1. Sustained Materiel Readiness David Pauling, ADUSD (MR&MP) MRO Conferences

2.  300 Ships 100,000+ Ground Combat/Tactical Vehicles  900 Strategic Missiles  15,000 Aircraft/Helicopters + 250K+ Wheeled Vehicles + Comm/Electronics Equipment + Support Equipment +... Maintained by: 681,000 DoD personnel Private sector companies Maintenance cost: ~$59B per year National Defense PP&E is valued at  $600 Billion Systems Supported by DoD Maintenance Source: LMI 1 1

3. DoD Field- and Depot-Level Maintainers Distribution by Service (in 000s) Totals Field-Level Maintainers 631.1 ~93% Depot Maintainers 44.1 ~7% Army Field Maintainers 220.8 (33%) Army Depot Maintainers 7.2 (1%) Air Force Field Maintainers 186.8 (28%) Air Force Depot Maintainers 15.1 (2%) Navy Field Maintainers 173.6 (26%) Navy Depot Maintainers 20.9 (3%) Marine Corps Field Maintainers 49.9 (7%) Marine Corps Depot Maintainers 0.9 (<1%) 2

4. Major DoD Intermediate-Level Activities Army 21 Aviation Intermediate Maintenance (AVIM) companies 31 Direct Support/General Support (DS/GS) companies Navy 15 shore-based Aircraft Intermediate Maintenance Detachments (AIMDs) 12 carrier-based AIMDs 6 Shore Intermediate Maintenance Activities (SIMAs) 2 Trident Refit Facilities (TRFs) Air Force 65 aviation maintenance groups Marine Corps 12 Marine Aviation Logistics Squadrons (MALS) 11 Amphibious assault ship-based AIMDs 3 Force Service Support Groups 4

5. Organic–Commercial Distribution of DoD Depot Maintenance ArmyNavyAir Force FY03 $ (in billions) USMC 85% Organic 52% 56% 54% 48% 44% 46% DoD-wide: 54% Organic; 46% Commercial Commercial Organic Source: USD(AT&L) report Distribution of DoD Depot Maintenance Workloads: Fiscal Years 2002 and 2003, February 2004 5

6. Field maintenance key to both DoD and commercial maintenance structures Maintenance structure drivers include... –DoD deployable maintenance capabilities –Equipment differences (e.g., age, complexity, role) –Available commercial infrastructure –Life-cycle status (i.e., position in life cycle) –Business support concept (e.g., run to optimum age and dispose vs. continuous rebuild) Depot (Centralized) vs. Field Level Percentage of Personnel Note: Commercial percentages are estimated based on available data Field MaintenanceDepot Maintenance 0%20%40%60%80%100% Legacy airline Railway Parcel trucking Low cost air carrier DoD maintenance Trucking maintenance 125K 8.7K 15K 13K 681K 40K Approximate Total Number of Maintainers DoD/Commercial Maintenance Structure Comparison 6

7. Sustained Materiel Readiness ISSUE: Concentrate on achieving/sustaining SPG/CPG readiness Balance safety, reliability, and maintenance activities to achieve readiness at best cost. Optimize “TIME-ON-WING” and repair “TURN AROUND TIME” Promote End-to-End (E2E) materiel readiness value chain perspective across DoD Optimize materiel condition reliability sustainment Optimize maintenance cost, cycle time 7

8. Sustained Materiel Readiness WAY AHEAD: Translate SPG/CPG capabilities to weapon system/materiel requirements Develop cause and effect predictive models Foster and promote continuous process improvements –Reliability Condition Based Maintenance (CBM)/Reliability Centered Maintenance (RCM) –Cycle process discipline Lean, Six Sigma, Theory of Constraints, etc Institute integrated budgets (engineering, logistics, industrial) 8

9. Update/execute policy (E2E) Improve System Life Cycle Management Prediction Capabilities Expertise, Tools and T&E Facilities Cause and effect predictive modeling Optimize Materiel Reliability Implement CBM+/RCM Preventive Maintenance Addresses Failure Characteristics Optimize Repair/build specs Optimize Materiel Cycle Time Employ CPI (Lean, 6Sigma, Theory of Constraints) Integrate Depot and Intermediate Level Best Practices and Processes Parts forecasting Integrate Materiel Readiness Budgets Balance Engineering, Logistics, Industrial Accounts VISION - Focus Areas Materiel Readiness E2E Planning and Process(es) Improvement 9

