AAFA DSCP Update
PRESENTED BY Dennis Dudek
Director of Supplier Operations
CLOTHING & TEXTILES
March 2006
I MEF Protection Initiatives
Why We Are Here …
Why We Need Your Support …
Agenda
• The Year in Review
• Support to the Warfighter
• BSM Update
• Dollars and Sense
• Issues
FY 02 Sales/Services: $ 7.8B FY 03 Sales/Services: $10.4B FY 04 Sales/Services: $11.5B FY 05 Sales/Services: $12.7B FY 06 Projection: $12.3B
• C&T $2.5B• Medical $3.6B• Subsistence $3.9B• Construction & Equip. $2.7B
FY 02 Sales/Services: $21.5B FY 03 Sales/Services: $25B FY 04 Sales/Services: $28B FY 05 Sales/Services: $31.3B FY 06 Projection: $34.3B
• Land/Maritime/Missiles: $ 3.3B• Aviation: $ 3.6B• Troop Support: $12.9B• Energy $11.0B• Distribution: $ 2.5B • Other: $ 1.0B
Scope of Business• #50 Fortune 500 – Above Intel• 5.2 Million NSNs • 1411 Weapon Systems Supported• 48 States / 28 Countries• 26 Distribution Depots
Scope of Business
• #172 Fortune 500 – 2 Above Nike• 2.7 Million NSNs / LSNs • 1200 Weapon Systems Supported• 14 States / 11 Countries• 22 Distribution Depots with DSCP Stock
DLA (20,804 Civilians / 1267 Military) DSCP (2706 Civilians / 71 Military)
The DLA / DSCP Enterprise
FY05$12.7B
DSCP - 4 Supply Chains
Food Service Produce Operational Rations
Recruit Clothing Readiness Organizational Clothing & Individual Equipment
Pharmaceutical Medical/Surgical Readiness Equipment
Facilities Maintenance Equipment Wood Products Safety & Rescue Equipment
CONSTRUCTION & EQUIPMENT CLASS IV / VII
MEDICAL CLASS VIII
CLOTHING & TEXTILE CLASS II
$2.54B$3.86B
$2.71B$3.60B
SUBSISTENCE CLASS I
Sales by FY
00 $5.5B
01 $6.3B
02 $7.8B
03 $10.4B
04 $11.5B
05 $12.7B
SALES:
FY 01 - $1.2BFY 02 - $1.5BFY 03 - $2.1BFY 04 - $2.6BFY 05 - $2.5BFY06 - $944M to date
INVENTORY:
FY 01 - $1.2BFY 02 - $1.1BFY 03 - $1.0BFY 04 - $1.4BFY 05 - $1.4BFY05 - $1.5B
PEOPLE:
Customers – 14,000
Vendors – 220
Employees – 295
MAGNITUDE:3,600,000 orders per year-31,000 different items-$2B spent each year- [ FY06 $1,049,000,000]
FY05 – The C&T Big Picture
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
C&T 17.4% 16.9% 17.0% 12.1% 9.0% 9.0% 9.0%
FY00 FY01 FY02 FY03 FY04 FY05 FY 06
C&TC&TCost Recovery RatesCost Recovery Rates
FY96 - FY06FY96 - FY06
$50
$100
$150
$200
$250
$300
$350
$400$450$500$550$600$650$700$750$800$850$900
Net Demands @ Cost 189. 194. 110. 153. 184. 212. 105. 125. 94.7 122. 176. 292. 146. 61 101 204 105
Net Sales @ Cost 174. 203. 164. 172. 144. 210. 159. 176. 176. 181. 207. 250. 137 113 128 223 133
Backorders @ Cost 846. 837. 783. 764. 805. 807. 752. 701. 620. 560. 529. 571. 582 529 503 484 457
Oct-04
Nov-04
Dec-04
Jan-05
Feb-05
Mar-05
Apr-05
May-05
Jun-05
Jul-05
Aug-05
Sep-05
Oct-05
Nov-05
Dec-05
Jan-06
Feb-06
C&T – FY05/06 Budget C&T – FY05/06 Budget ExecutionExecution
C&T – FY05/06 Budget C&T – FY05/06 Budget ExecutionExecution
Backorders @ Cost (9/30/04)… $831.8M
Month Only
Cumulative Balance
End of FY05Net Demands @ Cost.… $1,962.1M Net Sales @ Cost……… $2,222.1MBackorders @ Cost……… $571.7M
C&T sold off some of their backorders Demands $213M less in first five months of FY06
BackordersDemands/Sales
Supply Chain Management (SCM)Support to the Warfighter
“The only thing harder than getting a new idea into the military mind is to get an old one out.”
