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An outline of The Defense Logistics Agency

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  1. An overview ofThe Defense Logistics Agency DoD’s ONLY Logistics Combat Support Agency . . . Supporting the Military Services & Combatant Commanders for Over 40 Years Current as of 26 March 07

  2. The DLA Enterprise Scope of Business FY02 Sales/Services: $21.5B FY03 Sales/Services: $25B FY04 Sales/Services: $28B FY05 Sales/Services: $31.8B FY06 Sales/Services: $35.5B FY07 Projected: $34.6B • 54,000 Requisitions/Day • 8,200 Contracts/Day • #58 Fortune 500 – Above Sprint Nextel • #3 in Top 50 Distribution Warehouses • 26 Distribution Depots • 5.2 Million Items – eight supply chains • 25M Annual Receipts and Issues • 1411 Weapon Systems Supported • 134M Barrels Fuel Sold • $14.6B Annual Reutilizations/Disposals • Land/Maritime: $3.4B • Aviation: $3.4B • Troop Support: $12.7B • Energy: $12.5B • Distribution: $1.5B • Other: $1.1B • ~95% of Services’ repair parts • 100% of Services’ subsistence,fuels, medical, clothing & textile, construction & barrier materiel People • 20,805 Civilians • 519 Active Duty Military • 754 Reserve Military • Located in 48 States/28 Countries Foreign Military Sales • Sales: $1.02B • Shipments: 520K • Supporting 126 Nations

  3. Agency Priorities • Warfighter Support • Stewardship to the Nation • Growth and Development of our People • Leadership

  4. Director Vice Director Defense Reutilization & Marketing Service DES Enterprise Support J-8 Financial Ops J-1 Human Resources J-7 Acquisition Management J-6 Information Ops J-5 Enterprise Transformation Defense Supply Center Columbus Defense Supply Center Philadelphia Defense Supply Center Richmond J-9 Reserve Forces J-3/4 Logistics Ops& Readiness Defense Distribution Center DLA Pacific DLA Europe DLA Central Def Logistics Info Service Defense Logistics Agency Senior Enlisted Advisor Defense Energy Support Center COMMANDERS & DIRECTORS CORPORATE STAFF Special Staff SERVICE ACTIVITIES Document Automation & ProductionService Defense National Stockpile 20 Feb ‘07

  5. Business UnitsDefense Supply Center Columbus Land/Maritime Supply Chains • LAND • - Wheeled Vehicles • - Tracked Vehicles • - Diesel Engines • - Transmissions • Vehicle Chassis • Batteries • Nuts and Bolts • Springs • Brackets, Hinges Customers Major Commands Maintenance Activities International Customers Suppliers OEM Competitive Sources • MARITIME • - Steam Turbines • - Valves & Pumps • - Engine Fuel Systems • Compressors - Fiber Optics • Gyro Components • Bearings • Gaskets, O-rings, Seals • Knobs, Dials, Pointers

  6. MAPS - Maps - Charts - Graphs For all DoD Activities • AVIATION • - Engine Components • - Air Frames • Landing Gear • Flight Safety Equip • Propeller Systems INDUSTRIAL - Lathes - Milling Machines - Heavy Industrial Machinery • ENVIRONMENTAL • - Re-refined Oil • Ozone Depleting • Substances • - Hazardous Minimization Program Business UnitsDefense Supply Center Richmond Aviation Supply Chain Customers Major Commands Maintenance Activities International Customers Suppliers OEM Competitive Sources Other Supply Chains

