Pipeline Measurement Process Review Committee

1

Pipeline Measurement Process Review Committee

Kickoff Session

Paul BlackwellOffice of the Deputy Assistant Secretary of Defense for Supply Chain

Integration2 August 2011

2

Supply Chain Metrics GroupSupply Chain Metrics Group

•Purpose of this Group: To monitor the efficiency and effectiveness of supply chain management through evaluation of the performance and cost of supply chain management operations.

• Membership:•Chair: Office of the Deputy Assistant Secretary of Defense, Supply Chain Integration•Each Military Service and the Defense Logistics Agency • United States Transportation Command• Joint Staff (JS) J4•Other OSD and JS representatives as required

•Specific Tasks:• Evaluate and monitor the performance of the DoD supply chain • Recommend enhancements to the DoD-wide supply chain metrics to monitor the inherent reliability, effectiveness, and the costs• Resolve and formulate multi-Component problems through direct coordination among members• Recommend policy changes to the DUSD(L&MR), as necessary• Address supply chain metrics performance issues to the Supply Chain Executive Steering Committee

•Relationship to the Pipeline Measurement Process Review Committee:•Identifies and obtains measures to enhance performance monitoring•Describes the intent of new measures to be enabled with transactions to be developed by the PRC• Serves as an evaluator of the data used in the measurement of supply performance and related reports

3

Comprehensive Supply Chain Comprehensive Supply Chain Metrics PlanMetrics Plan

Defining Enterprise Metrics: Criteria and MetricsDefining Enterprise Metrics: Criteria and Metrics

4

What are the strategic objectives for supply chain materiel management?What are the strategic objectives for supply chain materiel management?

5

Enterprise metrics under strategic objectivesEnterprise metrics under strategic objectives

Strategic Objectives Enterprise MetricsAccurately forecast customer materiel needs Demand forecast accuracy

Work with suppliers to ensure timely acquisition of materiel

Procurement lead time

Repair cycle time

Retrograde time

Effectively and efficiently manage materiel Customer wait time

Perfect order fulfillment

Fill rate

Tiered inventory turn

Excess on-hand inventory

Excess on-order

Denial rates

In-transit visibility

Sustain weapon system materiel readiness Not mission capable rates

NMC backorders

Control costs Value of inventory

Materiel acquisition prices

Total supply chain costs

6

Do they reinforce the desired behavior?Do they reinforce the desired behavior?

Abbreviated strategic objective

Desired behavior Metric(s) - How it supports desired behavior

Forecasting demand

Work towards more accurate forecasts to drive less excess stock and better supply support

Forecast Accuracy - Provides a baseline for improvement and focuses management attention on more accurate forecasts

Acquiring materiel

Work towards shorter cycle times to reduce inventory and provide a more agile supply system.

Procurement lead time, repair cycle time, and retrograde time - Provide baselines for improving cycle times for three major sources of resupply and focus management attention on reducing those times.

Managing materiel

Work towards right-sizing and improving the productivity of DoD inventories while maintaining high levels of customer satisfaction.

Customer wait time - Measures responsiveness of the DoD supply chain to its customers and focuses management attention on timely customer support.Perfect order fulfillment - Measures how well wholesale suppliers are responding to customers and focuses attention on timeliness and quality.Fill rate - Measures customer satisfaction for wholesale inventories and serves as a gauge for efforts to improve inventory productivity.Tiered inventory turn - Provides a sizing of inventory relative to customer demand and serves as a measure of success in reducing inventory levels.Excess on-hand inventory and excess on-order - Measures how much of inventory on-hand and on-order is not needed.Denial rates – Is an indicator of the effectiveness of distribution depots in supporting customer satisfaction with inventory they store.In-transit asset visibility – Is an indicator of how effective the supply chain is keeping customers informed on status of their orders.

7

Do they reinforce the desired behavior?Do they reinforce the desired behavior?

Abbreviated strategic objective

Desired behavior Metric(s) - How it supports desired behavior

Sustaining readiness

Work to ensure that the DoD supply chain continuously supports the needs of operating forces.

Not mission capable rates - Indicators of how the DoD supply chain is accomplishing its primary mission of supporting the operating forces.NMC backorders – Measures the responsiveness of the DoD supply chain in satisfying shortfalls in materials needed to sustain operations.

Controlling costs

Work to reduce materiel, operations and management costs while not adversely affecting performance.

Value of inventory – Measures the DoD investment in inventory.Materiel acquisition prices – An indicator of how the prices that the supply system is paying for inventory is changing relative to expected price changes.Total supply chain management costs – Measures how much it is costing the Department to perform its supply chain mission.

8

QuestionsQuestions

On-Hand Excess

Inventory

On-Order Excess

Tiered Inventory

Turn

Denial Rates

In-Transit Asset

Visibility

Fill Rate

Procurement Lead Time

Repair Cycle Time

Retrograde Time

Forecast Accuracy

Materiel Acquisition

Prices

Value of Inventory

Total Supply Chain Cost

NMC Rates

Backorders Downing Systems

Forecasting Demand

Acquiring Material

Managing Material

Sustaining Readiness

Controlling Cost

POF

CWT