today's logistics transformation initiatives:elog21

I n t e g r i t y - S e r v i c e - E x c e l l e n c e

Today’s Logistics

Transformation Initiatives:

eLOG21

I n t e g r i t y - S e r v i c e - E x c e l l e n c e

Purpose

• Describe eLog21 Initiatives

Customer Relations Management

Strategic Sourcing• Discuss Implementation Activities

I n t e g r i t y - S e r v i c e - E x c e l l e n c e 3

IT Strategy/Expeditionary Combat Support System (ECSS)IT Strategy/Expeditionary Combat Support System (ECSS)

AF Smart Ops (AFSO21) Change Management (CM) Capability-Based Programming (CBP)AF Smart Ops (AFSO21) Change Management (CM) Capability-Based Programming (CBP)

CRM /Strategic SourcingeLog21 Campaign Initiatives

Product Supportand Engineering

• Total Life Cycle System Management

• Product Support Camp• Condition Based

Maintenance+• Asset Marking and Tracking• Demand Management• Operations Safety Suitability

& Effectiveness Tools• Product Life Cycle Mgmt

Logistics EnterpriseArchitecture (LogEA)Logistics EnterpriseArchitecture (LogEA)

PortfolioManagement

PortfolioManagement

Air ForceData Strategy

Air ForceData Strategy

Performance ManagementPerformance Management

ARCHITECTURE & GOVERNANCE

Future Financials

Future Financials WorkforceWorkforceAgile Combat Support (ACS)/Assured ConnectivityAgile Combat Support (ACS)/Assured Connectivity

ENABLING PROCESSESENABLING PROCESSES AND TECHNOLOGY AND TECHNOLOGY

• Integrated Planning System (IPS/APS)

• Purchasing Supply Chain Management (PSCM)

• Customer Relationship Management (CRM)

• Strategic Sourcing• Commodity Councils

• Strategic Distribution• Weapon System Supply Chain

Management

Supply Chain Management

• WFHQ/ Agile Combat Support C2

• Log Supt Centers• AF Common Operating

Picture • I&L COP

• Decision Support Tools• Global Logistics

Support Center (GLSC)

Expeditionary Operations and C2

Maintenance, Repair and Overhaul

• Field MX & Regional Maintenance

• CONUS CIRFs• Re-engineering Depot

Maintenance (DMT)• AF Lean Maintenance

Enterprise Integration


How eLog21 Will Work:The Future Process Model


Customer Relationship Management – Purpose

The primary purpose of Customer Relationship Management (CRM) is to be the single point of contact to customers in all aspects of logistics support. Commercial best practices identify CRM as a customer-focused and customer-driven approach, running all aspects of business to satisfy customers by addressing their requirements for products, expectations of service levels and by providing high-quality, responsive service.


End State Vision – A Virtual CRM

• Single point of entry

• Automatic call routing - Transparent to customers

• Virtual Call Center Concept

• Standardized business processes across the Air Force

• Focused on the customer’s view of the supply chain

• Customers receive closed-loop response to requests / queries

• CRM provides proactive and anticipatory services

• Continuously improve processes for efficiency and effectiveness


CRM Goal - Customer Satisfaction

• Centralize and standardize to a single point of service

• Anticipate customer needs

• Reduce customer wait time for products and services

• Create self-service environment

• Achieve response credibility

• Achieve first-call closure

• Leverage technology

• Provide proactive support


CRM Enterprise Relationships

Identified as a Command Critical Capability

Aligned with Expeditionary Logistics for the 21st

Century (eLog 21) Goals and Objectives

Designed to be compatible with the Expeditionary

Combat Support System (ECSS)

Envisioned as a key component of Air Force Global

Logistics Supply Center (GLSC) concept

Aligned with Balanced Scorecard (BSC)

Defined in the Business Process Model (BPM)


Air Force Sourcing Model

Opportunity

Assessment –

Goods and Services

Opportunity

Assessment –

Goods and Services CommodityCommodity

Market ResearchMarket Research

Identify requirements Review past and present

business arrangements Conduct TCO analysis

Current Strategy Review


Identify qualified suppliers Understand industry trends

and cost structure

FAR Part 7*FAR Part 7*


Collect requirements Standardize requirements

Requirements Definition


Sourcing Strategy Development


Results

ResultsCustomer

Warfighter

Taxpayer

Customer

Warfighter

Taxpayer

Follow acquisition process Use business arrangements

Strategy ExecutionStrategy Execution

Administer contract Monitor internal performance Integrate supplier relationship mgmt Conduct quality analysis

Performance Management



FAR Part 6,7,19*FAR Part 6,7,19*

FAR Part 12, 13,14,15*FAR Part 12, 13,14,15*

FAR Part 42*

FAR Part 42*

StrategicSourcing

Team

StrategicSourcing

Team

SB

Pilots

Maint.