Source: B.H. Liddell Hart, Marine Corps Gazette, January 2003
Logistics Challenge OEF / OIF
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
O03
N D J F M A M J J A S O N D J04
F M A M J J78.0%
80.0%
82.0%
84.0%
86.0%
88.0%
90.0%
92.0%
94.0%
96.0%
Demands Supply Availability
Demand is Erratic
Average Monthly DemandItem Prior to OEF FY 04 FY 05
Boots Hot Weather Desert 5,000 82,600 36,674
Coat/Trousers Desert 17,250 160,000 125,335
Boots Intermediate Cold Wet 9,392 24,000 7,648
Hat Camouflage Desert 7,000 90,000 19,253
Clothing & TextilesThe BIG Picture
PGC Net Sales Item1 02780 $92.0M Insert, Small Arms Protective2 02637 $46.4M Parka, ECWCS, Desert3 02934 $43.9M Body Armor, Outer4 21266 $32.5M Modular Sleep System5 01973 $19.7M Helmet, Ground Troop6 02671 $18.8M Trousers, Cold Weather7 02147 $15.4M Boots, Hot Weather8 02665 $14.5M Shirt, Cold Weather9 20187 $ 6.9M Tent, Personnel, Ext Mod
10 02926 $11.9M Boots, Combat
OEF / OIF Top Sales Items
• Currently Working– ‘Chocolate Chip’ Desert Uniform
• Initial Requirement: 280K sets Coats/Trousers• 255K set delivered
– 50 other items• Boots, Helmets, Cold Weather Items,
Tents, Gloves, Duffel Bags, Berets, ECWCSBerets
Delivered 255K ($2.4M)Flash removal – 25K/month
Winter Aviator Gloves
164K order; RFI Item; Delivered 4K ($153K)
Delivered 80K Trousers, 88K Parkas
($21.8M of ECWCS)
Delivered 242K ($16.8M)
Boots, HW & Combat
Totals to date:$175M ordered / $95M filled
Delivered38K ($1.3M)
Poncho Liners
Delivered 47K ($2.2M)Ponchos
" I wanted to thank you for DLA’s assistance in helping advance the ball so substantially. DLA has been a key element in what we’ve been able to accomplish, and the progress in recent months had been particularly noteworthy. Purchasing stocks through DLA channels has consistently provided us with high quality items that are delivered on time and to the desired location. " - LTG David Petraeus, April 22, 2005. . . Email to VADM Lippert, Director, DLA
Support to MNSTC-I
Army Direct Ordering (ADO)Web-Based Logistics
• DSCP solution:
• Use an existing web-based program which currently supports 631,000 Guard/Reservists
Serves 360K Army National Guardsmen
ANG saving $10M / year
•Test Case: 7 Units deployed in Iraq
– Ran from Jun-Oct 2004
– Very Successful – all orders filled complete
• 311 orders worth $36K
• Expansion on-going
– Afghanistan (16K soldiers), Horn of Africa(100 soldiers) & Iraq (90K soldiers);
–872 units ordering, 57,000 Orders shipped
–Overall totals: 395,000 items / $6.0M
• Next Step
– Possible expansion to support OCIE Concept
Boots, Caps, Hats, Cold Weather Coats,BDU Coats / Trousers, Helmet Covers, and more…
1. Deployed Soldier Needs
Item
3. Places OrderVia Army
KnowledgeOn-Line
2. AccessesInternet
4. Order ReceivedStateside at DSCP site(KyLOC)
5. Items Picked;Patches / Insignia
Sewn on
6. Order ShipsVia US
Postal SystemTo Individual
Soldier
CSA authorized a test of Internet ordering capability
WINNER OF 2005
SUPPLY CHAIN
EXCELLENCE
OSD AWARD
(announced Feb 06)
Army Recruit Cell
Navy Recruit Cell
USMC Recruit Cell
AF Recruit Cell
USCG Recruit Cell
Army CIF Cell
USMC, Navy, USCG OCIE Cell
Recruit Customer Facing Division
Clothing Sales Stores Cell
National Guard & Reserves Cell
AF IEE Cell
Dress Clothing IPT
Field Clothing IPT
Organizational Clothing IPT
