Executive Briefings

The U.S. Air Force Targets a Total Transformation of Its Supply Chain

Through an innovative program called Expeditionary Logistics for the 21st Century, or eLog21, the U.S. Air Force is replacing outmoded, stove-pipe processes and disjointed IT systems with an enterprise-wide infrastructure that optimizes its supply chain.

The U.S. Air Force is supported by one of the largest and most complex supply chains in the world. Like commercial supply chains, it includes delivery, transportation, maintenance, repair, procurement, inventory management and product lifecycle management of both inexpensive consumable items as well as very expensive reparable items with long lifecycles. Unlike commercial operations, the Air Force's main objective is to provide weapon system capability and readiness to the warfighter, and it must be flexible enough to meet any contingency.

Historically, the Air Force has not had the tools required to rapidly re-plan, respond and allocate resources as operational priorities change. In order to meet these needs, the Air Force several years ago launched Expeditionary Logistics for the 21st Century (eLog21). This campaign is a portfolio of initiatives to transform Air Force supply chain processes from stove-piped processes to planning-based, integrated operations. eLog21 is guided by a strategic vision to provide a logistics system across the service that delivers superior capabilities to the warfighter in a flexible, scalable, modular, and expeditionary manner while minimizing costs. The goals of this transformational effort include an enterprise-wide optimization of equipment availability and a 10-percent reduction in operations and support costs by 2011.

To guide this effort, the service developed an enterprise-wide strategy and architecture called the Air Force Logistics Enterprise Architecture (LogEA).  By requiring compliance with the LogEA, the Air Force ensures its transformational initiatives are focused on the following four fundamental concepts:

Customer Focused to manage processes under a single enterprise and provide mission support to the warfighter. Supply chain planning is based on the operational requirements of theater commanders and based on enterprise-wide requirements and resources in a shared-data environment.

Goal Driven initiatives that increase equipment availability and reduce operations costs. The Air Force says its logistics community is adopting management by responsibility, accountability, and authority rather than through oversight.

Network-Centric structure with dynamic command, control, communication and intelligence providing real-time and near real-time feedback permitting rapid supply chain reconfiguration.

Mission Focused, so functions that do not directly support the Air Force logistics mission are improved and realigned. The strengths of other public or private organizations are being integrated with Air Force supply chain processes creating strategic partnerships wherever possible.

In addition to the above four concepts, the LogEA also guides the management of the Air Force supply chain through the creation of the Air Force Global Logistics Support Center (AFGLSC), which merges what is currently wholesale (Air Logistics Center) and retail (base level) supply chain entities. The AFGLSC is responsible for establishing and executing plans for the purchase, delivery, return, repair and lifecycle management of materiel. The organization also manages supply chain performance, business rules, budgeting processes and technology requirements. To accomplish these objectives, the AFGLSC is organized around three main supply chain functions:

Supply Chain Planning and Execution (SCPE) provides oversight of supply chain planning and sourcing processes. The mission of SCPE is twofold: (1) to develop the plan for each reparable and consumable part needed to meet weapon system availability targets and (2) to work with the sources of supply and repair to eliminate gaps between the demand plan and the supply plan. In particular, SCPE is responsible for meeting  projected requirements. Planned and unplanned orders from customers must be balanced with labor, machine time and inventory. SCPE combines planning and execution functions currently accomplished at various levels. Commodity items provided via contract support are also integrated with the enterprise supply chain plan. Lastly, SCPE manages the execution of the supply plan, which is tied to the aircraft availability targets established at the enterprise level. For the first time in its history, the Air Force has created a single organization responsible for balancing resources and requirements with an integrated focus on enterprise-wide priorities.

Supply Chain Operations (SCO) is the single point of contact of AFGLSC to the customer and is responsible for order management processes, in-process order information management and communication, and order fulfillment. It has the authority to direct and redirect materiel support to satisfy customer demand. It is also responsible for the development of enterprise business rules to prioritize and redistribute assets, to fill orders and optimize readiness. It may reallocate assets from finished goods inventory locations, as well as redirect the source, direction or speed of resupply. SCO provides feedback to SCPE to identify plan deviation that have a long-term impact and that may require re-planning or inclusion in future planning. This ability to make instantaneous changes to the plan makes the AFGLSC critical for the Air Force and its partners.