Lawyers PEOs

Contracting

Buyers

QA Reps

COTRs

Finance

CE

Proj. Mgr

Buyers

* Additional FAR parts may apply

Determine level of competition Develop a CONOPs


Opportunity Assessment

• Mr. Smith wants to trade in his station wagon and buy a brand new convertible

• Mr. Smith reviews his annual budget and expenditures

• Snow removal is a significant expenditure during the winter months

• Several people offered to plow his driveway last winter

• Mr. Jones and Ms. White also use snow removal services

• Other people in the neighborhood use snow blowers and/or shovels

• Mr. Smith is a member of the homeowner’s association (HOA) board

• Mr. Smith discusses the opportunity with his friend, Mr. Green from the neighboring condo board

Opportunity Assessment

Opportunity

Assessment –

Goods and Services

Opportunity

Assessment –

Goods and Services CommodityCommodity

What did we buy?

Opportunity Assessment –

Goods and Services


Goods and ServicesCommodityCommodity


Identify requirements

Review past and present business arrangements

Conduct TCO analysis



Identify qualified suppliers

Understand industry trends and cost structure



Collect requirements

Standardize requirements



Determine level of competition

Develop a CONOPs



Results

ResultsCustomer

Warfighter

Taxpayer

Customer

Warfighter

Taxpayer

Follow acquisition process

Use business arrangements


Administer contract

Monitor internal performance

Integrate supplier relationship mgmt

Conduct quality analysis




FAR Part 12, 13,14,15*FAR Part 12, 13,14,15*


Strategic Sourcing

Team

Strategic Sourcing

Team

SB

Pilots

Maint.

Lawyers PEOs

Contracting

Buyers

QA Reps

COTRs

Finance

CE

Proj. Mgr

Buyers




• Mr. Smith looks up any existing arrangements made by the HOA

• He and Mr. Green review past contracts and talk to the neighbors about any contracts they may have

• They note the various services used and others that are available

• Driveway snow plowing• Sidewalk clearing• Salting/Sanding• Snow removal

• They calculate the average cost and time for all options:

• Snow blower• Shovel• 3rd party





Identify requirements Review past and present

business arrangements Conduct TCO analysis


How did we buy it?


Goods and Services


















Develop a CONOPs



Results

ResultsCustomer

Warfighter

Taxpayer

Customer

Warfighter

Taxpayer




Administer contract







FAR Part 12, 13,14,15*FAR Part 12, 13,14,15*


Strategic Sourcing

Team

Strategic Sourcing

Team

SB

Pilots

Maint.

Lawyers PEOs

Contracting

Buyers

QA Reps

COTRs

Finance

CE

Proj. Mgr

Buyers



Market Research

• Mr. Smith and Mr. Green obtain potential supplier contact names and numbers from various sources

• Phone book/internet• Past usage

• A group of local teens approach Mr. Smith about being considered

• He and Mr. Green contact the potential suppliers to gauge their interest and ability to perform the various services

• They discuss potential scope and get an understanding of the industry

• Their key findings are:• Many local part time suppliers with

limited scope • Few regional full time suppliers with

full scope and year round services

Market Research


Identify qualified suppliers Understand industry trends

and cost structure



How did we buy it?


Goods and Services


















Develop a CONOPs



Results

ResultsCustomer

Warfighter

Taxpayer

Customer

Warfighter

Taxpayer




Administer contract







FAR Part 12, 13,14,15*FAR Part 12, 13,14,15*


Strategic Sourcing

Team

Strategic Sourcing

Team

SB

Pilots

Maint.

Lawyers PEOs

Contracting

Buyers

QA Reps

COTRs

Finance

CE

Proj. Mgr

Buyers




• Mr. Smith and Mr. Green set up meetings with the HOA and condo board to discuss the potential of sourcing snow removal services

• The attendees discuss and standardize requirements

• Time by which driveways need to be cleared

• Evening salting for driveways and roads to ensure no ice buildup

• Sidewalks must be clear/not slippery at all times

• Walkways and paths to front doors would be a set fee, but on an as requested basis





Collect requirements Standardize requirements


How should we buy it?


Goods and Services


















Develop a CONOPs



Results

ResultsCustomer

Warfighter

Taxpayer

Customer

Warfighter

Taxpayer




Administer contract







FAR Part 12, 13,14,15*FAR Part 12, 13,14,15*


Strategic Sourcing

Team

Strategic Sourcing

Team

SB

Pilots

Maint.