Individual Equipment IPT
Clothing & Textiles Customer Operations DirectorateDirector Paul C. Diamonti, Mil 0-6
Deputy Director Gary Shute
OCIE Customer Facing Division
Other Customer Facing Division
Other C&T Customers Cell
Operating Forces Support Team
Other & FMS Support Team
Installation Support Team
Item Planning Division
Customer Support DivisionSee DSCP Customer
Operations Directorate
Clothing & TextilesCustomer Operations
Gloves/Wet Weather ISTKevin Peoples
Dress Uniforms ISTSuzanne Kershaw
Outerwear ISTBob Spadaro
Dress Shirts/HeadweaCherly Reynoldsr
Footwear ISTTom Hutchinson
Battledress ISTSusanne McHale
Accessories ISTHarry Veneri
Chemical ISTMarie Brywka Chemical IST
Marie Brywka
Organizational Clothing Division
Donna Pointkouski
ECWCS ISTFlorence Robinson
Individual Equipment Division
Terri ScheetzSafety IST
Dave Johns
Individual Equipment ISTMark Twardziak
Tentage & Shelters ISTLouAnn Graham
Heraldics ISTTom Zassick
Product Services Branch
Product Services Branch
Non-NSN IST
Coverall/Special Purpose ISTCindy Small
Dress Clothing DivisionBill McClellahan
Field Clothing DivisionBob Panichelle
Supplier Support Div
SMSGClothing & Textiles Supplier Operations DirectorateDirector Dennis Dudek
Deputy Director Sally DiDonato
Clothing & TextilesSupplier Operations
Product Services BranchProduct Services Branch
Release 1.1 – Battledress Uniform Went live: 1 December 03
Release 2.1.1 Flags & Insignia Went live: 1 Jan 05
Release 2.1.2 Chemical Suits Went live: 1 Apr 05
Release 2.1.3 Tents Went live: 1 Jul 05
Release 2.1.4 Accessories Went Live: Nov 05
Release 2.1.5 Org Clothing Went Live Mar 06
Business System ModernizationBSM
What’s Left?
Jun 06 – Dress ClothingAug 06 - Footwear
Dollars, and Sense…
Recruit Clothing PlanKey Drivers $M
Projected
Totals
BattleDress $494.7
Footwear $141.6
PT/PFU/Accessories $73.7
Cloth $6.8
Dress Outerwear $29.7
Dress Uniform $34.9
Total $781.4
Individual Equipment and Clothing PlanKey Drivers $M
Projected Totals
Safety $44.4
Individual Equipment $291.9
Tentage $142.5
Helmets $51.8
ECWCS $27.4
Gloves $33.7
Special Purpose $68.5
Chemical $386.7
Wet Weather $18.4
Total $1065.3
ACU Award Breakout
NISH
UNICOR$39.7M
Large Business
Small Business
MandatorySources
$15.9M
NIB
$92.7M
$37.1M
$140.0M
$88.8M
Large Business = 5 FirmsSmall Business = 11 Firms NISH = 1 Workshop NIB = 7 Workshops UNICOR = 5 Plants
HubZone
WmnOwned
SBD
OtherSmall
43.6%
Total BaseYear
$321.5M
7.5%
9.1%
27.6%
28.8%
4.9%
11.6%12.3%
4.4%6.6%
Joint Meetings of Industry and DSCP
Contract Length – Will maintain long-term contracts – will stress advanced notice and timely placement of orders
Solicitation Improvements – Will track buy times in FY06 and address specific industry concerns from a supply chain perspective (new mgmt position)
Min / Max – Will use correct base figure to calculate and will be more flexible depending on sub-industry particulars – not a ‘one shoe fits all’ approach – will also be able to adjust production lead-times based on material
Information Sharing – Will provide current vendors with a 12 month window at the beginning of the fiscal year (Oct) and a 6 month window at mid year (Apr) - based on demand figures – Advance notice the key, even for bad news
Technology Issues – Will continue to inform on latest changes – RFID, VIM-ASAP, BSM, etc.