Supply Chain Strategy and Integration (SCS&I) manages supply chain metrics, analysis, policy and business rules developed by SCO. This team integrates AFGLSC processes and activities, to include other related process improvement initiatives. SCS&I is the "sense and respond" node of the Air Force supply chain. It measures supply chain health to ensure standardization of processes and consistent application of business rules and resources.

The Air Force is transforming its IT systems to enable these new supply chain processes and organizational structure. The current IT environment consists of over 700 systems, many of which are duplicative, stand-alone and ineffective, thereby limiting visibility of resources and requirements. Non-standardized reporting processes create credibility issues throughout the supply chain, resulting in customers circumventing the system to obtain needed supplies. To address these issues, the Air Force is implementing an enterprise resource planning system called the Expeditionary Combat Support System (ECSS). The ERP system enables advanced planning and scheduling, proactive collaboration with suppliers and customers, sales and operations planning, vendor managed inventory, and collaborative planning and forecasting for replenishment.

APS pilot programs have already enabled an integrated, near-real-time, capability to centrally plan for and balance resources and requirements. These efforts provide an automated, alert-based system to identify, examine and resolve supply chain issues by exception before they impact daily execution. This APS solution uses commercial-off-the-shelf technology for supply chain planning and decision support functions. Commercial implementations of these products have resulted in significant improvement to order fulfillment cycle time and cost efficiency. Additionally, ECSS incorporates APS technology to provide total asset visibility across the enterprise allowing the Air Force to manage supply chain cycles while synchronizing supply and demand.

The Air Force purchases billions in materiel and services each year giving it considerable marketplace leverage. It launched the purchasing and supply chain management (PSCM) initiative that takes advantage of this leverage through creation of commodity councils responsible for developing enterprise-wide procurement strategies; bringing customers and suppliers together in a collaborative environment; driving commonality and standardization of procurement processes; and leveraging purchasing power. Commodity council processes are a revolutionary approach for the Air Force and are based on five principles:

1. The more that each individual organization knows about the parts and services it buys and manages, the more value it generates for the entire Air Force
2. They are cross-functional and fully leverage organizational expertise and knowledge
3. They focus on groups of similar commodities grouped by demand volume, price, impact on equipment and/or weapon system availability or other factors
4. They are persistent structures that operate continuously and are not created and disbanded around particular events
5. They operate at the enterprise level making decisions relative to specific materiel from an Air Force-wide perspective.

Commodity councils ensure that required parts and services are procured and managed to support strategic goals while minimizing supply chain costs and cycle times. Councils collect and document market intelligence for a respective commodity, including suppliers, trends and directions, risks, costs and price drivers. They work with customers to understand problems and issues impacting enterprise goals. They can make trade-off decisions between different potential sources of value such as quality, delivery time, and price. They assess the current state by conducting a detailed spend analysis of specific commodity groups looking at total spending levels, existing contracts, performance against existing contracts and internal agreements, and the impact of those commodity groups on readiness. This analysis is then used to develop specific commodity group strategies and plans that lay out how the council will source and manage the commodity and relationships with internal and external suppliers. These plans are used as inputs to the supply chain planning process, which drives the supply chain execution processes.

AFGLSC is helping to merge wholesale and retail processes, so SCO can make effective decisions with fewer people. SCO is resolving near-term needs at the point of execution, and it is working with the SCPE to change the priority of production schedules in support of readiness goals and objectives. SCPE provides the immediate collaborative information stream the combatant commanders need to execute the mission.

The Air Force is also seeing significant results from the depot maintenance transformation initiative of eLog21. For example,  the Ogden Air Logistics Center's F-16 Fighting Falcon wing shop at Hill Air Force Base in Utah has  reduced workflow days from 64 to 27 days and improved on-time delivery by 67 percent. The C-5 Galaxy depot maintenance at the Warner Robins Air Logistics Center at Robins Air Force Base in Georgia, has been cut from 339 days to 225 days. Workers at the Oklahoma City Air Logistics Center at Tinker Air Force Base have cut KC-135 Stratotanker flow days from more than 400 to about 200.

