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Operations Research Enhanced Supply
Chain Management at the US Coast Guard
Aircraft Repair and Supply Center
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Team Members
USCG Team CDR Carl Riedlin
LCDR Mike Shirk LCDR Kent Everingham
LCDR Gary Polaski
Purdue Team Prof. Vinayak Deshpande
Prof. Ananth Iyer
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Cultural Transformation
Through
USCG ARSC + Purdue = OR ingrained
+ =
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Route of Flight
US Coast Guard Roles & Missions
Logistics Network
Ops Research & Purdue/Coast Guard Partnership Four Projects:
MIDAS, REAP, CRISP and OPT
Impact & Organizational Transformation
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Aviation Facility Location &Allocations
Humboldt Bay 5 HH-65C
Kodiak
5 HC-130H
4 HH-65C
4 MH-60J
ATC Mobile
4 HU-25A
7 HH-65C
3 MH-60J
North Bend 5 HH-65C
Los Angeles 3 HH-65C
San Francisco 4 HH-65C
Barbers Point
4 HC-130H
4 HH-65C
Corpus Christi
3 HU-25C
3 HH-65C
Houston- 4 HH65CNew Orleans- 5 HH-65C
Miami
6 HU-25D
9 HH-65C
Savannah 5 HH-65C
Borinquen 4 HH-65C
Detroit 5 HH-65C
Traverse City 5 HH-65CAstoria 3 HH-60J
Sacramento 4 HC-130H
San Diego 3 MH-60J
Sitka 3 HH-60J
Clearwater
6 HC-130H
9 HH-60J
Elizabeth City
4 HC-130H
5 MH60-J
1 HC-144A
Cape Cod
4 HU-25C
4 HH-60J
Atlantic City 10 HH- 65C
Washington
1 C-37
1 C-143
HITRON 8MH-68A
HC-130: 22 Operational - 5 Support / HU-25:17 Operational - 8 Support / HH-60: 34 Operational - 7 Support / HH-65: 84 Operational - 11 Support
Port Angeles 3 HH-65C
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Aircraft Repair and Supply
Center (ARSC)
One stop shop for all aviation logistics support Depot level maintenance
Supply engineering
Spare parts inventory management Component repair
Information services
60,000 individual parts, Inventory value over $937 million
Annual maintenance budget over $154 million forover 6000 parts
http://www.airliners.net/open.file?id=1197456&size=L&width=1200&height=811&sok=JURER%20%20%28nveyvar%20%3D%20%27HFN%20-%20Pbnfg%20Thneq%27%29%20%20BEQRE%20OL%20cubgb_vq%20QRFP&photo_nr=5http://www.airliners.net/open.file?id=1198118&size=L&width=1024&height=695&sok=JURER%20%20%28nveyvar%20%3D%20%27HFN%20-%20Pbnfg%20Thneq%27%29%20%20BEQRE%20OL%20cubgb_vq%20QRFP&photo_nr=3http://www.airliners.net/open.file?id=1201254&size=L&width=1200&height=812&sok=JURER%20%20%28nveyvar%20%3D%20%27HFN%20-%20Pbnfg%20Thneq%27%29%20%20BEQRE%20OL%20cubgb_vq%20QRFP&photo_nr=1 -
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ScheduledMaintenance
Air Station
Repair
Maintenance
Shop
Warehouse
- Air Station
- ARSC
Item Managers
Procurement Specialists
Component
Repair (Internal)
Vendors (OGA
& Commercial)
failed partsgood parts
ACMS Data
AMMIS Data
Un-ScheduledFailures
http://www.airliners.net/open.file?id=1197456&size=L&width=1200&height=811&sok=JURER%20%20%28nveyvar%20%3D%20%27HFN%20-%20Pbnfg%20Thneq%27%29%20%20BEQRE%20OL%20cubgb_vq%20QRFP&photo_nr=5http://www.airliners.net/open.file?id=1198118&size=L&width=1024&height=695&sok=JURER%20%20%28nveyvar%20%3D%20%27HFN%20-%20Pbnfg%20Thneq%27%29%20%20BEQRE%20OL%20cubgb_vq%20QRFP&photo_nr=3http://www.airliners.net/open.file?id=1201254&size=L&width=1200&height=812&sok=JURER%20%20%28nveyvar%20%3D%20%27HFN%20-%20Pbnfg%20Thneq%27%29%20%20BEQRE%20OL%20cubgb_vq%20QRFP&photo_nr=1 -
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Clear & Present Danger
Highly complex supply-chain
Various groups focused on a specific task Reliability Center Analysis
Inventory Replenishment & Budgeting
In-House Repairs & Capacity Management
Procurement & Best-Value Contracting
Need for information collaboration between groups
Impending Brain Drain in Federal Govt Item Manager / Procurement Specialists Retirement
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A Partnership is Formed
