component
Component
Component
July 2002 • • •
Interoperable
Interoperable
Interoperable
July 2002
Execution Plans
Execution Plans
Execution Plans
Execution
Execution
Execution
Systems
Systems
Systems
And
And
And
FLE
FLE • • •
Milestones
Milestones
Milestones
Modernization
Modernization
Modernization • • •
Schedules/Brown Out
Schedules/Brown Out
Schedules/Brown Out • • •
Critical System/
Critical System/
Critical System/
Database Information
Database Information
Database Information
Component
Component
(IT meta data)
(IT meta data)
(IT meta data) • • •
Evaluate Logistics AISs
Evaluate Logistics AISs
Evaluate Logistics AISs
Strategies
Strategies
and Databases
and Databases
and Databases • •
Management Approach
Management Approach
January 2003
January 2003
January 2003 • • •
Identify Systems to be:
Identify Systems to be:
Identify Systems to be: • •
CIO Interface
CIO Interface • •
Evaluation Criteria
Evaluation Criteria Ø Ø Ø
Eliminated
Eliminated
Eliminated • •
Process Methodology
Process Methodology Ø Ø Ø
Sustained
Sustained
Sustained • •
Metrics
Metrics Ø Ø Ø
Integrated
Integrated
Integrated • •
POM Considerations
POM Considerations
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Leading DoD Enterprise Integration
August 2002
August 2002
Streamlined Portfolio Management

25. Enterprise Integrated Data Environment (EIDE)
Provide an enhanced environment that enables the DoD Logistics Enterprise to execute practices, processes, applications and decision support tools to achieve logistics interoperability and allow for information exchange within and between internal and external DoD business partners.
- Non-system dependent transactions
- Consolidation and reuse of Interfaces
- Data integration/sharing
- Leverage Modernization Efforts
- Data Standards not Standard Data
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26. DoD Logistics Strategic Objectives
Provide optimum responsive logistics support to the joint warfighter to ensure:
Immediately employable force options
A rapidly deployable capability
A sustainable total force
Warfighter Perspective*
Ensure a skilled capable workforce responsible for meeting the warfighter logistics support requirements to include:
Introduction of leading edge advanced concepts
Organization adaptability
Workforce shaping
Workforce
Provide effective logistics chain performance and capacity while reducing the logistics footprint to include:
Reducing cycle time, improving effectiveness, improve product quality, leveraging IT improvements and Commercial Advances
Logistics Process Perspective
Vision
and Strategy
Ensure affordable logistics support through resources and choices that enable effective joint warfighter capability to include:
Accurately forecast and identify logistics requirements
Identify and understand the risks associated with logistics resource allocation
Improved cost predictability and constrained cost growth.
Resource Planning Perspective
JLB Approved Aug 03
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27. Logistics Transformation
Mass-Based
Just-in-Time
Sense and Respond
FSB
More is better
Mountains of stuff measured in days of supply
Uses massive inventory to hedge against uncertainty in demand and supply
Mass begets mass and slows everything down
Precision is better
Reduce Inventory to a minimum and keep moving
Use precise demand prediction and optimization to reduce uncertainty
Works great, except when it doesn’t
Agile is better
Dynamically positioned Inventory throughout
Use transportation flexibility and robust IT to handle uncertainty
Supports adaptive operations
Prime Metric: Days of supply
Prime Metric: Flow Time
Prime Metric: Effects
Migrating to the Force-centric Logistics Enterprise
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28. Ubiquitous, cost-effective capability to project and sustain power.
The End Game
Ubiquitous, cost-effective capability to project and sustain power.
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04pm12-28

29. Backup/unused slides
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30. Single Point of Entry (SPOE)
A common way to exchange information with the Logistics Domain from modern weapons platforms and it’s suppliers via an Integrated Data Environment (IDE) at the process level not the system interface.
ALIS - OEM
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31. Where NAVICP Is Today Awarded PBLs
NAVAL SUPPLY SYSTEMS COMMAND
42K Items,
12% of total obs
Covered $M
NAVICP PBL Obligations
Awarded PBLs
# of Contracts Awarded
Aviation Maritime Total
# of PBLs $ Value # of PBLs $ Value # of PBLs $ Value
FY $21.0M $14.0M $35.0M
FY $51.0M $34.0M $85.0M
FY $146.5M $98.2M $244.7M
FY $228.6M $102.8M $331.4M
FY $306.1M $179.7M $485.8M
FY $361.5M $163.9M $525.5M
FY04(to 1-31) $366.3M $57.9M $424.2M
Types of PBLs in FY03 Total:
Philadelphia:
Total: 62 Full: 31: Partnership: 9 (Partnership same as full with organic depot involvement);
Mini Stock Point: 10; Organic: 8; CLS: 2; Commercial: 2
Mechanicsburg:
Total: 76 Full: 12; Mini Stock Point: 11; Organic: 26; CLS: 1; Commercial: 26
A Reengineering Tool to Improve Readiness/Sustainment
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32. F/A-18 E/F USN/Industry Partnership
Configuration Control
System Safety
Organizational and Intermediate Maintenance (Ashore/Afloat)
GFE and E/F, C/D Common Spares
GFE Support Equipment
Component Repair
Program Management
Systems Engineering
Information Systems
Fleet Support
Life Cycle Management
Support Planning
Teaming
Material Management
E/F Unique Reparables
All E/F Consumables
Transportation
Retail and NADEP Support
Reliability Improvement
Configuration Management
Component Repair
Obsolescence Management
Design Engineering
Tech Data
Deployed 6 months early to meet OEF/OIF requirements
99% Range and Depth of Spares Deployed to OIF
70%-89% of demands met in 48 hours
97.1% successful launch rate
Industry/Gov’t distribution
Seamless support to warfighter
Web-based asset visibility
Leverage commercial and DoD best practices
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