Lawyers PEOs

Contracting

Buyers

QA Reps

COTRs

Finance

CE

Proj. Mgr

Buyers




• Mr. Smith and Mr. Green analyze the potential benefit of adding lawn services (to ensure year round business)

• They research whether the salting/clearing of the walkways could be performed by the group of local teenagers who had approached Mr. Smith

• They verify participation after showing neighbors, HOA and condo board the business cases on what they would save on snow blower maintenance and shoveling time

• Mr. Smith and Mr. Green decide to request prices/quotes from vendors who have been in business at least two years and received good reviews from at least one household






Develop a CONOPs


How should we buy it?


Goods and Services


















Develop a CONOPs



Results

ResultsCustomer

Warfighter

Taxpayer

Customer

Warfighter

Taxpayer




Administer contract







FAR Part 12, 13,14,15*FAR Part 12, 13,14,15*


Strategic Sourcing

Team

Strategic Sourcing

Team

SB

Pilots

Maint.

Lawyers PEOs

Contracting

Buyers

QA Reps

COTRs

Finance

CE

Proj. Mgr

Buyers




Strategy Execution

• Mr. Smith and Mr. Green obtain permission from the HOA and condo board to go forward with requesting prices/quotes

• They have Ms. White, who is a lawyer, review the request he has prepared

• Mr. Smith sends out the request and answers any questions from the suppliers

• Mr. Smith and Mr. Green analyze the responses and prepare recommendations

• They review the recommendation at HOA and condo board meetings

• They make awards to three businesses• A small local company for roads and

drives when it snows under a foot• A large company for roads and

drives when it snows over a foot• The local teens for walkway clearing

Strategy Execution

Follow acquisition process Use business

arrangements

FAR Part 12, 13,14,15*FAR Part 12, 13,14,15*


Buy it!


Goods and Services


















Develop a CONOPs



Results

ResultsCustomer

Warfighter

Taxpayer

Customer

Warfighter

Taxpayer




Administer contract







FAR Part 12, 13,14,15*FAR Part 12, 13,14,15*


Strategic Sourcing

Team

Strategic Sourcing

Team

SB

Pilots

Maint.

Lawyers PEOs

Contracting

Buyers

QA Reps

COTRs

Finance

CE

Proj. Mgr

Buyers




• Mr. Smith has a monthly call with each supplier to discuss past performance and any anticipated changes

• Mr. Smith provides feedback if any service levels have not been met (e.g., Mr. Miller’s driveway was not cleared in time for him to go to work)

• The suppliers provide feedback to Mr. Smith (e.g., Mr. Miller had a vehicle in his driveway which obstructed the plow)



FAR Part 42*

FAR Part 42*

Administer contract Monitor internal performance Integrate supplier relationship mgmt Conduct quality analysis


How well did we buy it?


Goods and Services


















Develop a CONOPs



Results

ResultsCustomer

Warfighter

Taxpayer

Customer

Warfighter

Taxpayer




Administer contract







FAR Part 12, 13,14,15*FAR Part 12, 13,14,15*


Strategic Sourcing

Team

Strategic Sourcing

Team

SB

Pilots

Maint.

Lawyers PEOs

Contracting

Buyers

QA Reps

COTRs

Finance

CE

Proj. Mgr

Buyers



Results

• Neighbors who had used a snow removal service before now see a decrease in cost by $10 per snow

• Mr. Jones is able to build snow forts with his son instead of spending three hours shoveling his driveway

• Mr. Myers does not have to pay for gas and repairs for his snow blower and is now selling it on eBay

• Ms. Grey does not have to wait for her son to get off of work to come over and shovel her driveway

• The entire HOA and condo neighborhood roads, drives and sidewalks are cleared uniformly

• More neighbors are able to get to work (and arrive on time)

Results

Results

ResultsCustomer

Warfighter

Taxpayer

Customer

Warfighter

Taxpayer

How well did we buy it?


Goods and Services


















Develop a CONOPs



Results

ResultsCustomer

Warfighter

Taxpayer

Customer

Warfighter

Taxpayer




Administer contract







FAR Part 12, 13,14,15*FAR Part 12, 13,14,15*


Strategic Sourcing

Team

Strategic Sourcing

Team

SB

Pilots

Maint.

