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Diminishing Manufacturing Sources and Material Shortages (DMSMS) and Parts Management Synergies and Interrelationships

Institute for Defense Analyses

Presented to theParts Standardization and Management Committee Meeting

April 25 – 27, 2017

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Presentation Objectives

• Describe parts/DMSMS management roles and interactions throughout the life cycle as well as activities in support of them

• Generate discussion on the efficiencies and effectiveness of the interactions– Discussion questions throughout

• Potentially identify initial steps for improving those interactions

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Outline

• Roles and interactions throughout the life cycle• Activities in support of those roles

– Establishing contract requirements– Developing plans and forming teams– Selecting parts for designs– Facilitating supply chain integration

• Conclusions

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Life Cycle Structure for Hardware Intensive Programs

Source: DOD Instruction (DODI) 5000.02C

Not unusual to take more than 5 years from Milestone B to reach Full Rate Production

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Upfront Observations on the Roles• DMSMS management is a parts management

requirement if Military Standard (MIL STD) 3018 is on contract

• Parts management is primarily concerned with part selection processes while DMSMS management is mostly focused on identifying and cost effectively rectifying obsolescence issues

• DMSMS and parts management roles complement one another early in the life cycle up to Low Rate Initial Production– They should interact in a way that steers clear of

selecting parts susceptible to DMSMS issues in design • During production and sustainment, parts

management activities are primarily associated with modernization and parts replacement

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Summary of Technology Maturation and Risk Reduction Phase Roles

• Parts management– Preliminary parts management plans should be developed– Although parts management requirements for prototypes

are not anticipated, architecture and technology decisions affect part selection

– All initial determinations and collaborations between the acquisition activity and the contractors concerning the parts management requirements as stated in MIL-STD-3018 should be considered in the development of preliminary designs before Milestone B

• DMSMS management– The technology development contractors and their subcontractors along with

the DOD program office in an oversight role should develop designs for prototypes that are resistant to DMSMS issues by employing DMSMS design considerations

– DMSMS management plans should be developed– To the extent that part selection is done, the contractors should be required to

deliver parts lists to the government– All high-risk parts should be monitored for actual or pending DMSMS issues;

results should be identified to the government program office; and plans should be developed to eliminate these parts as the design matures

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Technology Maturation and Risk Reduction Phase Desired Interactions

Note: It is possible for thesame person to have bothDMSMS and parts managementresponsibilities

DMSMS community reviews new parts

lists to identify obsolete and high DMSMS risk parts

Parts management community

establishes parts selection criteria

Design community develops prototype

designs


identifies options

Design community tentatively selects

parts

DMSMS considerations

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Summary of Engineering and Manufacturing Development Phase Roles

• Parts management– Requirements as stated in MIL-STD-3018 should be

implemented under an approved parts management plan– Requirements should be flowed down to subcontractors,

and the contractor should review their processes for approval

– As subcontractors come “on line,” they should implement their approved parts management process

• DMSMS management– The prime contractor and its subcontractors along with the DOD program

office in an oversight role should develop designs resistant to DMSMS issues by employing DMSMS design considerations

– DMSMS management plans should be updated– Contractors should be required to deliver bills of material (BOMs) to the

government– All high-risk parts should be monitored for actual or pending DMSMS issues;

results should be identified to the government program office and plans should be developed to replace these parts before production begins

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Engineering and Manufacturing Development Phase Desired Interactions

DMSMS community reviews new parts lists and BOMs to identify obsolete and high DMSMS

risk parts



Design community develops

preliminary designs for production


approves and rejects parts and provides options


parts

Design community revises designs and

reselects parts where necessary

Design community finalizes designs


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Summary of Production and Deployment Phase Roles

• Parts management is required for changes or modification to the baseline design, such as value engineering changes or parts obsolescence issue resolutions

• DMSMS management– The prime contractor and its subcontractors along with the DOD

program office in an oversight role should develop designs resistant to DMSMS issues by employing DMSMS design considerations for new designs and engineering change proposals

