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Defense Supply Center Philadelphia

Clothing & Textiles Supply Chain

AAFA Mar 2007

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Background

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Provide Dress/Field Uniforms, Field Gear and Personal Chemical Protective Items to

the Armed Forces in Peace and War

Clothing & Textiles Supply Chain Mission

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The Big Picture

Customers / ItemsCustomers: 14,000 Orders: 3,600,000 / year Items: 31,000

SalesFY 01 - $1.0BFY 02 - $1.3BFY 03 - $1.7BFY 04 - $2.2BFY 05 - $2.2BFY 06 - $1.9B

ObligationsFY 01 - $1.1BFY 02 - $1.6BFY 03 - $2.8BFY 04 - $2.0BFY 05 - $2.0BFY 06 - $1.6B

PersonnelEmployees: 302 civilian

+ 8 Military + 2 Europe

+ 50 internsSuppliers: 858

Clothing & Textiles Supply Chain

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C&T Business

Complexities

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Customer Requirements

Sales %

• Type I 65%– 18K to 50K of individual orders daily

• 18K Shirts can equal 10K requisitions– Demand based

• Type II 25%– Larger single customer orders

• 100K Helmets for RFI (phased delivery)• 400K ACUs for National Guard (phased delivery)• 50K BDUs for MNSTC-I (unforecasted; ASAP)

– Customer Collaboration – phased delivery or ASAP

• Type III 10%– New Item Introduction

• ACU / ABU / Task Force Uniform– Customer Collaboration

Difficulty:Sizes

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From Requirements… to … Vendors

• Requirements– Customer Input

• TRADOC with CIIP inductions• PMs with troop support

– Demand … Past / Anticipated• Trend analysis / seasonality

– Demand Planner Info• Major customer, eg, NTC Great Lakes

• Vendors Expenditures– Annual forecast for existing contracts– Mid-year forecast update– Monthly item execution reviews

• Demand / Inventory / Sales / Deliveries / Obligations– Still causes production fluctuations

Know whereevery dollar

is spent!

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Inventory Growth

• Customers changing items based on OIF needs– ‘Desert Storm’ Boot proved too soft for rocky Afghanistan terrain

– Body Armor has technology infusion every 18 months

– ACUs need FR capabilities

• More expensive items– ACU / Modular Sleep System / MOLLE / T-Shirts

• Forecasted Demands Overstated– ACUs / Desert Boots / ECWCS

Pre-War 1.2 Turns

In-War 1.2 TurnsBut Still …

… However,

Affects new $$

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C&T Business

The Lean Process – Improving Acquisition

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Air Force Lean Event

• DLA and AAFES are currently participating with the Air Force in a Lean Six

Sigma Event for uniform introduction.

• Lean is a process of identifying:

– What adds value to the product from a customer’s perspective

– Eliminating whatever is non-value added

• UASF recognized need to streamline process of introduction of new items

• Process: Initial development by the USAF to receipt by the customer

• Four events were considered necessary:

– Development (Air Force) – Completed

– Requirements and Funding (Air Force) - Completed

– Acquisition Process (DLA) - Completed

– Acquisition Process (AAFES) – Completed

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Air Force Lean Event

• Areas found to produce the greatest improvements:

– Increased Thresholds for Acquisition Reviews

– Real-Time Acquisition Review Boards for New Item Introduction

– Eliminate Factors found to have limited effect on award decision

• Reduces preparation and review time

– Electronic submission of proposals with abstract

– Two Step Negotiation Process

• Any changes will be communicated to Industry prior to implementation

• DSCP / AAFES will pursue a future lean event with Industry to discuss

production leadtimes, strategic distribution, incentives, etc.