The support equipment commodity council (SECC) represents a broad cross section of items, including weapon system testers, stand-alone equipment, vehicles, life support items, and hand tools. These are low-demand items  provided by many suppliers. In FY07 the SECC consolidated thousands of contracts into four 3PL contracts used by customers to purchase 8,000 different items with unit prices of $10,000 or less. Purchases of these items represent only two to four percent of the total dollar value of this commodity class. Through this and similar strategies, the SECC has avoided administrated costs of nearly $4.9m and reduced administrative lead-time from 127 days to five.

The Air Force feels the full benefits of eLog21 are just beginning. The focus will soon shift from creating the organization to improving it. Aligned resources and centralized oversight will provide operational efficiencies not previously achievable. Reengineering of current processes and elimination of duplicative processes will result in overall improvements and savings. Additional results will be fully realized when ECSS is fielded in FY13 to include:

1. Enabling greater combat support capability to joint and Air Force commanders and airmen
2. Merging base level and wholesale logistics systems
3. Improving synchronization of opertions/logistics planning and execution
4. Improving command and control
5. Providing near real-time worldwide visibility of assets
6. Retiring more than 400 legacy systems
7. Reducing, creating, and enhancing current job roles
8. Enabling improved availability of mission critical weapon systems
9. Supporting expeditionary and in-garrison operations with seamless peace to wartime operations
10. Delivering significant savings over the Future Years Defense Program.

Although the eLog21 campaign will end in 2013 when ECSS is fielded, continuous process improvement has become the norm for the Air Force and will continue to improve its supply chain. The AFGLSC is working to establish the Center of Process Excellence (COPE) that will work hand-in-hand with eLog21 to instill a culture of continuous process improvement within the AFGLSC, oversee AFGLSC improvement initiatives to effectively utilize scarce resources, and ensure improvements are aligned to AFGLSC strategic goals. The COPE will drive process improvement accountability throughout the AFGLSC to ensure eLog21 targets of 10 percent cost reduction are met and an enterprise wide optimization of equipment availability. Lastly, the AFGLSC will establish a Fusion Center to provide leadership with near real-time access to integrated, supply chain information to drive accurate decision making. These improvements will help ensure that the Air Force supply chain continues to provide enterprise warfighter support efficiently and effectively.

RESOURCE LINK:
U.S. Air Force, www.airforce.com

The U.S. Air Force is supported by one of the largest and most complex supply chains in the world. Like commercial supply chains, it includes delivery, transportation, maintenance, repair, procurement, inventory management and product lifecycle management of both inexpensive consumable items as well as very expensive reparable items with long lifecycles. Unlike commercial operations, the Air Force's main objective is to provide weapon system capability and readiness to the warfighter, and it must be flexible enough to meet any contingency.

Historically, the Air Force has not had the tools required to rapidly re-plan, respond and allocate resources as operational priorities change. In order to meet these needs, the Air Force several years ago launched Expeditionary Logistics for the 21st Century (eLog21). This campaign is a portfolio of initiatives to transform Air Force supply chain processes from stove-piped processes to planning-based, integrated operations. eLog21 is guided by a strategic vision to provide a logistics system across the service that delivers superior capabilities to the warfighter in a flexible, scalable, modular, and expeditionary manner while minimizing costs. The goals of this transformational effort include an enterprise-wide optimization of equipment availability and a 10-percent reduction in operations and support costs by 2011.

To guide this effort, the service developed an enterprise-wide strategy and architecture called the Air Force Logistics Enterprise Architecture (LogEA).  By requiring compliance with the LogEA, the Air Force ensures its transformational initiatives are focused on the following four fundamental concepts:

Customer Focused to manage processes under a single enterprise and provide mission support to the warfighter. Supply chain planning is based on the operational requirements of theater commanders and based on enterprise-wide requirements and resources in a shared-data environment.

Goal Driven initiatives that increase equipment availability and reduce operations costs. The Air Force says its logistics community is adopting management by responsibility, accountability, and authority rather than through oversight.

Network-Centric structure with dynamic command, control, communication and intelligence providing real-time and near real-time feedback permitting rapid supply chain reconfiguration.

Mission Focused, so functions that do not directly support the Air Force logistics mission are improved and realigned. The strengths of other public or private organizations are being integrated with Air Force supply chain processes creating strategic partnerships wherever possible.