Purdue a Best Value in Advanced Education Coast Guard officers in MBA & Structures programs since 1970s
Initial contact in 2001 with 2 goals Validate OR capability with ARSC
Lead cultural change in face of budget & people crisis
Prof. Deshpande & Iyer form a team
Exhaustive review of supply-maint business processes
Concise project definition & contracting deliverables MIDAS = Turning Data into Gold
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Project 1: MIDAS
(June 2002-April 2003)
Improving Aircraft Service Parts Demand Forecastsand Inventory Management using Scheduled
Maintenance Data
3 Main Tasks
1. Integrate ACMS maintenance and AMMIS demand data
2. Build Demand Forecast Models
3. Policies for effective inventory management using
maintenance data
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MIDAS Methodology
and Results
Gathered extensive maintenance and demand data on41 critical components consisting of 50% of budget
Created a Linear Programming model to link themaintenance data and demand data for these 41components
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1308/08/0208/08/02TRBL
05/08/0205/08/02TIME
504/19/0203/05/0206/29/0107/20/01TRBL
207/10/0106/25/0106/22/0106/29/01TRBL
206/25/0106/15/0106/06/0106/06/01TIME
205/23/0105/01/0108/28/0008/28/00TRBL
208/25/0008/24/0012/14/9912/14/99TIME
511/15/9911/08/9904/22/9904/22/99TIME
503/22/9903/18/9904/15/9904/15/99TIME
504/13/9903/11/9901/05/9901/05/99TIME
512/02/9810/29/9810/28/9810/28/98TRBL
207/07/9807/07/9807/30/9807/30/98TIME
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1210/17/9710/16/9711/25/9711/25/97TRBL
pj
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RCi
AMMIS demand DatabaseACMS maintenance Database
Database Match Example
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Young Parts Old Parts
Failed parts at
Warehouse
IMs
Component Re-Supply
failed parts
good parts
ACMS Data
AMMIS Data
Good parts at
Warehouse
re-supply order
L1
L2
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0%
20%
40%
60%
80%
100%
0 500 1000 1500 2000 2500 3000
TSO
CumulativeD
istributio
Oct. '98
Oct. 2000
Part-Age Distribution
of Installed Parts
Time Since Overhaul
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SIGNAL Dependent
BASE STOCK
SIGNAL each period = # parts beyond Threshold age
Correlate the SIGNAL and Demand over lead time
Use the conditional distribution and costs to set
BASE STOCK = Function(SIGNAL)
Evaluate the optimal THRESHOLD
Empirical Results showing cost impact on Inventory
levels Proactive Inventory Management
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Data Becomes Gold
(1) LP tools used to match maintenance recordsand inventory
(2) Part Age (accumulated flight hours)information improves demand forecast
(3) Part Age based triggers for advance orders(4) Empirical results show cost reductions ranging
from 20% to 70% for over 90 % of the partsexamined
(5) The advance orders enable separation ofsupply processes for replenishment andadvance orders and can be used for budgeting
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MIDAS Project
Organizational Impact
Establishment of OR Cell 4 new positions & summer interns
Expanded budget planning-execution authority
Demand forecasting & budgeting using MIDAS Partnering with Item Managers
Supply Chain Management Business Solution Scalable, repeatable, supportable solution
Up-to 100,000 stocking units Data warehouse
AMMIS ACMS bridge
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Project 2: REAP
(June 2003-May 2004)
Improving Scheduling of Repairs of Partsusing Scheduled Maintenance Data
Main tasks:
(1) Understand current repair release approaches usingempirical data
(2) Develop Component Repair Capacity PlanningModels to choose the optimal repair mix includinginternal vs vendor repair choices.
