Naval Inventory Control Point
NAVICP Top 2
Aviation Supply Chain Concerns
Presented to the Senior Executive Partnership
Round Table 10
2 May 2007
1
Naval Aviation Supply
Naval Inventory Control Point
NAVICP Concerns
 Meet Warfighter Material Availability Expectations
Decrease Customer Direct Turn Over (DTO) Backorders
Reduce Organic Depot Awaiting Parts (AWP) Levels
 Support CNO Cost-Wise Readiness Objectives
Implement Ready For Tasking (RFT) Focus
Expand Utilization of Performance Based Logistics (PBLs)
The War On Terror And The Battle
Against Cost ... We Must Win Both
2
Decrease Customer
DTO Backorders
Naval Inventory Control Point
Backorder Breakdown
(NAVICP Managed Items)
3%
 DTO slice of the pie is
too big
F
M
S
20%
Outfitting
40%
DTO
Stock
37%
Observations
 We must do a better job
of filling outfittng / stock
rqmts to prevent DTOs
 To succeed, we must
reinforce our day to day
efforts on basic business
3
Naval Inventory Control Point
Decrease Customer
DTO Backorders
The Way Ahead
Reinforce sound supply chain management practices
as part of day to day business operations
Focus
on the
Basics
 Continually improve requirements forecasting
 Execute timely placement of procurements
 Ensure on-time delivery of all due-in material
 Pursue aggressive expediting, where required
 Utilize intense customer collaboration to prioritize efforts
4
Reduce Organic Depot AWP
Naval Inventory Control Point
Fleet Readiness Center AWP Scorecard
FRC
East
South
East
South
West
Metric
End FY06
Current
% Change
Total Comps in AWP
2105
2312
9.8%
Comps > 150 days
772
975
25.8%
Comps w/ BBs
693
758
9.4%
Total Comps in AWP
558
781
40.0%
Comps > 150 days
149
273
83.2%
Comps w/ BBs
164
278
69.5%
Total Comps in AWP
616
711
15.4%
Comps > 150 days
118
317
169.0%
Comps w/ BBs
162
227
40.1%
Bottomline: Need To Reduce The Negative Trends
5
Reduce Organic Depot AWP
Naval Inventory Control Point
What We're Doing
 Continue aggressive interface with FRC-Ds / DLA
Validate requirements, target expediting, and discuss select inhibitors
Focus on AWP with BBs, overaged AWP, and AWP with single downers
Review growth in local purchase/local manufacture requirements
Reinforce process discipline and reconcile data bases
Conduct DLA site visits; ICP AWP Summit; Business meetings
Assemble and disseminate “AWP report card”
 Develop AWP Entitlement metric
NAVICP developing with DSCR, FRC-D supply/production reps, NAVAIR
Entitlements set by site, based on historical induction rates, budgeted
delay time
6
Naval Inventory Control Point
Implement Ready for
Tasking (RFT) Focus
RFT Overview
 RFT Defined: ”The right readiness, at the right time, at the
right cost”
Amount of required readiness for any given aircraft is determined by
mission
RFT replaces traditional Full Mission Capable (FMC) standard...
”Aircraft and all mission systems ready at any given time”
 RFT creates some Initial Support Challenges
RFT is dynamic...must be defined for each T/M/S and each
mission...effort is in its infancy
Virtually all current metrics are based on FMC standard...RFT will
demand revised metrics to properly focus support efforts
Paradigm Shift From “Readiness At All Costs”
To “Cost-wise Readiness”
7
Naval Inventory Control Point
Implement Ready for
Tasking (RFT) Focus
Current Effort
 The Naval Aviation Enterprise (NAE) is working three FY07
goals to support RFT attainment
Achieve necessary RFT gap closure
Identify and prioritize systems degrading RFT
Improve reliability of RFT degraders
Right readiness,
right time
RFT Availability (E-2C)
RFT Entitlement
Actual RFT
RFT Gap
Degraded RFT
8
Implement Ready for
Tasking (RFT) Focus
Naval Inventory Control Point
E-2C Example
# days
contribution
to RFT gap
PDS-ESM, 0.11
Other(NonRAM/RBM), 0.07
IFF Interogate, 0.15
Engine/ Power
Plant, 0.80
CEC, 0.17
JTIDS (Link 16),
0.23
UHF/HF Radio,
0.23
Propellers, 0.46
Radar, 0.68
Flight Controls,
0.45
Airframe, 0.33
Other NRBA
Systems, 0.44
Landing Gear, 0.26
Inspections, 0.10
Navigation/Insts.,
0.18
ECS/Pneum. Sys.,
0.25
Elec. Pwr. Sup. &
Light, 0.26
9
Expand Utilization of PBLs
Naval Inventory Control Point
The Essence of PBLs
 What we buy:
Comprehensive performance package... not individual parts
 Value Proposition:
Substantially improved performance at less than or equal to cost
 Why they work:
Vendor asked to provide
superior performance
at no additional cost
Government sets performance, establishes long-term fixed price
relationship ... Fixed price "pay for performance" contract motivates
vendor to reduce failures / consumption
Long term commitment enables vendor to balance risk vs. investment
A Reengineering Tool To Improve Readiness Through
Improved Reliability And Better Availability
10
Expand Utilization of PBLs
Naval Inventory Control Point
PBL Program Performance
Availability
Reliability
Inventory Reduction
H-60 FLIR ... 40% increase
F/A-18 SMS - availability
Aviation Tires ...
was 65% ... now 98%
ARC - 210 Radio –
- Wholesale Inventory
reduced by 90%
availability
was 70% ... now 85%
- Plane-side inventories
reduced by 66%
APU - availability was
70% ... now 95%
F404 engine availability
ALR-67 (v)3 Radar Warning
Receiver- 53% increase
was 43% ... now 99%
11
Expand Utilization of PBLs
Naval Inventory Control Point
Current Enterprise Objectives
PBL Demand Coverage
Goal:
- Increase aviation demand
covered by PBL contract
to 28% by the end of
FY07
Benefits: - Enhance supply support
at equal or lower cost
- Achieve select reliability
improvements
- Support NAE RFT and
ACWT goals and objectives
PBL Cost Reduction
- Reduce the cost of PBL
contracts renegotiated in
FY07 by an average of 2%
- Reduce AVDLR costs for
items supported by PBLs
renegotiated in FY07
- Support NAE cost-wise
readiness goals and
objectives
12
Summary
Naval Inventory Control Point
NAVICP Top Priority is Meeting
Enterprise Performance Expectations
as defined by
CNO Guidance and
Our Customers
while
Improving the Supply Chain
and Reducing Life Cycle Costs
13