– DMSMS management plans should be updated– Contractors should be required to deliver updated BOMs to the

government– All high-risk parts should be monitored for actual or pending DMSMS

issues; results should be identified to the government program office and plans should be developed and funded to resolve DMSMS issues before production is impacted

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Production and Deployment Phase Desired Interactions

DMSMS community reviews new BOMs to identify obsolete

and high DMSMS risk parts


approves and rejects parts and identifies options




DMSMS community continuously

reviews existing BOMs to identify obsolete and high DMSMS risk parts

Engineering community

approves changes



Other changes proposed


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Summary of Operations and Support Phase Roles

• Parts management is required for changes or modification to the baseline design such as value engineering changes or parts obsolescence issue resolutions

• DMSMS management– DMSMS management plans should be updated– Contractors should be required to deliver BOMs for system changes

and checking new designs for DMSMS resilience– All high risk parts in the BOMs should be monitored for actual or

pending DMSMS issues • Monitoring should be conducted by support contractors and/or government

program offices as a function of the life cycle support plan. When contractors are monitoring, actual and pending DMSMS issues should be identified to the government program office. The government program office oversees all contractor DMSMS management activities.

• Plans should be developed and funded to resolve DMSMS issues before they impact the system

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Operations and Support Phase Desired Interactions

Sustainment

Modernization






DMSMS community continuously

reviews existing BOMs to identify obsolete and high DMSMS risk parts

Engineering community

approves changes


risk parts

Design community develops

preliminary designs for production




parts



Other changes proposed


risk parts

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Discussion of Roles and Interactions

• To what extent do the desired interactions of the two communities reflect reality?

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Outline



• Conclusions

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MIL-STD-3018 Parts ManagementRequirements (1 of 2)

• Parts selection baseline shall be maintained• Parts selection and authorization process shall be

established• Obsolescence management procedures which include

proactive obsolescence forecasting for applicable part types (e.g., microcircuits) and plans for reacting and achieving solutions to obsolescence impacts as they occur and affect the program shall be established. SD-22* provides guidance in this area

• Parts list or BOM shall be delivered as required by contract• Subcontractor management shall occur to ensure

satisfaction of parts management objectives• Part and supplier quality shall be assessed

But what about SAE 0016**?

* Diminishing Manufacturing Sources and Material Shortages: A Guidebook of Best Practicesfor implementing a Robust DMSMS Management Program** SAE-STD-0016 Standard for Preparing a DMSMS Management Plan

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MIL-STD-3018 Parts ManagementRequirements (2 of 2)

• Part level documentation procedures shall be consistent with configuration management, logistics, and life cycle requirements

• Substitute and alternative part procedures shall be consistent with system engineering requirements

• Customer-contractor teaming shall occur for program verification• Counterfeit parts shall be addressed• Lead-free electronic parts shall be addressed• Additional elements shall be addressed as requiredDMSMS management is a specific parts management requirement, but there is ambiguity with respect to the applicability of SD-22 vs. SAE 0016 to a contract requirement for DMSMS plans.

Other parts management requirements tie-in to DMSMS elements.

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Parts Management and DMSMS Management Contract Requirements

Parts Management• MIL-STD-3018 requirements

DMSMS Management• DMSMS in design• Technical data requirements• DMSMS Management Plan

(DMP)• DMSMS Management Team

(DMT) participation• Establishment of a risk-

based program• Management and oversight

of sub-tier activities• Roles for implementing

resolutions• Termination clause

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Observations on Contract Requirements

• Summary– Putting MIL-STD-3018 on contract establishes a

requirement for DMSMS management, however, other contract clauses are necessary to conduct robust DMSMS management

– Contract requirements associated with DFARS* clauses may not appear in the statement of work, but are included elsewhere

• Questions– Is guidance sufficient?