  7. Business UnitsDefense Supply Center Philadelphia Troop Support Lead Center CLOTHING & TEXTILES - Combat uniforms/tents - Body armor/field equipment - Individual chem/bio protective suit - All Service uniforms SUBSISTENCE -Operational Rations (incl. Meal, Ready-to-Eat and Unitized Group Rations) - Food Service & Field Feeding Equipment - Dining Facility Support - Fresh Fruits & Vegetables Customers Major Commands Maintenance Activities International Customers Suppliers OEM Competitive Sources • CONSTRUCTION & EQUIPMENT • -Facilities Maintenance • Equipment • (HEPP, Diving, Safety & Rescue, MHE) • -Fire & Emergency Services • -Wood Products • Metals • Barrier Material • MEDICAL • - Diagnostic Imaging Equip • - MRI Equipment • - Surgical & Dental Supplies • - Pharmaceuticals • Optical Products • Laboratory Items

  8. BULK FUELS - Jet Fuel - Ship Propulsion - Diesel, Gasoline - Missile Fuel Business UnitsDefense Energy Support Center Energy Lead Center • INSTALLATIONS • - Natural Gas • - Coal • Electricity • Utility Privatization Customers Major Commands Base, Camps, Stations Suppliers Major Oil Companies Sub-Contracts • FACILITIES • - Bulk Fuel Storage • - Environmental • - Optimization • Maintenance, Repair • International Agreements DIRECT DELIVERY - Vehicle Fuel - Heating Oil - Commercial Airport Fuel

  9. Business UnitsDefense Distribution Center Distribution Lead Center • WAREHOUSING • 55M Sq Ft Covered • 23M Sq Ft Open • Unique Storage Capabilities • Hazardous • Freeze and Chill • Ozone Depletion • Stock Positioning Mgt • Forward Stock Programs • Targeted Mission Support • DISTRIBUTION • - 26 Depots (7 OCONUS) • 3.7M NSNs • $94.1B Inventory • 9 Map Support Offices • Container Consolidation • 22.7 M Receipts/Issues (FY06) • Deployable Distribution Center • Capability Service Providers SDDC AMC MSC A-76 Commercial Providers Commercial Transportation Providers Customers Military Services Inventory Control Points • TAILORED LOGISTICS • SUPPORT • Total Package Fielding • Kitting • Deployable Medical Systems • Rigging • Combat Configured Loads • In-Transit Visibility • Time Definite Delivery • Theater Consolidation and • Shipping Points (Kuwait and • Germany) • TRANSPORTATION MANAGEMENT • 8M Shipments Annually • 1.4B Pounds Shipped Annually • 82 CONUS Dedicated Truck • Lanes • 34 OCONUS Dedicated Truck • Lanes • 1,063 Vendors with DSS-VM • 600K DPMS Vendor Shipments • (FY06)

  10. Business UnitsDefense Reutilization and Marketing Service Reuse, Recycling and Disposal Lead Center At-A-Glance (FY06) 49,392 Turn-In Customers Served $ 24.7B Usable Turned-In (Acq Val) $ 2.3B R/T/D (Acq Val) $318.4M Total Revenue Organizational Structure 101 Offices Worldwide (19 Countries/37 States) 1483 Authorized Personnel (Includes Local Nationals) 11 Military 200 Reserve DRT Members 57 EE Positions Qualified $296.7M Operating Costs Customers Military Services DLA Inventory Control Points Federal / Public Agencies Service Providers Commercial Providers Government Liquidity R2010/ISP Services Reutilization Transfer Donation Demilitarization Environmental Disposal/Reuse Humanitarian Assistance Foreign Military Sales/Grant-in-Aid Disaster Relief Exchange/Sale Precious Metal Recovery Contingency Operations Operation Enduring Freedom Dec 01 – Present 7 Mil/Civ Deployed Operation Iraqi Freedom Sept 02 – Present 47 Mil/Civ Deployed

