1. DoD Supply Chain Integration Performance Metrics using RFID April 8, 2008

2. 2 Objective  Demonstrate how passive RFID… -Captures precise measurement of materiel flow -Identifies potential opportunities for improvement Improved business processes (Lean Six Sigma approach) Timely system updates

3. 3 Travis AFB, CA Elmendorf AFB, AK Fort Richardson, AK Commercial Ship Commercial Truck Military Aircraft DDJC  Objectives of Alaska Project  Determine how to automate processes with passive RFID technology & execute RFID enabled processes  Determine how to make ITV data available through DoD enterprise capabilities (e.g. DAAS, IDE, AV)  Identify business process re- engineering opportunities  Quantify the financial benefits Using RFID to highlight opportunities for improvement The Alaska RFID Project Cross-Service implementation of passive RFID technology along multiple supply chain segments at select Department of Defense (DoD) sites (DDJC, Travis, Alaska)

4. 4 RFID provides a new data point - revealing actual materiel movement more discretely for the first time Continuous Process Improvement (CPI) Root cause analysis Issue Identification Accurate measurement RFID Middle- ware Actual Movement of Materiel System Transaction We need to understand this gap Identify issues with the process between these two points Logistics System

5. 5 RFID Middle- ware Distribution Depot RFID Middle- ware Retail Logistics System Retail Facility Logistics System The new RFID data point provides additional insight within the response time segments Storage Depot Time Transportation / Theater Time Arrival Receipt Transaction Departure Shipment Transaction Departure Shipment Transaction Trans-shipment Point

6. 6 RFID reveals potential areas for improvement at the Container Consolidation Point RFID Middle- ware Logistics System Materiel loaded onto the truck trailer System transaction indicating truck departure Transportation Time The average time to build a container load at the CCP was over 3 days In-transit to the Customer Average = 3.33 days The average time to build a container was variable

7. 7 RFID reveals potential areas for improvement at the retail sites RFID Middle- ware Retail Logistics System Actual Arrival of Materiel (Visibility Transaction) System Receipt Transaction The new data makes this process visible for analysis. Transportation Time Site A had an average receipt posting of 0.3 days. Site B had an average receipt posting of 8.5 days. Opportunity: Reduce receipt take-up time Business Benefits: Materiel to the customer more quickly, Increased throughput

8. 8 RFID reveals potential areas for improvement at retail sites when there is no system receipt at DAASC RFID Middle- ware Actual Movement of Materiel No System Transaction in DAASC Identify issues with the process X Many requisitions to the Alaska sites did not have a system receipt at DAASC*: 19% of the requisitions going to Ft. Richardson 26% of the requisitions going to Elmendorf AFB *Requires additional causative research: - Receipted in local AIS but not sent to enterprise level? - Not receipted in local AIS or at enterprise level? Sep-Nov 2007 requisitions reviewed in Jan 08. Metrics are based on a statistical sample - 95% confidence with a variation of ±6.5%.

9. 9 Type of visibility at Ft Richardson 95 – 97% of requisitions were visible at the local site via RFID or FEDEX, despite not having a system receipt at DAASC Type of visibility at Elmendorf AFB

10. 10 Closing receipts in a timely manner produces business benefits RFID Middle- ware Actual Arrival of Materiel (Visibility Transaction) Transportation Time Including requisitions not received, the response time measurement grows from an average of 8.5 days to 28.9 days. Time of the Analysis (No receipt in Systems yet) Retail Facility Opportunity: Reduce LRT by eliminating erroneous supply receipt discrepancies Business Benefits: Reduce erroneous losses, Avoid possible reorders System Receipt Transactions averaged 8.5 days

11. 11 22% of requisitions from DDJC to Alaska sites were never received at DAASC. After the expected arrival date, 30.1% of those requisitions had a subsequent requisition by the same unit ordering the same or greater quantity of the same NSN The POSSIBLE reorders represent 7% of the entire number of requisitions sent to Alaska in same timeframe (June – Sep 2007) -Transportation Savings -Inventory Reduction Alaska Customers DDJC Original Request: Requisition A NSN # 123 Reordered Request: Requisition B NSN #123 Materiel that Arrived Reorder Not Received Analysis June 2007 – September 2007 Metrics are based on a statistical sample - 95% confidence with a variation of ±6.5%. Estimating a potential business benefit – avoiding reorders * Requires additional analysis of demand data to confirm if reorders occurred

12. 12 RFID reveals precise materiel movement, enabling Lean Six Sigma process analysis TDD Target * RFID LRT Mean = 32 days STDev = 17.5 days *System LRT Mean = 43.5 days STDev = 24 days 68% of Issue Priority Group 3 requisitions actually arrive within the defined Time Definite Delivery (TDD) target of 37 days compared to 56% of system receipts.

13. 13 Trans-shipment Point Distribution Depot Retail Facility Storage Depot Time Transportation / Theater Time Arrival Receipt Transaction Departure Shipment Transaction Departure Shipment Transaction Potential improvements will have a cumulative effect across the DoD Supply Chain 1 day improvement* 2 day improvement* 8 day improvement* 11 day improvement* *days improvement are examples only

14. 14 Summary  Passive RFID provides a new data point -Captures precise measurement of materiel flow -Identifies potential opportunities for improvement Improved business processes (Lean Six Sigma approach) Timely system updates  Initial implementations at small sites yield an opportunity for improvement  Analysis team will continue to work with the Services to enable them to complete, and expand upon, the analysis