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Naval Inventory Control Point

Naval Aviation Support

AVIATION WEEK
MRO Military Conference
17 April 2007
Ready. Resourceful. Responsive!

Agenda
NAVAL INVENTORY CONTROL POINT

• NAVICP ... From 50,000 Feet
• Enterprise Support
– Deliver Warfighting Capability
– Support Cost-Wise Readiness
• Transformation ... Our Strategy
• Acquisition ... Adopt a Different Approach
– Focus on F414 Module Support
– Other PBL Successes
– Joint PBL Opportunities
• Summary

Av Wk MRO Mil Conf 17 Apr07 2

... Multiple Missions & Customers Naval Supply Systems Command (NAVSUP) Naval Inventory Control Point (NAVICP) 11 Command. From 50. Command. 22 Sites Sites Aviation International Ship & Subs Operations Programs Operations Support Ready Support Our Our For Tasking Stewardship of Dual Dual Operations Life Cycle Costs Focus Focus Customer Budget / Service Fnancial Life Cycle HCA & Acquisition Management Strategy Inventory Repair & Investment Acquisition Configuration Reliability Fleet Management Program Improvement Reqmts Support Material Support Tech / ILS Interim Determination Allocation Support Supply Retrograde Allowance Management Development Foreign Military Item Introduction Av Wk MRO Mil Conf 17 Apr07 3 .000 Feet NAVAL INVENTORY CONTROL POINT One ICP . NAVICP ..

850 FOREIGN MILITARY * Organic – 70.043 MAINTENANCE * Comml – 93.131 * Intrsvc – 17.000 Feet NAVAL INVENTORY CONTROL POINT Who We Support AFLOAT AFLOAT ASHORE ASHORE Carrier Aircraft Marine Corps Surface Ships Naval Other Services and Aviation Aviation Gov't Agencies Aviation Air Stations Business BusinessProfile Profile Coast Guard Sales: $3..015 Repair Units Comp: 180.746 Program Managers Helo Detachments Submarines Line Items Managed: 166.4B Customer Orders: 461.676 Navy Other Service Contractor Depots Depots Depots Av Wk MRO Mil Conf 17 Apr07 4 . From 50. NAVICP ..

. develop supply support/ make go/no-go demand patterns .... Deliver Warfighting Capability NAVAL INVENTORY CONTROL POINT Sustain Support Throughout The Life Cycle Early Involvement Initial Operating Initial Operating Interim Supply Replenishment Sundown Capability Support Capability (IOC) Support (ISS) Support Review (IOCSR) Date • EA-18G • V-22 • DDG-51 • F-14 Concept Design X • LCS Access Stabilize Mature all 10 ILS elements ... sustainment . decision to field Appropriated funding Working Capital funding “Cradle to Grave” Integrated Logistics Support Av Wk MRO Mil Conf 17 Apr07 5 . configuration ...

Deliver Warfighting Capability NAVAL INVENTORY CONTROL POINT Two Levels of Support Force Readiness Shipboard Shipboard // Planeside Planeside Supply Supply System System Response Response Response Response Site I level New Depot Allowance Maintenance Procurement Repair Effects Effects Driven Driven Investment Investment Outfitting Outfitting Accounts Accounts Supply Supply Working Capital Working Capital Funds Funds Two Positioning Strategies 100% Ships & Subs 100% Aviation 90% 90% Supply System 80% 80% Response Supply Supply System System 70% 70% Key Metric Response Response 60% 60% Customer 50% 50% "First Pass" Planeside Planeside 40% 40% Shipboard Fill Rate Inventory Inventory Response Response 30% Shipboard 30% 20% Inventory Inventory Response Response 20% • Redundant Systems 10% 10% • Limited “I” Capability 0% 0% Av Wk MRO Mil Conf 17 Apr07 Decision Based on Logistics / Maintenance Plans 6 .

. ~80% of aviation customer requirements satisfied at local level • Depot Level: Key element to planeside sustainment and wholesale back-up support . Commercial Repair & Interservice Depots Av Wk MRO Mil Conf 17 Apr07 7 . Repair and Overhaul (MRO) Support Traditional Approach Three Levels of Maintenance • Organization Level: Minor check and test/repair capability • Intermediate Level: Key element to planeside support .. Deliver Warfighting Capability NAVAL INVENTORY CONTROL POINT Focus on Maintenance... largest percentage of customer orders satisfied from repair of repairables Depot Providers Naval Organic.

Deliver Warfighting Capability NAVAL INVENTORY CONTROL POINT Focus on Maintenance. Lower costs Av Wk MRO Mil Conf 17 Apr07 8 .. Repair and Overhaul (MRO) Support Fleet Readiness Centers Two Levels of Maintenance • On Flight Line: Organizational Level remains in place • Off Flight Line: Intermediate and Organic Depot Levels merge to form Fleet Readiness Centers Benefits Reduce Maintenance Manpower Reduce "Hand-offs" ..