  11. Service Activities Document Automation & Production Service 175 Locations in 8 Countries 1000 Gov’t & Contract Personnel $413M Annual Sales (FY06 Plan) Services: Document Production Document Imaging/Conversion and Electronic Document Management Equipment Management Solutions Defense National Stockpile Center 20 Sites 144 Personnel $5.9 B Sales Since FY 93 $1.5 B Inventory Manages 42 Internationally Traded Commodities Defense Logistics Information Service One Site 1,389 Gov’t (80%) & Contractor (20%) Personnel $164 M Budget Services: DOD/Federal/NATO/International Cataloging J6B IT Support (Technology, WEB, Software) for DLIS/DRMS Key Initiatives/Programs: FLIS, MEDALS, FEDLOG, DOD EMALL, DLA Map Catalog, AV, LINK, DESX, CCR/BPNse, HMIRS, ERLS, ERP Support, Customer Contact Center, Data Quality, UDR/Medical, UID Registry, eWorkplace… Defense Automatic Addressing Systems Center (DAASC) 2 Locations 180 Gov’t & Contract Personnel $33M Budget Services: Editing/Routing of DoD Logistics Transactions Enforcement of DoD Business Rules Network Interoperability DoD Supply Chain Metrics eBusiness Services

  12. Service Activities • Defense Logistics Agency - Europe • 12 Offices • 38 Personnel • Liaison/planner at EUCOM • Planners at USAFE, USAREUR and NAVEUR • Customer reps at 10 sites – Germany, UK, • Italy • Area rep for the Balkans in Kosovo • On-site, deployable logistics experts assist • customers on all DLA supplies and services • Provide EUCOM, components and units a • single POC for DLA support Defense Logistics Agency - Pacific 9 Sites located in two states and 2 countries Hawaii, Alaska, Japan, Okinawa, Korea 28 Personnel AOR Covers 52% of Earth’s Surface Provide Contingency & Deliberate Planning and on-site Customer Support Liaison Officers at PACOM, USFJ and USFK • Defense Logistics Agency - Central • 4 Enduring sites (CONUS, Kuwait, Bahrain, Qatar) staffed by 10 personnel • 3 Contingency support teams (Afghanistan, Iraq, Kuwait) staffed by 60-90 personnel (mission dependent) • Single focal point for all DLA activities/contractors in Southwest Asia (e.g., Kuwait distribution depot, Kuwait DRMO yard, Bahrain fuels office, Subsistence Prime Vendors, MRO Prime Vendors) • Liaison/planner at CENTCOM • Customer Support Representatives with ARCENT-K/Q, CENTAF (FWD) and NAVCENT-B

  13. Warfighter Engagement 106 DLA personnel permanently assigned to 71 Major Military Service Locations Globally • DLA In-theater Commands provide Logistics Support to Combatant Commanders… • DLA-Central; DLA-Pacific; DLA-Europe • DLA Liaison Officers and Customer Support Representatives embedded in Service and Combatant Commands Worldwide • DLA Contingency Support Teams • Deploy as Requested by Combatant Commanders • Kuwait, Iraq, and Afghanistan, over 150 personnel deployed to OIF/OEF • Provide On Site DLA Logistics, Asset Visibility Support, Fuels Management, and Disposal Services. • Support the Combatant Commands’ In-theater Distribution Centers

  14. Moving Towards Transformation • Refined Goals and Metrics • Instituted Robust Performance Reviews • Focused on Backorder and Cost Reductions • Streamlined Procurement Processes • Fully Supported by DoD Leadership

  15. TransformationKey Initiatives • Base Closure and Realignment – BRAC • DLR procurement and consumable item management to DLA; changes to DLA’s distribution infrastructure; tires, compressed gases, packaged petroleum products to Direct Vendor Delivery • $5.5B Savings projected over 20 years • Business Systems Modernization - BSM • End-to-end Supply Chain Enterprise Resource Planning (ERP), Commercial Off The Shelf Software (COTS) • Order fulfillment, Supply & Demand Planning, Procurement, Tech Quality, Financial • Customer Relationship Management - CRM • A customer focused approach comprised of people, processes, and tools for setting and meeting mutual expectations that optimize value for both the customer and DLA, in order to increase customer readiness • National Inventory Management Strategy – NIMS • Collaborative inventory investment reduction effort • Rationalize levels and inventory management