(3) Estimate the impact of adjusting releases onperformance of the repair shops
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Components vs TSO
The data shows that as part age increases, the number ofcomponents to be replaced and labor content increases
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Role of LP Models
The optimization models try to minimize costswhile maintaining safety stock of parts andcompleting contracted number of part repairs in
the shop
Models capture the impact of shop costs using
vendor capacity, using overtime, coordinatingrepair releases with IMs etc.
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REAP Optimization Model
BXc
DRZ
DRDAXX
ORRXa
ORCOXcXCG
i
t
ii
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t
i
t
i
t
i
t
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=+++
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)(I
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s.t
Min
Demands composed ofadvance and regular orders
Safety stock only needed for regular orders
Budget constraint
Resource availability constraint
Minimize Sum of in-house repair, vendorrepair and overtimecapacity costs
Where i is for NIIN andj for shop or resource.
REAP M th d l
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REAP Methodology
and Key Results
Data Analysis to link AMMIS ACMS Extended WO data
Link TSO to labor, material data
Optimal component repair capacity planning LP models
Use models to project a 10% savings in repair costs
REAP P j t
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Developed 2 bill of material (BOM) lists based onTSO (young vs old failures)
Linked BOM to extended work order
Used BOM to assist with budget builds Shadow price of $ 6500 per hour for specificresources
Adjusted resources and skills Release shop repairs to optimally use scarce shared repair
resources Coordinate IM management
Use material usage data to create realistic BOM
REAP Project
Organizational Impact
U d f HH6 D l hi
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Upgrade of HH65 Dolphin
Helicopter
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Restore Unrestricted Ops
Restore safety, increase payload andoperational flexibility
Retrofit HH65 with Turbomeca engines
Improve gearbox durability upgrade 135 units Urgent requisition - 2 year completion mandate
How do we accomplish this?
Project 3: CRISP
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Project 3: CRISP
(June 2004-May 2005)
CRISP required a model of the impact of: Availability of overhaul kits and parts
Planned overhaul vs modification
Associated spare parts required Overhaul interval
Future overhaul
Different levels of aircraft operation (C with G4, C
with G2, switch back and forth, etc.) Resources available
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Features of the MIP Model
Model possible states of individual aircraft andindividual components
Evolution of configuration over time
Impact of overhaul or modification schedule Impact of constraints on level of flexibility (B,C-G2,C-
G4, switchover)
Weighted by upgrade level over horizon to maximize
aircraft uptime Mixed Integer Program with network substructures
Number of Flying Aircraft by
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Number of Flying Aircraft by
Type Over Time
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Results of the Model
Model results highlighted the impact of partavailability constraints on upgrade process
Quantified impact of:
level of aircraft operation flexibility onperformance
manufacturer suggested mean time to
overhaul for new components spare parts availability
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CRISP Results and
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CRISP Results and
Organizational Impact
Bottlenecks reduced by productivity changes Dual conversion paths
Lean manufacturing
Building block for additional analysis Spend plans
Fleet sparing
Catalyst for a successful on-time conversion
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Deferred Maintenance Crisis
Project 4: OPT
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Coast Guards Big Iron 300 NM radius
essential to cover EEZ Alaska and Caribbean
Critical role in massive disaster relief
As showcased during Hurricane Katrina ARSC HH60 Product Line
PDM corner stone process every 4 yrs Logistics and Engineering Support
Impending failure Mission scope creep following 9/11 Aging airframe and extensive corrosion
Diminishing overhaul throughput Dropped from 9 in 1999 to low of 5 in 2005
Project 4: OPT
(June 2005-Present)
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Impending Disaster
The HH-60 deferred maintenance burden on USCGreached an all time high of $23.6 Million
The Impending Train Wreck Operational Groundings Starting Mar 07
24% of the Coast Guards operational fleet
In order to begin a road to recovery, the HH-60 ProductLine needed to rapidly increase its throughput
Original PDM Line
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Start
End
Disassembly
(7 days)
Strip
(7 days)
Hull(58 days)
Hull(58 days)
Intermediate
Paint (4 days)
Assembly(54 days)
Assembly(54 days)
Final Paint
(9 days)
Fuel Ops(11 days)
Ground Turns(12 days)
Aircraft Flies in
from Field Unit
Aircraft Returns to
Field Unit
Original PDM Line
Base Case
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OPT Project Goals
Capture the links between decisionsregarding resources
inventory
repair rules
lead times
Identify bottlenecks and the benefits ofimplementing improvements
Design plans for MH-60T aircraft conversion
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ARENA Simulation Model
Captured three sets of flows in the system Aircraft cycles of field missions and PDM overhaul
Component flows on flying aircraft, inventory andrepair
Modules (within components) flow on components,field failures, inventory and vendor repair
Each flow has different criteria Model includes component repair, vendor repair
lead-times, contracts, priority rules, repairtriggers, etc.