3 points from FY02 to FY07 10.0 81.879 85 82.7 85 40 80 First Pass up 5.4 19.4 60 Days 90 89.2% from FY02 to FY07 FY02 FY03 FY04 FY05 FY06 FY07 Av Wk MRO Mil Conf 17 Apr07 FY02 FY03 FY04 FY05 FY06 FY07 FY02 FY03 FY04 FY05 FY06 FY07 9 .4 95 94.273 65 15.6 70 67.3 43.0 43.000 70.7 71.206 SMA Percent 80 78.000 Backorders 75 25..7 81.749 70 20.4 65.6 90.3 50 47.000 60 SMA up 11.000 BB’s down 57.2 61.487 13.394 14.000 33.9 30.000 Backorders Backorders 35.8 31.3 93. Deliver Warfighting Capability NAVAL INVENTORY CONTROL POINT Aviation Supply Chain Performance .9% from FY02 to FY07 FY02 FY03 FY04 FY05 FY06 FY07 FY02 FY03 FY04 FY05 FY06 FY07 FY02 FY03 FY04 FY05 FY06 FY07 FY02 FY03 FY04 FY05 FY06 FY07 100 First FirstPass Pass 80 ICP ICPResponse ResponseTime TimeDelayed Delayed First Pass Percent 95.3 points from FY02 to FY07 FY02 FY03 FY04 FY05 FY06 FY07 30 ICPRT-D down 35.1 94.000 14. Material Response (Depot Level Repairable) 90 SMA SMA 40..

Material & Transportation 15 Customer Wait Time 10 Days Aviation Goal 5 0 FY02 FY03 FY04 FY05 FY06 FY07 CWT is the length of time for Organizational Level Maintainers to receive material from all sources of Supply. and other sources. DLA. Av Wk MRO Mil Conf 17 Apr07 10 . This includes transportation time for off-ship or off-station orders.on hand stocks... NAVICP... Deliver Warfighting Capability NAVAL INVENTORY CONTROL POINT Aviation Supply Chain Performance .

Support Cost-Wise Readiness NAVAL INVENTORY CONTROL POINT Transformation ... "Determine Value Stream... Understand and Manage Costs Av Wk MRO Mil Conf 17 Apr07 11 .. Our Strategy • Identify Business Operating Costs .. Reduce Variation" Adopt a "Cost Conscious" Culture ..... Array in Terms of Products and Services Provided to Customers • Target Major Cost Drivers for Process Efficiency / Cost Reduction . Remove Waste. "Follow the Money" • Apply LEAN/SIX SIGMA Methods .

. $4. Support Cost-Wise Readiness NAVAL INVENTORY CONTROL POINT Transformation . Realize Savings .. Av Wk MRO Mil Conf 17 Apr07 Maintain Performance 12 .5M ...500 2410 2.000 500 0 FY02 FY03 FY04 FY05 FY06 FY07 Management Approach • Utilize Lean Six Sigma Tool – Full time champion.000 1... 55 FTE savings.500 3103 3... 13 more in work Achieve Process Efficiency ... plus 16 Black Belts.000 3. 51 Green Belts • Capitalize on Results – 31 solutions implemented .500 1.000 2675 2637 2574 2439 2. Reducing and Managing Labor Workforce Downsizing 4.

Support Cost-Wise Readiness NAVAL INVENTORY CONTROL POINT Transformation…Lowering Our Costs NAVICP Cost of Doing Business Key Drivers 700 22% Reduction $110M • Personnel Reductions 600 509 500 460.7 401.8 399 Reductions TY$M 400 • Overhead Efficiencies 300 – Communications 200 100 – Printing 0 – Travel FY02 FY03 FY04 FY05 FY06 Focus on Business Efficiencies Av Wk MRO Mil Conf 17 Apr07 13 .3 • Warehouse Cost 403.

1999 2000 and Beyond Traditional Inventory Mgmt Supply Chain Management Buying Parts to Attacking Logistic Address Failure Failures 9Improve 9Improve Reliability Reliability 9Resolve 9Resolve Obsolescence Obsolescence 9Integrate 9Integrate Support Support Solutions Solutions Managing Relationships Managing Supplies and Outcomes 9Customer 9Customer Focused Focused Goals Goals 9Gov’t 9Gov’t // Industry Industry Partnerships Partnerships Turning to Commercial Best Practices Av Wk MRO Mil Conf 17 Apr07 14 .1996 1997 . Support Cost-Wise Readiness NAVAL INVENTORY CONTROL POINT Acquisition ... Adopt a Different Approach Pre .

. establishes long-term fixed price relationship .. investment Procuring the Performance "End-State" ..... Support Cost-Wise Readiness NAVAL INVENTORY CONTROL POINT The Essence of Performance Based Logistics (PBLs) What we buy: – Comprehensive performance package. not individual parts Value Proposition: – Substantially improved performance at less than or equal to cost Vendor Vendor asked asked to to provide provide superior superior performance performance at at no additional cost no additional cost Why they work: – Government sets performance. Not the "How To" Av Wk MRO Mil Conf 17 Apr07 15 . Fixed price “pay for performance’ contract motivates vendor to reduce failures / consumption – Long term commitment enables vendor to balance risk vs.