  16. TransformationKey Initiatives • Supplier Relationship Management – SRM • Strategic Material Sourcing for 500,000 business drivers • Strategic Supplier Alliances with 29 critical suppliers • Distribution Planning Management System - DPMS • Distribution planning and transportation optimization • In-transit visibility of materiel • Global Stock Positioning - GSP • Pre-positioning to optimize readiness at least cost • OSD, Joint Staff, Service, TRANSCOM and DLA • Executive Agent - EA • DLA-Services partnership synchronize logistics for common materiel: fuel, medical, subsistence and construction • Integrated Data Environment - IDE • Facilitates seamless and integrated access to DLA logistics data • Provides a single point of entry for the exchange of DLA data $4.8 Billion Savings for Services

  17. TransformationKey Initiatives • Business Systems Modernization-Energy – BSM-E • Commercial software – best practices • Deploying now – integration w/BSM to follow • Reutilization Modernization Program - RMP • Redistribution of excess government property • Disposal of hazardous material and waste • Leverages capabilities of other transformation initiative • Work Force Transformation • Transformation alters every facet of environment • Structure, rigor and disciplined program in place • Product Data Management - PDM • Transforms Agency’s Technical & Quality business processes and capabilities • Ensures engineering correctness in the products bought and managed by DLA

  18. Base Realignment and Closure BRAC 2005 • Recommendations will deliver transformational • change for the agency • All Depot Level Reparable procurement transitions to DLA • The vast majority of consumable hardware items not managed by the agency today will transition to DLA • Two military Service Inventory Control Points close • Management of repair depot supply operations transitions to DLA • Two additional Strategic Distribution Platforms (SDP) created from existing Distribution Depots • One Distribution Depots close • Remaining Distribution Depots will provide only regional support • Tires, compressed gasses and pre-packaged petroleum products transition to Direct Vendor Delivery NPV $1.9 B Over 20 years NPV $2.9 B Over 20 years NPV $.74 B Over 20 years

  19. Business Systems Modernization (BSM) • Enterprise Resource Planning (ERP) to manage the agency’s 5.2 million items • Replaces numerous ’60s & ‘70s vintage systems with single, Commercial-Off-the-Shelf (COTS) system • Processes re-engineered to best practices • Cycle times dramatically reduced • Savings in inventory and personnel • payback period 2009 • Improved war fighter support • Joint interoperability • Better Demand Forecasting – by customer – through collaboration • Improved data integrity • “Clean Financial Opinion” in accordance with CFO Act • Full-scale deployment completes in DEC 06 ERP…a critical Supply Chain Management Enabler!

  20. Customer Relationship Management (CRM) • Customer Focus: War Fighter-centric strategies & tools and structured Service, Sales and Marketing processes to better meet these customers’ expectations across the DLA Enterprise. • Service: Deliver on DLA commitments and provide timely and effective issue resolution. • Sales: Engage War Fighters regarding readiness and business value of DLA solutions. • Marketing: Reach out to understand War Fighter needs and communicate DLA capabilities. Release 1.0 Implemented April 06… Full Operational Capability – FY08

  21. CRM (cont’d) • National Account Managers (NAM) for each of the four Services, Department of Homeland Security and Foreign Military Sales • Customer Account Managers (CAM) for customer segments within Services • Customer Support Representatives (CSR) • Single POC for DLA Logistics at major Service locations globally • Performance-Based Agreements (PBA) with each of the four Services and some Combatant Commanders • Establish Customer-focused performance metrics • Set Agenda for logistics initiatives • Use Partnership Council for continuous interaction

  22. Supplier Relationship Management (SRM) • Strategic Material Sourcing (SMS) • DLA manages 5.2 million items • ~500,000 items are the agency’s major business drivers • Goal: assured availability, cost & quality for business drivers • Strategy • Leverage competition • Develop long-term contracts • Establish prime vendor relationships • Establish corporate contracts • Buy capability rather than stock for surge requirements • Minimize procurement cost drivers • Minimize logistics costs • Insurance stock where essential 390,000+ Items Now Managed Under SMS