* Defense Federal Acquisition Regulation Supplement

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Outline



• Conclusions

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DMSMS and Parts Management Plans Have Similar Structure

Parts Management Plan• Scope

• Parts Management Infrastructure

– Team tasks, responsibilities, meetings, and tools

• Parts Management Operations

– MIL-STD-3018 requirements

DMSMS Management Plan• Purpose/Scope/Applicability

• DMSMS Management Team– Tasks, responsibilities, meetings

• Funding

• DMSMS Analysis and Risk Management

– Risk-based identification, analysis, and resolution of issues

– Reporting– Tools

• Metrics• Contract Requirements

Separate from the Plan

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Observations on DMSMS and Parts Management Plans

• Summary– The parts management plan described in the SD-19* is a

tactical plan written by industry for industry– There is no parts management plan written by the

government for the government– The DMSMS management plan described in the SD-22 is

written by the government for the government • It is generally more strategic than tactical, but individual

program offices may tailor it to their needs– Industry’s tactical DMSMS management plan is

described in SAE 0016 and should be aligned with the government’s plan

• Questions– Should there be closer integration among the plans?

* Parts Management Guide

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DMSMS and Parts Management Teams Described in Guidance Have Similar Structure

Parts Management• Design engineering• Procurement• Engineering standards• Manufacturing• Reliability• Quality• Subcontractors and suppliers• Customer

DMSMS Management• Program office lead (often the

product support manager) • DMSMS subject matter experts• Engineering authority• Software• Supply/maintenance repair • Value engineering• Contracting • Prime/subcontractor • Foreign military sales• Others as needed:

– Budget– Legal– Environmental and materials engineering– Change configuration board

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Observations on DMSMS and Parts Management Teams

• Summary– The parts management team described in the SD-19 is an

industry team– While there will be a point of contact (POC), there usually is

no formal parts management government team– The DMSMS management team described in the SD-22 is a

government led team that meets regularly, including industry participation to the extent required by contract

– Industry’s internal DMSMS management team is not described in the SD-22

• Its structure may be similar to industry’s parts management team• Questions

– How does the necessary communication take place?• There is no direct interface between the industry parts

management team and the government DMSMS management team

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Outline



• Conclusions

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SD-19 Parts Selection Criteria are Applicable to DMSMS

• Availability (DMSMS concerns, aging technology, number of sources)

• Application (derating, operation, use of the part, type of environment in which the part will be used)

• Cost-benefit analysis• Part screening• Qualification test data or past performance data• Supplier selection• Part technology/obsolescence (use of DMSMS databases,

Government Industry Data Exchange Program)• Compliance with contract performance requirements• Technical suitability• Government life cycle cost optimization

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Systems Engineering Design Considerations per the Defense Acquisition Guidebook (DAG) (1 of 2)

• Parts management– Standardization provides policies on when to

standardize, how to document standardization decisions, and a discussion of the tailoring of standardization documents through rewriting, extracting, or eliminating requirements

– Parts management is a standardization design strategy available to Program Managers. Benefits of parts standardization include:

• Reducing the number of unique or specialized parts used in a system (or across systems)

• Reducing the logistics footprint• Lowering life cycle costs

– In addition, parts management can enhance the reliability of the system and mitigate part obsolescence due to DMSMS.

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Systems Engineering Design Considerations per the DAG (2 of 2)

• DMSMS management– Practices that the program should consider to

minimize DMSMS risk throughout the life cycle of the system:

• Avoid selecting technology and components that are near the end of their functional life

• During the design process, proactively assess the risk of parts obsolescence while selecting parts

• When feasible, use an Open Systems Architecture to enable technology insertion/refreshment more easily than with design-specific approaches

• Proactively monitor supplier bases to prevent designing in obsolescence

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Observations on Selecting Parts for Designs

• Summary– Parts and DMSMS

management interact with other DAG design considerations

– Robust parts management delays DMSMS risk

– Both contribute to producibility, quality, manufacturing readiness, supportability, and ultimately affordability

• Questions– How well do interactions

with designers work?