Focus on F414 Module Support NAVAL INVENTORY CONTROL POINT F414 Module Challenge .. 137 days (est..) Readiness Imperative Requires New Solution Av Wk MRO Mil Conf 17 Apr07 16 .. 2004 • F414 engine module repair cycle time – Squadron to depot maintenance plan – Planned depot cycle time … 55 days – Actual repair cycle time ..

Focus on F414 Module Support NAVAL INVENTORY CONTROL POINT g Critical Components F414 p ENGINE FAN Module HPC Modul e COMB Module HPT Module LPT Module A/B Module Top 17 Module Components FAN FAN FAN HPC HPC HPC COMB COMB HPT HPT HPC LPT Turbine LPT LPT HPT HPT Rotor Stator Front MID Rotor Stator Liner Case Inner Nozzles OBD Rotor Frame Support Nozzle Rotor Support Frame Frame Support ASSY ASSY Assy ASSY Compone nts Repair Shops Retrog rade Repaired Component Av Wk MRO Mil Conf 17 Apr07 Component Bit & Piece Support a Major Issue 17 .

$400M – More inventory (modules) COA 2 … Use NWCF to Buy More Module Components – Component buy and repair costs ~ COA 1 – Probably could secure NWCF $’s … but – More inventory (components) … does not guarantee availability Alternative COA 3 … Secure Component Availability Instead of Inventory Performance Av Wk MRO Mil Conf 17 Apr07 18 . Focus on F414 Module Support NAVAL INVENTORY CONTROL POINT Course of Action Options COA 1 … POM to Buy More Modules – POM requirement $200M + for modules (unlikely) – Repair costs … another $300 .

Focus on F414 Module Support NAVAL INVENTORY CONTROL POINT COA 3 F414 Depot Component PBL • 5 year Fixed Price PBL contract – 17 critical components … Guaranteed Availability – Organic Partnership for "touch labor" • Cost of PBL $549M • $85M savings over buying and repairing more components (COA-2) PBLs Proven To Yield Performance For Equal or Less Cost Av Wk MRO Mil Conf 17 Apr07 19 .

.210 Radio – availability ..Wholesale Inventory reduced by 90% was 70% .53% increase was 43% . Other PBL Successes NAVAL INVENTORY CONTROL POINT Multi-Pronged Performance Availability Reliability Inventory Reduction F/A-18 SMS . now 85% APU .....availability was . ARC .availability H-60 FLIR . now 95% reduced by 66% F404 engine availability ALR-67 (v)3 Radar Warning Receiver.. 40% increase was 65% .Plane-side inventories 70% ... now 98% Aviation Tires .. now 99% Av Wk MRO Mil Conf 17 Apr07 20 ...

... Inventory mgmt . mgmt .. CCAD and availability .. Guaranteed Partnerships with all 3 NADEP CP ... Inventory Demand surge up to 10% .. Reliability Tobyhanna ... Other PBL Successes NAVAL INVENTORY CONTROL POINT Expanding Program Scope Components Sub System Platform Common Avionics H-46 H-53 APUs ALQ-126B H-60 T2T Awarded Oct 03 Awarded Feb 05 Phase 1 awarded Dec 03 5-year base and five 1-year base period and Phase 2 Awarded Jun 06 1-year options four 1-yr options IPG1 – 24 hr ship time Priced by flight hour Partnership with IPG 2-3 – 48 hr ship time Partnership with NADEP JAX . Inventory mgmt Obsolescence mgmt Obsolescence mgmt Av Wk MRO Mil Conf 17 Apr07 21 ... Obsolescence mgmt ... NADEPs .. increases ... 90% availability/ delivery ....

Joint PBL Opportunities NAVAL INVENTORY CONTROL POINT V-22 Air Vehicle PBL • Joint PBL W/ USAF & SOCOM will cover all logistics elements • In addition … V-22 will leverage existing PBLs for common components • Joint Vision … full PBL support for long term sustainment F / A-18 E/F Sale to Australia • RAAF plans to procure 24 Super Hornets to deliver FY09/10 • Requirement includes 10 yr sustainment strategy • Initial PBL discussions between RAAF / USN already underway Av Wk MRO Mil Conf 17 Apr07 22 .

Summary NAVAL INVENTORY CONTROL POINT NAVICP Enterprise Focus • Deliver Warfighting Capability – Always the #1 Priority – FY02 .FY07 Performance Trends at Record Levels • Support Cost-wise Readiness – L6S Efforts: • Driving Process Improvements • Producing Tangible Savings – Performance Based Logistics: • Providing Better Availability / Readiness at Equal or Lower Costs • Capitalizing on Industry / Organic MRO Partnerships Av Wk MRO Mil Conf 17 Apr07 23 .