In addition to the above four concepts, the LogEA also guides the management of the Air Force supply chain through the creation of the Air Force Global Logistics Support Center (AFGLSC), which merges what is currently wholesale (Air Logistics Center) and retail (base level) supply chain entities. The AFGLSC is responsible for establishing and executing plans for the purchase, delivery, return, repair and lifecycle management of materiel. The organization also manages supply chain performance, business rules, budgeting processes and technology requirements. To accomplish these objectives, the AFGLSC is organized around three main supply chain functions:

Supply Chain Planning and Execution (SCPE) provides oversight of supply chain planning and sourcing processes. The mission of SCPE is twofold: (1) to develop the plan for each reparable and consumable part needed to meet weapon system availability targets and (2) to work with the sources of supply and repair to eliminate gaps between the demand plan and the supply plan. In particular, SCPE is responsible for meeting  projected requirements. Planned and unplanned orders from customers must be balanced with labor, machine time and inventory. SCPE combines planning and execution functions currently accomplished at various levels. Commodity items provided via contract support are also integrated with the enterprise supply chain plan. Lastly, SCPE manages the execution of the supply plan, which is tied to the aircraft availability targets established at the enterprise level. For the first time in its history, the Air Force has created a single organization responsible for balancing resources and requirements with an integrated focus on enterprise-wide priorities.

Supply Chain Operations (SCO) is the single point of contact of AFGLSC to the customer and is responsible for order management processes, in-process order information management and communication, and order fulfillment. It has the authority to direct and redirect materiel support to satisfy customer demand. It is also responsible for the development of enterprise business rules to prioritize and redistribute assets, to fill orders and optimize readiness. It may reallocate assets from finished goods inventory locations, as well as redirect the source, direction or speed of resupply. SCO provides feedback to SCPE to identify plan deviation that have a long-term impact and that may require re-planning or inclusion in future planning. This ability to make instantaneous changes to the plan makes the AFGLSC critical for the Air Force and its partners.

Supply Chain Strategy and Integration (SCS&I) manages supply chain metrics, analysis, policy and business rules developed by SCO. This team integrates AFGLSC processes and activities, to include other related process improvement initiatives. SCS&I is the "sense and respond" node of the Air Force supply chain. It measures supply chain health to ensure standardization of processes and consistent application of business rules and resources.

The Air Force is transforming its IT systems to enable these new supply chain processes and organizational structure. The current IT environment consists of over 700 systems, many of which are duplicative, stand-alone and ineffective, thereby limiting visibility of resources and requirements. Non-standardized reporting processes create credibility issues throughout the supply chain, resulting in customers circumventing the system to obtain needed supplies. To address these issues, the Air Force is implementing an enterprise resource planning system called the Expeditionary Combat Support System (ECSS). The ERP system enables advanced planning and scheduling, proactive collaboration with suppliers and customers, sales and operations planning, vendor managed inventory, and collaborative planning and forecasting for replenishment.

APS pilot programs have already enabled an integrated, near-real-time, capability to centrally plan for and balance resources and requirements. These efforts provide an automated, alert-based system to identify, examine and resolve supply chain issues by exception before they impact daily execution. This APS solution uses commercial-off-the-shelf technology for supply chain planning and decision support functions. Commercial implementations of these products have resulted in significant improvement to order fulfillment cycle time and cost efficiency. Additionally, ECSS incorporates APS technology to provide total asset visibility across the enterprise allowing the Air Force to manage supply chain cycles while synchronizing supply and demand.

The Air Force purchases billions in materiel and services each year giving it considerable marketplace leverage. It launched the purchasing and supply chain management (PSCM) initiative that takes advantage of this leverage through creation of commodity councils responsible for developing enterprise-wide procurement strategies; bringing customers and suppliers together in a collaborative environment; driving commonality and standardization of procurement processes; and leveraging purchasing power. Commodity council processes are a revolutionary approach for the Air Force and are based on five principles:

1. The more that each individual organization knows about the parts and services it buys and manages, the more value it generates for the entire Air Force
2. They are cross-functional and fully leverage organizational expertise and knowledge
3. They focus on groups of similar commodities grouped by demand volume, price, impact on equipment and/or weapon system availability or other factors
4. They are persistent structures that operate continuously and are not created and disbanded around particular events
5. They operate at the enterprise level making decisions relative to specific materiel from an Air Force-wide perspective.