10. INTEGRATED REPAIR/BUILD CYCLE TIME PLAN R&D S&T Design SAFETY STANDARDS Technical PLAN MATERIEL READINESS GOALS ACHIEVED? Building the Optimum Materiel Readiness Sustainment Plan/Budget MAINT/RCM STRATEGY COMMON METRICS PIPELINE SPARES FORECASTING & PROCUREMENT PLAN PROCUREMENT O&M In Svc Eng/Log DEPOT DLR WCF INTEGRATED BUDGET Required Amount of RFI Materiel (installed + uninstalled) READINESS BASED MATERIEL REQUIREMENTS MODEL SPG/CPG INTEGRATED MANAGEMENT PLAN PLANNING FACTORS START “WAR PLAN” MATERIEL TRANSPORTATION DISTRIBUTION PLAN EQUIPMENT RELIABILITY mission-based operational readiness requirement Required Number of RFI Weapons mission-based materiel readiness requirement YES NO Seek to reduce sustainment costs Seek to increase sustainment performance 10

11. Materiel Readiness Responsibilities 11

12. VISION - Focus Areas Materiel Readiness E2E Planning and Process(es) Improvement Update/execute policy (E2E) Improve System Life Cycle Management Prediction Capabilities Expertise, Tools and T&E Facilities Cause and effect predictive modeling Optimize Materiel Reliability Implement CBM+/RCM Preventive Maintenance Addresses Failure Characteristics Optimize Repair/build specs Optimize Materiel Cycle Time Employ CPI (Lean, 6Sigma, Theory of Constraints) Integrate Depot and Intermediate Level Best Practices and Processes Parts forecasting Integrate Materiel Readiness Budgets Balance Engineering, Logistics, Industrial Accounts 12

13. Policy: MR&MP Mission (1) A. A. DoD Materiel Readiness Sustainment Outcomes –Achieve and sustain inherent performance, safety, reliability Invest/employ technologies –Meet readiness and sustainability objectives Minimize total life cycle cost Optimize reliability & cycle time B.B. Condition Based Reliability Centered Processes –Provide materiel design improvement data/needs as necessary –Allocate reliability centered, FMECA-based tasks –Utilize diagnostics and prognostics techniques –Employ serialized item management (SIM) techniques DoDD 4151.18: Maintenance of Military Materiel 13

14. Policy: MR&MP Mission (2) C.C. E2E Materiel Value Chain Agility/Continuous Process Improvement –Employ Lean, Six Sigma, Theory of Constraints –Identify consolidation, partnership, opportunities –Maintain core capabilities D.D. Resources/Operations Information Systems –Scheduling, production control, financial management –Personnel & materiel performance and QA –Integrated budgets DoDD 4151.18: Maintenance of Military Materiel 14

15. Update/execute policy (E2E) Improve System Life Cycle Management Prediction Capabilities Expertise, Tools and T&E Facilities Cause and effect predictive modeling Optimize Materiel Reliability Implement CBM+/RCM Preventive Maintenance Addresses Failure Characteristics Optimize Repair/build specs Optimize Materiel Cycle Time Employ CPI (Lean, 6Sigma, Theory of Constraints) Integrate Depot and Intermediate Level Best Practices and Processes Parts forecasting Integrate Materiel Readiness Budgets Balance Engineering, Logistics, Industrial Accounts VISION - Focus Areas Materiel Readiness E2E Planning and Process(es) Improvement 15

16. Materiel Readiness Modeling Why?: Prescribe policies/procedures and monitor/review/assess materiel readiness E2E Value Chain operations relative to the ability of the Department’s major weapon systems to meet mission requirements. How?: Develop DoD-wide predictive modeling/analyses capability to determine cause and effect relationship to materiel readiness-based outcomes, e.g.,: Reliability improvement initiatives Cycle Time Process improvements for Supply/Maintenance/Transportation/Distribution Alternative resource strategies (short-term/long-term) Determining life-cycle costs from an integrated budget perspective when materiel readiness issues are addressed Status: Assessing current DoD and commercial models Submitted cross-cutting proposal – enhance best of breed model Working with Services to convert status models to predictive models 16