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OPT : Methodology
Closed-loop Queuing and Inventory simulationmodel in ARENA Identified bottleneck processes
Hull rework
Final Assembly Capture impact of changes on the production line Impact of different rules for triggering module repair Impact of improving processing times through lean
events Impact of inventory positioning (ARSC vs field) Impact of WIP inventory changes Impact of resource level changes
Original PDM Line
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2 Hull RepairVV
2 Assembly0 hull inventory6aircrafts
Hull stations 3Assembly stations 3
7 aircrafts
1 hullCC
2 hulls
8 aircrafts
9.14
9.649.14
9.29
9.31
9.33
9.31
9.29
4 aircrafts 5 aircrafts
8.066.55
Module life 500
Module life 0
9.2
9.2
Original PDM Line
Base Case
OPT Results and
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OPT Results and
Organizational Impact
Reduced process cycle time 200 (+) working days down to an impressive 145
Eliminated $5M annual outsourcing initiative
Analysis used to drop plans to add 2 hulls at acost of $ 10 million (low throughput impact)
This resulted in an increase in throughput by80% and a drop in deferred maintenance burdenfrom $23.6M to a mere $6.5M
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Missions
Aircraft Type
Air-station
Upgrade Repair
Inventory ARSC Repair Vendor
ARSC/E-city
REAP
MIDAS
CRISP OPT
Four Projects
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Research Impact
Each project led to aninnovative idea with solidOR analysis assummarized in the table
Project Concept
MIDAS Part Age basedInventory Levels(published in Operations
Research)
REAP Repair portfolio of ages
CRISP Linking upgrade rates to
future part demand,including effect offlexibility
OPT Inventory, Capacity,contracts and closedloop supply chains
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At the End of The Day
Quantifiable, measurable, tangible benefits MIDAS inventory reduction for critical parts REAP 10% cost avoidance with $200MM budget CRISP - Unrestricted H65 Operations
CRISP Capacity constraints highlighted Catalyst for Lean Manufacturing with $1.2MM savings
CRISP - Redirect $9.9MM for component sparing Gear box, engine control system with long lead-time
OPT Ended H60 deferred maintenance crisis 80% increase in overhaul throughput
Organizational Impact
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Organizational Impact
of OR Projects
Establishment of an Operations Research cell Several new employees and interns hired
Provides critical decision support tools for planning repair andmaintenance activities
Overwhelming increase in requests to analyze logistics issues All new projects expected to be grounded with OR analysis
Supply Chain Management System (SCMS) being implementedto leverage information sharing and OR applications across theenterprise
Future Initiatives: Aircraft availability simulation
Social Impact
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Social Impact
of OR Projects
Total cost savings in excess of $ 70 million CRISP returned the H-65 aircraft to a safe, reliable
platform
Prevented grounding of 9 HH-60 aircraft which would
have resulted in loss of 6300 mission flight hours Replacing these aircraft would have cost USCG $270 million Long procurement lead-times and budgetary realities would
make that infeasible
True impact of grounded aircraft would have been a drop
in mission readiness from 100% to 96% and missionexecution drop to 4%.
The social cost would have been our inability to respondto natural disasters such as Hurricane Katrina 33,000 rescues, 5,000 by the HH-60
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Questions?