  23. SRM (cont’d) 29 SSA’s In Place • Strategic Supplier Alliances (SSA) • Partnering initiatives with 29 top suppliers that are the sole source for materiel critical to America’s defense posture • Goal: assured availability, cost & quality for this critical materiel • Strategy • Negotiated, signed agreements between DLA and suppliers to collaborate to pursue common objectives • Specific, quantifiable objectives – number of items managed under the SSA, Administrative Lead Time, Procurement Lead Time, Quality issues, Backorders, Price Control, Delivery Performance, Sales Volume • Performance measured and monitored…Report Card

  24. Distribution Planning Management System (DPMS) • Transforming DLA’s global warehousing functions with the ability to collect, assess and act on real time information re: materiel location and status • First and second destination transportation optimization • In Transit Asset Visibility • in-bound shipments, direct delivery • Standardized shipping documentation and labeling • Web-based with real time access for shippers and customers • Automated Advance Shipping Notices and Proof of Shipment • Improved Customer Wait Time • Lowered costs – shipment optimization • Reduction in frustrated/lost shipments

  25. Global Stock Positioning (GSP) • ICP-unique approach…no central strategy • Vendor-centric stock positioning tendency • Limited Service engagement • Central strategy and business rules • DDC-led Stock Positioning IPT • Focus shift to Service/Warfighter • Services engaged • Enterprise Strategy: Global positioning in advance of requirement to increase mat’l availability/reduce wait time • Increasing readiness while reducing cost • “Facing Fill” Targets built into BSM business rules • Hub and Spoke methodology • Service/Warfighter-centric • Services in partnership PAST • Strategic Distribution Platforms (SDP) • 4 New Forward Depots • Sigonella, Kuwait, Guam, Korea PRESENT FUTURE • Tailored stock profiles • 2 New SDPs • DLA Afloat • Deployable Depot

  26. Executive Agency (EA) • Designated by Secretary of Defense to serve as focal point for ensuring sustainable, efficient and effective support to the war fighter • Assembles strategic, operational and tactical elements of supply chains to simultaneously engage across boundaries to identify/resolve challenges • DLA currently EA for • Subsistence, bulk petroleum, medical materiel, and Construction & Barrier materiel • Expect EA designation this year for • Clothing & Textile

  27. Integrated Data Environment (IDE) • Supports data and information sharing through a single point of access supporting: • Exchange of DLA data between systems • Sharing of DLA corporate logistics information • Enhanced DOD Asset Visibility • Assured access to: • Supply chain management data • Centrally managed metadata • Authoritative data sources • DoD logistics business rules • Supports logistics (supply chain & distribution) Communities of Interest • Reduced system-to-system interface costs through implementation of net-centric data strategy goals

  28. DLA Achieved Enterprise Strategic Customer Satisfaction Dissatisfied 1% Somewhat Satisfied 9% Very Satisfied 38% Satisfied 51% 89% Total Customer Satisfaction = “Overall, how satisfied are you with our products and services?”

  29. Platform and Troop Support Supply Chains Requirements Definition Demand Planning Supplier Management Procurement Warehousing Order Fulfillment Defense Logistics Agency Manufacturers/Suppliers PODs/POEs Transport Inventory Control Points Distribution Depots DEMIL Disposal Reutilization Vision: Uninterrupted hardware and troop support to the warfighter through end-to-endsupply chain integration – delivering a seamless flow of materiel and information to all authorized users Military Services/ Combatant Commanders In Theater Distribution DLA Forward

  30. Summary • Critical Combat Enabler … Light and Agile • Focused on Improved warfighter support and reduced costs • DOD Leader In Enterprise System Transformation Tomorrow’s vision … Extending the Enterprise to the lowest level while linking supply with demand