Lawyers PEOs

Contracting

Buyers

QA Reps

COTRs

Finance

CE

Proj. Mgr

Buyers



Strategic Sourcing

Reduction of Total Cost of Ownership


Pricing Improvements

Improved Operating Efficiency


Reduced Operating Expense

Management of Consumption


Demand Management

Improved Focus on Socio-

Economic Goals


Economic Goals

Socio-economic Goals

Benefits

• Maintenance costs• Operating costs• Disposition costs

Supply Chain Savings

• Lower unit price• Volume rebates• Payment term discounts

• Eliminate demand• Reduce consumption• Encourage substitution• Change product mix

• PR Processing• Accounts Payable• Receipt/Warehousing• Standardized procurement process• Other non-procurement

related operating efficiencies

• Structured analysis of small/disadvantaged business opportunities

• Better understanding of small business spend and market

• Cost of capital/Inventory• Depot/storage costs• Transportation costs

Reduced Lifecycle

• Eliminate “gold-plating”• Simplify specifications• Determine industry

standards

Specification Review

• Structured metrics and periodic review of

contractor performance

Performance Monitoring


Successes

• MSCC - 100% award to small businesses

• SECC – Moved 21% from large business to small business

• SECC - Multiple Award to two 8(a) and two (Hubzone) businesses to foster competition and sustain small businesses

• SECC - Improved repair turnaround time and overall system performance by use of Performance Based Logistics (PBL) Contract

• CECC - Reduced ALT for 2 initiatives: from 72 to 10 days and 81 to 20 days, respectively. Decreased total number of contracts from 37 to 14

• ITCC - Reduced mainframe configurations from 100+ to 4; Configurations adopted by OMB as standard

• PCC - Optimized the Source Approval Process to increase Parts Manufacturer Approval (PMA) process

• ITCC - Reduced the computer systems administrator workload thru standardization

• SECC - Improved 2nd destination charges thru terms and conditions

• SECC - improved MICAP hours 25%

• Sustainment: total savings/cost avoidance $261M thru FY11

• ASCC - Consolidated sole source remanufacturing to leverage spend

Strategic Sourcing









Demand Management


Economic Goals


Economic Goals



Reduced Lifecycle

Specification Review

Performance Monitoring


Benefiting from Strategic Sourcing

Strategic Sourcing BenefitsStrategic Sourcing Benefits




• Lower unit price• Volume rebates• Payment term discounts


• Cost of capital/Inventory• Warehousing costs• Transportation costs

Reduced Lifecycle Costs

• Maintenance costs• Operating costs• Disposition costs




• PR Processing• Accounts Payable• Receipt/Warehousing• Standardized procurement process• Other non-procurement

related operating efficiencies

Performance Monitoring• Structured metrics and periodic review of

contractor performance



Demand Management

• Eliminate demand• Reduce consumption• Encourage substitution• Change product mix

Specification Review• Eliminate “gold-plating”• Simplify specifications• Alternative products• Determine industry

standards


Economic Goals


Economic Goals


• Structured analysis of small/disadvantaged business opportunities

• Better understanding of small business spend and market

Source: Censeo Consulting and AQCA


How eLog21 Will Work:The Future Process Model


PSCM Strategic Sourcing:Critical Lessons Learned

The upfront investment was tremendous in terms of people and dollars.

It’s a lot harder to buy strategically than tactically We didn’t have all the skills needed Rationalizing supply base has significant impact on

current providers Original schedules were optimistic

Transformation has brought in new stakeholders that we didn’t think about at the time

External stakeholders can impact your progress


PSCM Strategic Sourcing:Critical Lessons Learned

Overcoming data paralysis early is essential. Implementation of the Strategic Sourcing Analysis Tool

Eliminate “tactical buying” through knowledge sharing. Compliance Database prevents overlapping contract

support AFMC/A4 Logistics deployed Air Force Knowledge Now

Establishing Supplier Relationships are critical. Supplier Relationship Management Division has been

developed to improve business relationships


Current policy impacts our ability to implement our sourcing strategies Thorough communication of requirements to supply

base facilitates greater participation from industry Quantifying savings. It’s more than dollars spent. It’s

about.. Reduction in Mission Incapable (MICAP) Hours Reduction in number of contracts (administrative costs

in time and dollars) Reduction in Sourcing time and Improving on-time

delivery Reduction of amount of inventory on hand

PSCM Strategic SourcingOn-Going Challenges


Transformation efforts from related/unrelated areas may

impact the current organizational construct Difficult to implement standardization

Unanticipated changes may slow progress

Implementation of Performance Based Logistics (PBL)…

buying performance outcomes

Changing the culture…eliminating stove-piped thinking

It’s all about teamwork

Preventing turning back to the “old way”

Strategic Sourcing:On-Going Challenges

today's logistics transformation initiatives:elog21

Documents

proactive support

aspects of logistics

customer needs

snow removal services

supply chain customers

expeditionary logistics

green review

crm enterprise relationships