Affordability(production)

Affordability(O&S)

Producibility, Quality, and

Manufacturing Readiness

SupportabilityDMSMS

Reliability, Availability,

Maintainability

Open Systems Architecture

Standardization

COTS

Parts Management

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Outline



• Conclusions

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Supply Chain Integration Elements to be Discussed

• New product development• Technology• Procurement• Strategic sourcing• Quality• Technical data• Inventory and demand management• Supply chain risk management

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Parts/DMSMS Management Aspects of Supply Chain Integration Elements (1 of 6)

• New product development– Parts management is concerned with selecting the

appropriate parts for the design– DMSMS management is concerned with ensuring

that the selected parts are not obsolete or not immediately prone to obsolescence

• Technology– Parts management is concerned with avoiding

technologies that are too immature or do not meet the requirement

– DMSMS management is concerned with avoiding technologies that either are too mature and will soon become obsolete or have not yet been proven in the marketplace

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• Procurement– Both parts management and DMSMS management

are concerned with the availability of sources of supply

• Strategic sourcing– Both parts management and DMSMS management

are concerned with foreign sources, sole source suppliers, counterfeiters and vulnerabilities in the supply chain

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• Quality– Parts management is concerned about initial and

replacement part quality during design, development, and production

• There is a requirement in MIL-STD-3018 to have “provisions for assessing part suppliers and part quality such as statistical process control data, audits, past performance, etc.”

– DMSMS management is concerned about the quality of the replacement item if the original item can no longer be procured throughout the life cycle

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• Technical data– Parts management is concerned with using

technical data to assure that the part can perform in a way that meets all requirements

– DMSMS management is concerned with having sufficient technical data to allow for monitoring for obsolescence and resolving issues if an item can no longer be procured

Note: Tech data requirements are often established as configuration management requirements

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• Inventory and demand management– These are principally DMSMS management

concerns• For an obsolete part that can no longer be procured,

a resolution is only needed if the expected demand exceeds the supply

• If a life of need buy is executed as part of the DMSMS resolution, demand must be estimated for the proper time period

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• Supply chain risk management– Parts management

• Identifies critical application parts for others to evaluate and mitigate cyber security risks

• Mitigates counterfeit risk– DMSMS

• Counterfeiters and malicious actors target DMSMS items

• The prevalence of reactive DMSMS management increases the likelihood that DOD will deal with unauthorized suppliers

• Resolving issues in sustainment should continue to take criticality and protection into account

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Observations on Supply Chain Integration• Summary

– DMSMS and parts management are key elements of supply chain integration; their contributions are quite similar in concept

– Proactive DMSMS management and robust parts management decrease supply chain risk

– Robust supply chain integration reduces DMSMS risk– Numerous DFARS clauses deal with supply chain risk

and with counterfeit prevention• Questions

– Is there duplication of effort and sufficient communication at the tactical level?

– Are the interactions among headquarters offices sufficient?

– Are these subjects sufficiently addressed in policy and guidance?

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Outline



• Conclusions

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Conclusions (1 of 2)

• DMSMS management and parts management are closely connected– They complement each other throughout the life

cycle– MIL-STD-3018 requires proactive DMSMS

management– They both require plans, operate in teams, and rely

on contract language– They reinforce each other as design considerations– They both have strong connections to supply chain

integration• There are questions concerning the efficiency and

effectiveness of those connections as well as connections to other activities

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Conclusions (2 of 2)

– To what extent do the desired interactions of the two communities in program offices reflect reality?

– How can the program office teams, plans, and contract language be better integrated?

– Is there any duplication of effort or lack of communication that can be avoided in program offices?

– Can communication be improved at the headquarters level?

– Are changes needed to parts/DMSMS management policy, guidance, training, or outreach?

Are there ways to improve how each is managed by better taking advantage of their synergies to answer

the following?

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