– To be held in conjunction with NAUMD annual meeting in April 07

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C&T Business

Recruit Training Centers - The Challenge and Solution

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• Current Situation:– Emergency buys / Expedited shipments– Size Changes / Weekly Shipments

• Future Strategy:– Establishment of a VVM (Virtual Vendor Manager) expanding

existing functionality under VPV (Virtual Prime Vendor)• Initial Operational Capability – Increased Visibility of Business Flow• Full Operational Capability – Demand Planning at Customer Site

• GOAL: Fill Clothing Bag Items 99% MA– Adjust Safety Levels based upon demand type:

1. Commercial Items – Socks and T-shirts2. Normal Variability – Boots and Pants3. Unusual Variability – All Weather Coats and Shirts (S/S and L/S)

Bottom Line Up Front

Warfighter Support – Stewardship to the Nation – Growth and Development of our People – Leadership

Need to getback to

98% MaterialAvailabilityBy Service

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The Recruit BAG

• Each Service Recruit Bag is different:

MALE GENERIC PER MALE TRAINING SERVICE ITEMS RECRUIT PERIOD (weeks)USA 41 $1271.00 9USAF 38 $1297.00 6USMC 40 $1247.00 13USN 33 $1009.00 8USCG 29 $998.00 9

- The Service BAG is changed at the beginning of every fiscal year- Items are added / deleted / re-priced- Approved by Service Chiefs

- A total of 205,000 recruits were processed in FY06 (169k male, 36k female)

- Requiring 7,790,000 individual items to be issued

8400 NSNs

Warfighter Support – Stewardship to the Nation – Growth and Development of our People – Leadership

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History of Support

• DSCP C&T has a track record of support to RTCs– Performance since 2004 has been consistent (see example below)

– Slip in end of FY06 / Beginning of FY 07 caused great concern

FY 04 MA = 99%

FY 05 MA = 99%

FY 06 MA = 99%(thru Jun)

FY 06 MA = 97.5%(Jul to Sep)

FY 07 MA = 96%(Oct to Dec)

Warfighter Support – Stewardship to the Nation – Growth and Development of our People – Leadership

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1405

573 23

1352

83 14 5

972

127866

1392

596 16

1334

84 13 4ARMY RTC Bag Items

Marine RTC Bag Items

Green – Over 90 Days

Amber – 30 – 90 Days

Red – Under 30 Days

Black – NIS

Number of NSNs (Individual Sized Items)

RTC Bag Items StatusTracking 120 Days Out

Stockage Levels

THE 120 DAY SUSTAINABILITY LOOKRepresents the wholesale

level of the universe of individual items at each Recruit Training Center

for the next 120 days

26 Feb 07

26 Feb 07

26 Feb 07

5 Mar 07

5 Mar 07

5 Mar 07

991

186851USAF RTC Bag Items

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Virtual Prime Vendor (VPV)

• VPV is a logistics management system• In operation since 1998 - excellent track record• Establishing a new VVM Manager at each Recruit Center

• To provide logistical ‘boots on ground’ support

VPV Site

RTC/CIIP

Usechart

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1 MC San Diego2 MC Parris Island3 NTC Great Lakes4 Lackland AFB5 Ft. Jackson6 Ft. Sill7 Ft. Len Wood8 Ft. Knox9 Ft. Benning

1 Lion Vallen – All Army2 Travis NIB – AF& MC3 Peckham NISH – Navy

1

2

3

2

3

4

56

7 8

9

On Time99.2%

Late0.8%Not shipped

On time = No pay!

* Chart Represents 35.5 Months Of Operation

Travis VPV

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C&T Business

Briefing to Congressional Staffers

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• Meeting with Congressional Representatives– Occurred on 12 Feb 07 (9 congressional staffers present)– Purpose:

• To provide background on Clothing & Textile Supply Chain• To provide funding projections for balance of FY 07• To provide update on new programs

– New Uniforms (Army, AF, Navy)– New Troop Support to U.S. troops in Iraq

» Using ADO (Army Direct Ordering)• Meeting was successful

– Meaningful dialogue on many issues • e.g., Fire Retardant requirements in uniforms used in Iraq• e.g., Knock-off uniform sales• e.g., Uniform support to the Iraqi forces

• Bottom Line: Good idea that needs to be done on a regular basis

Meeting with Congressional Staffers

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• DSCP Background• 14,000 customers ordering 3.6M times per year• Spending $1.7B to buy over 31,000 types of items• Doing all of this with only 310 personnel

• Commodity Uniqueness• Sized items

• Army Combat Boot – 133 sizes• Men’s Army Dress Coat – 65 sizes• Airman Battle Uniform – 155 sizes