17. Materiel Readiness Integrated Management (E2E) 17

18. VISION - Focus Areas Materiel Readiness E2E Planning and Process(es) Improvement Update/execute policy (E2E) Improve System Life Cycle Management Prediction Capabilities Expertise, Tools and T&E Facilities Cause and effect predictive modeling Optimize Materiel Reliability Implement CBM+/RCM Preventive Maintenance Addresses Failure Characteristics Optimize Repair/build specs Optimize Materiel Cycle Time Employ CPI (Lean, 6Sigma, Theory of Constraints) Integrate Depot and Intermediate Level Best Practices and Processes Parts forecasting Integrate Materiel Readiness Budgets Balance Engineering, Logistics, Industrial Accounts 18

19. Condition-Based Maintenance Plus Why?: To improve reliability centered maintenance effectiveness and efficiency through application of technology initiatives and process improvements Sustain inherent performance, safety, reliability of materiel How?: –Utilize interactive electronic technical manuals, portable maintenance aids and other enabling tools and technologies –Implement diagnostics, sensors and prognostic algorithms and techniques –Employ reliability-centered maintenance concepts and practices –Enable statistical and engineering analysis processes –Develop condition-driven maintenance plans –Integrate maintenance and logistics processes and reporting systems Status?: Completed survey of Service CBM+ Select Programs Establishing the DoD CBM+ baseline CBM+ website on-line and regularly updated OSD/Service CBM+ Advisory Group meets weekly 19

20. No Requirement to Build for Time on Wing Build to Achieve Inherent Reliability OCM Repair Not Only What Is Broken but What Will Likely Fail Before a Defined Time on Wing Repair Only What Is Broken Maintenance Is Unplanned Focus is Planned Maintenance Facilitates Resource Requirements Predications Maintenance Driven by Equipment Conditioner or Lowest $/Shop Visit Maintenance Based on LCC & Value (What's Easiest Today) (What's Best for the Long Term) OCM vs RCM On-condition Maintenance vs Reliability-centered Maintenance RCM 20

21. Engine Life Recovered After Repair RCM = Reliability Centered Maintenance 21

22. Engine Repair/ Time on Wing Tradeoffs $297K/repair $240K/repair $165K/repair $380/ flt hr $700/ flt hr 22

23. Cost Per RFI System Sensitivity Optimal Reliability Invest Reliability Investment 23

24. Update/execute policy (E2E) Improve System Life Cycle Management Prediction Capabilities Expertise, Tools and T&E Facilities Cause and effect predictive modeling Optimize Materiel Reliability Implement CBM+/RCM Preventive Maintenance Addresses Failure Characteristics Optimize Repair/build specs Optimize Materiel Cycle Time Employ CPI (Lean, 6Sigma, Theory of Constraints) Integrate Depot and Intermediate Level Best Practices and Processes Parts forecasting Integrate Materiel Readiness Budgets Balance Engineering, Logistics, Industrial Accounts VISION - Focus Areas Materiel Readiness E2E Planning and Process(es) Improvement 24

25. Continuous Process Improvement Why?: Maximize weapon system readiness while minimizing materiel flows and in-process inventories –Goal – Optimize reliability and cycle time while striking a reasonable balance with costs across the total life cycle value chain How?: Employ: Lean for eliminating all types of waste Six Sigma (6σ ) for minimizing process variation Theory of Constraints (TOC) for alleviating process “bottlenecks CBM+ (Condition Based Maintenance Plus) Status?: DOD CPI Transformation Review initiated DOD CPI Policy in coordination OSD-led CPI Working Group (O-6 level) meets weekly, updates OSD-led GO/SES Group monthly 25

26. AIMD Lemoore Power Plants Shop Engine Repair Cycle Time Apr-04 Oct-02 Apr-03 Oct-03 Oct-01 Apr-02 Focus on Continuous Improvement (Maintenance Cycle Time) 26

