DoD Supply Chain Integration

Performance Metrics using RFID

April 8, 2008

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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

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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)

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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

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RFID Middle-

ware

Distribution Depot

RFID Middle-

ware

RFID Middle-

ware

Retail Logistics

System

Retail Facility

Logistics System

Logistics System

The new RFID data point provides additional insight within the response time segments

Storage Depot Time Transportation / Theater Time

ArrivalReceipt

TransactionDeparture

Shipment Transaction

DepartureShipment

Transaction

Trans-shipment Point

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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

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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

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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%.

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No ITV5%

Passive RFID44%

Active RFID24%

FedEx27%

Sep-Nov 2007 requisitions reviewed in Jan 08. Metrics are based on a statistical sample - 95% confidence with a variation of ±6.5%.

No ITV3%

Passive RFID74%

Active RFID13%

FedEx10%

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

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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

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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

DDJCOriginal 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

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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.

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Trans-shipment PointDistribution Depot Retail Facility

Storage Depot Time Transportation / Theater Time

ArrivalReceipt

TransactionDeparture

Shipment Transaction

DepartureShipment

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

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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