• Military unique• Most clothing on a specification• Service driven requirements• Simple garments to complex protective clothing

• Mix of Businesses• See chart

What We Told Them

Large Business

UNICOR

NIB

NISH

Small Business

FY 06$$

PIE

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C&T Investment Plan FY 07By Major Grouping

• Expenditure History:– FY 05 = $2.088B– FY 06 = $1.613B– FY 07 = $1.70B

(planned)

• Plan adjustments:

– Based on actual sales

– Customer collaborative forecasts

– New items introductions

ITEM

Group

FY07

Plan

Dress Clothing $165.1M

Field Clothing $492.9M

Individual Equipment

$581.6M

Organizational Clothing

$481.8M

Total $1,721.4M

Adjustments made thru the use of automated demand and supply tools

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C&T Investment Plan FY 07By Minor Grouping

• Dress Uniforms– Shirts & Headwear $29.0M– Outerwear $76.5M– Dress Uniforms $59.9M

• Field Uniforms– Accessories $126.1M– Camo uniforms $239.6M– Footwear $127.2M

• Individual Equipment– Heraldics $9.4M– Equipment Items $305.9M– Safety Items $127.9M– Tentage $138.4M

• Organizational Clothing– Chemical Protective $189.8M– Cold Weather Gear $117.6M– Gloves $69.7M– Special Purpose $104.6M

Adjustments made thru the use of automated demand and supply tools

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New ProgramsAnd

Issues

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Army Fire Retardant Uniforms

• ONS-1 Requirement = Sep 06 – Satisfied by combination of all available FR garments

• Mix of Flight Suits (AF / Navy / Army) and Army Tanker Suits

– Army started development efforts for FR Ground Troops• Tested new fabrics in different types of blends

• ONS-2 Requirement = Feb 07– Originally requested use of A2CU (Army Aircrew Combat Uniform)

• At that time, FR ACU was not yet developed

– Army decision: Since that time a FR ACU was developed• Best solution now would be to include FR ACU in solution set

– DLA decision: Satisfy FR ACU thru existing contracts• Modify several existing contracts to the new FR ACU• These would be quantity neutral – no vendor gets more work• Allows less ACUs to be produced (rebalances inventory)• Creates new market for ACU producer base

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• USMC STATUS: Stable [MCCUU]

– The most stable program (started in 2003)– Currently working on incorporating Permethrin into fabric (bug repellant)

• USA STATUS: Excess stock due to lower than expected demand [ACU]

– Rolled out in 2005 - Sales have been sluggish– 16 commercial contracts awarded based on large anticipated sales – All vendors have had production cuts to slow down inventory growth– Latest action: Vendors received option contracts in late Jan / early Feb– Will allow for production into Jul 07 (6 month window)– New re-compete will better align supply with demand and result in fewer

number of contract awards• Award scheduled for Jul 07 - First delivery will be due Dec 07

– FR ACU will help vendor base with new product line

Issues in New Uniform Introduction

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Issues in New Uniform Introduction

• USAF STATUS: Building stock as per plan [ABU]

– In the process of rolling out in 2007• 4 commercial vendors and NIB / NISH (JWOD)

– Current difficulties in trouser production causing delays• Initial small issues in Jan 07• First deploying troops issued in Feb 07

– AF Leadership sponsoring “Lean Six Sigma’ event to streamline the process• Chaired by 2-star chief of logistics – DSCP participates • Includes a ‘Two-Step’ Procedure to let vendors know their competitive status early

• USN STATUS: Being initiated [NWU]

– Navy Task Force Uniform (TFU) will change the entire uniform • Includes all working and dress uniforms (will result in less total pieces)• Work Uniform (NWU) will be first

– Deliveries start by end of 2007 – issue to begin spring 2008

• Dress uniforms will follow (fabric being bought now)

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Clothing & Textiles Supply ChainADO

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

35,000,000

Jun-05

Jul-05

Aug-05

Sep-05

Oct-05

Nov-05

Dec-05

Jan-06

Feb-06

Mar-06

Apr-06

May-06

Jun-06

Jul-06

Aug-06

Sep-06

1650 units

$45MTo date

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Conclusion