27. CCAD Engine Turn Around Time Run Chart Reduction in Mean & Variation Continue In 2004! 27

28. Initial Lean Results Encouraging Employment of techniques fragmented, incomplete – needs policy) 28

29. When Should We Partner? Contractor Support Organic Support CLSORGANIC More OrganicMore Commercial MAJORITY ORGANIC SUPPORT MAJORITY CONTRACT SUPPORT Public/Private Partnering Opportunities MIX GOAL: Leverage Innovative Concepts of the Private and Public Sectors to Support the Warfighter at the Best Value for the Department of Defense and the Taxpayer 29

30. Growth Trend in Public-Private Partnerships Source: DoD reports, Public-Private Partnerships for Depot Maintenance, July 2003 and July 2004 30

31. Benefits Are Being Realized from Depot Maintenance Partnerships 47 Partnerships Have Identified More Than One Type of Benefit 31

32. Update/execute policy (E2E) Improve System Life Cycle Management Prediction Capabilities Expertise, Tools and T&E Facilities Cause and effect predictive modeling Optimize Materiel Reliability Implement CBM+/RCM Preventive Maintenance Addresses Failure Characteristics Optimize Repair/build specs Optimize Materiel Cycle Time Employ CPI (Lean, 6Sigma, Theory of Constraints) Integrate Depot and Intermediate Level Best Practices and Processes Parts forecasting Integrate Materiel Readiness Budgets Balance Engineering, Logistics, Industrial Accounts VISION - Focus Areas Materiel Readiness E2E Planning and Process(es) Improvement 32

33. Improving Materiel Readiness Reliability, Cycle-Time, Cost Drive reliability up to optimum level Drive sustainment cycle time down to optimum level (O&S only) Higher $ Lower $ more less reliability Sustainment cycle-time Life-cycle cost (acquisition + O&S) Cost of Readiness Higher $ R&D/ACQ Only R&D/ACQ/O&S Lowest $ Lower $ Higher $ 33

34. Engine Integrated Recovery Approach 34

35. Update/execute policy (E2E) Improve System Life Cycle Management Prediction Capabilities Expertise, Tools and T&E Facilities Cause and effect predictive modeling Optimize Materiel Reliability Implement CBM+/RCM Preventive Maintenance Addresses Failure Characteristics Optimize Repair/build specs Optimize Materiel Cycle Time Employ CPI (Lean, 6Sigma, Theory of Constraints) Integrate Depot and Intermediate Level Best Practices and Processes Parts forecasting Integrate Materiel Readiness Budgets Balance Engineering, Logistics, Industrial Accounts VISION - Focus Areas Materiel Readiness E2E Planning and Process(es) Improvement 35

36. Responsibility Warfighter Combat Capability Ensure a ready and controlled source capable of providing combat ready weapon systems anytime and anywhere efficiently and effectively. Program Manager Private Sector Government Team (Engr, Log, Ind) Partnering 36

37. 2004 Maintenance Award Winners Awarded to the Most Outstanding Field-Level Units in the DoD Marine Heavy Helicopter Squadron 462 Marine Corps Air Station Miramar, California, USMC 509 th Munitions Squadron Whiteman Air Force Base, Missouri, USAF 3 rd Military Intelligence Battalion (Aerial Exploitation) Camp Humphreys, Republic of Korea, USA Combat Service Support Battalion 10 Marine Corps Air Ground Combat Center, Twentynine Palms, California, USMC USS ABRAHAM LINCOLN (CVN 72) Naval Station Everett, Washington, USN 27 th Maintenance Group Cannon Air Force Base, New Mexico, USAF 37

38. Sustaining Weapon System Readiness through Reliability, Cycle Time, and Continuous Process Improvements Management OperationsTechnology Special Events Prognostics/Diagnostics Integrated Information Common Logistics Operating Environment UID/Serialized Item Management Senior Logisticians’ Roundtable SecDef Maintenance Awards Industry Tours Over 180 Exhibits Transformation Initiatives Maintenance-centric Readiness Roadmap Public/private-sector Integration Materiel Readiness Modeling... Lean, Theory of Constraints, Six Sigma in Maintenance Cycle Time Optimization Responsive Logistics Support Reliability-centered Maintenance More info: Chuck Field, (703) 697-9067 chuck.field@osd.mil or www.sae.org/dod chuck.field@osd.mil 2005 DoD Maintenance Symposium & Exhibition Birmingham, Alabama Lessons learned Knowledge sharing Training opportunities