ADDRESSING THE FIVE MAJOR AREAS:
The Forecast• Comprehensive review of items
– Every 6 months (start and mid-point of fiscal year)– Reviews past data / customer input– Establishes future projected demand– Prepares projected contract delivery schedules– Passed on to vendor community
• Reviewed on a monthly basis– Compares actuals vs. projected
• Demand / Delivery / Stock Levels / Sales– Makes adjustments based on the numbers
• Projected deliveries are just that – projections– Our ‘Best Guess’ based on all of the data– As much customer input as we can obtain
• Depends on:– Demand occurring as projected– Inventory hitting goals– Customer item changes (e.g., Army Combat Boot or ECWCS)
• Projected Delivery Schedules:– OCT: Beginning of our fiscal year (12 month look)– APR: Mid Fiscal Year (6 month look)
• Notices going out soon – with all necessary caveats
• DSCP is a Large User of JWOD Program– NIB and NISH production facilities– Always with the intent to broaden base of a product line– Demonstrated by use of the Pie Chart (next slide)
• Dollars may go up and down, % should remain relatively constant• One Exception was the JSLIST program
– Now undergoing review
– The Committee holds ultimate responsibility for Regulation Compliance
• Procedures now being analyzed• DSCP has asked for a re-check of certifications
– BOTTOM LINE: • DSCP will continue to use JWOD• Tighter controls will be needed
JWOD Program
Share of Business
Small Business
Large Business
NIB
NISH
MandatorySources
UNICOR
$1130.3M
$213.3M
$665.4M
$464.0M
$128.4M
$73.0M
Final FY05
Chem SuitsAccount for
$264M
• DSCP is bound by the Berry Amendment– Had always been very stringent
• As decided in Oct 05, the component needed to be of a general textile nature to be included
– Allowed some relief for some items contributing to making end item
– New Requirement (as backed by the AAFA)• Jan 06 – Section 833 of Authorization Act
– Revised Berry to all materials and components– Much more definitive in what is covered
• Feb 06 – Implementing guidance received– Vendors must confirm Berry compliance prior to orders
• Will immediately affect many recently acceptable product lines– Examples: Steel Toes for Shoes/Boots; Gloves; Sneakers
– Will need to pursue Relief– All of these will now require a DNAD exception
» Basically a waiver request signed by an Under Secretary of Defense– Will require synopsis for “Sources Sought’ to prove need– May require investigation of positive responses– Will require the Services to provide written statement of need– ‘Assume’ this will not be a short timeline process
– DSCP is pursing a 180 day window of exemption to allow sufficient time to evaluate the situation
Berry Amendment
• Army Utility Uniform– The ACU is still being rolled-out– Demand much less than anticipated
• Army Dress Uniform– Changes still being developed– Timeline
• Air Force Utility Uniform– The ABU is being readied for initial roll-out– Timeline
• Navy Task Force Uniform– Developing the Roll Out Schedule– Timeline
Major Uniform Changes
• Unite Now– DLA was contacted to respond to allegations of ‘sweatshops’
prior to a scheduled news conference (Declined)• Always with a threat of involving Congress
– We do investigate any specific allegations (never verified)– Informational
• TENTNET– A new development for the tentage product line– Joint effort of Govt / Industry / Academia
• VIM-ASAP– Need to continue to use – improves payment– BSM rqmts on ship dates may be forthcoming
Other Issues
Focus on getting the Warfighter what they need, when they need it, wherever they need it
BOTTOM LINE
• DSCP Will Strive To Make Improvements As Noted– However, we are bound by regulatory
limitations
• Need the Help / Understanding of Industry
• Working Together to Improve the System