Commodity councils ensure that required parts and services are procured and managed to support strategic goals while minimizing supply chain costs and cycle times. Councils collect and document market intelligence for a respective commodity, including suppliers, trends and directions, risks, costs and price drivers. They work with customers to understand problems and issues impacting enterprise goals. They can make trade-off decisions between different potential sources of value such as quality, delivery time, and price. They assess the current state by conducting a detailed spend analysis of specific commodity groups looking at total spending levels, existing contracts, performance against existing contracts and internal agreements, and the impact of those commodity groups on readiness. This analysis is then used to develop specific commodity group strategies and plans that lay out how the council will source and manage the commodity and relationships with internal and external suppliers. These plans are used as inputs to the supply chain planning process, which drives the supply chain execution processes.

AFGLSC is helping to merge wholesale and retail processes, so SCO can make effective decisions with fewer people. SCO is resolving near-term needs at the point of execution, and it is working with the SCPE to change the priority of production schedules in support of readiness goals and objectives. SCPE provides the immediate collaborative information stream the combatant commanders need to execute the mission.

The Air Force is also seeing significant results from the depot maintenance transformation initiative of eLog21. For example,  the Ogden Air Logistics Center's F-16 Fighting Falcon wing shop at Hill Air Force Base in Utah has  reduced workflow days from 64 to 27 days and improved on-time delivery by 67 percent. The C-5 Galaxy depot maintenance at the Warner Robins Air Logistics Center at Robins Air Force Base in Georgia, has been cut from 339 days to 225 days. Workers at the Oklahoma City Air Logistics Center at Tinker Air Force Base have cut KC-135 Stratotanker flow days from more than 400 to about 200.

The support equipment commodity council (SECC) represents a broad cross section of items, including weapon system testers, stand-alone equipment, vehicles, life support items, and hand tools. These are low-demand items  provided by many suppliers. In FY07 the SECC consolidated thousands of contracts into four 3PL contracts used by customers to purchase 8,000 different items with unit prices of $10,000 or less. Purchases of these items represent only two to four percent of the total dollar value of this commodity class. Through this and similar strategies, the SECC has avoided administrated costs of nearly $4.9m and reduced administrative lead-time from 127 days to five.

The Air Force feels the full benefits of eLog21 are just beginning. The focus will soon shift from creating the organization to improving it. Aligned resources and centralized oversight will provide operational efficiencies not previously achievable. Reengineering of current processes and elimination of duplicative processes will result in overall improvements and savings. Additional results will be fully realized when ECSS is fielded in FY13 to include:

1. Enabling greater combat support capability to joint and Air Force commanders and airmen
2. Merging base level and wholesale logistics systems
3. Improving synchronization of opertions/logistics planning and execution
4. Improving command and control
5. Providing near real-time worldwide visibility of assets
6. Retiring more than 400 legacy systems
7. Reducing, creating, and enhancing current job roles
8. Enabling improved availability of mission critical weapon systems
9. Supporting expeditionary and in-garrison operations with seamless peace to wartime operations
10. Delivering significant savings over the Future Years Defense Program.

Although the eLog21 campaign will end in 2013 when ECSS is fielded, continuous process improvement has become the norm for the Air Force and will continue to improve its supply chain. The AFGLSC is working to establish the Center of Process Excellence (COPE) that will work hand-in-hand with eLog21 to instill a culture of continuous process improvement within the AFGLSC, oversee AFGLSC improvement initiatives to effectively utilize scarce resources, and ensure improvements are aligned to AFGLSC strategic goals. The COPE will drive process improvement accountability throughout the AFGLSC to ensure eLog21 targets of 10 percent cost reduction are met and an enterprise wide optimization of equipment availability. Lastly, the AFGLSC will establish a Fusion Center to provide leadership with near real-time access to integrated, supply chain information to drive accurate decision making. These improvements will help ensure that the Air Force supply chain continues to provide enterprise warfighter support efficiently and effectively.

RESOURCE LINK:
U.S. Air Force, www.airforce.com