Defense logistics agency issue - KMI Media Group

forecasting, lower administrative costs and a streamlined negotiation
process. “As a result, a comprehensive contract can last several years,”
said Bryant, “as opposed to establishing large numbers of contracts
with a sole-source vendor and pricing purchase orders one at a time.
It’s much more efficient for the customer and it works well for us also.”
Strategic alliances and long term contracts are among the cornerstones
of DLA’s strategy to drive efficiencies to the land and maritime
supply chains. “Long-term contracts with suppliers enable us to
reduce the time is takes to put something on contract and allows us
to reduce inventory and better support our customers,” said Rodocker.
DLA has established these relationships with Navistar, Force Protection
and AM General, as well as with Oshkosh and others.
“These programs take a top-down approach and are very structured,”
Rodocker added. “We establish a charter with each company to
lay out goals to be achieved. We always focus on improving customer
support and reducing the costs of the products.”
The approach starts with creating joint teams among DLA and
company representatives to manage certain products or classes of
products. “We establish a battle rhythm with our suppliers and we
meet with them regularly,” said Rodocker. “We establish joint steering
groups to work on issues and problems and to come up with
resolutions and we track how they are doing. We have found that this
approach results in a much improved working relationship with suppliers.”
Around 65 percent of the dollars spent on land spare parts and
30 percent in the maritime supply chain are now managed through
long-term contracts, typically lasting three to five years. “It has had a
huge impact,” said Roberts. “It reduces labor costs because you don’t
have to spot buy every time there is a requirement. It also reduces
inventory levels and provides better customer service.”
There are a number of criteria that DLA looks for to place items
on long-term contracts. “They should have stable technical characteristics,”
said Rodocker. “Items with good spend histories and recurring
demand are also key for long-term contracts. That is also what companies
are looking for to provide us with a good business deal.”
The DLA land and maritime group has an arrangement with AM
General LLC, an HMMWV OEM, designed to reduce inventory levels
while improving customer support. “AM General provides spare parts
to HMMWV rebuild lines at the Red River and Letterkenny army
depots,” explained Roberts. “They plan the requirements and leverage
their commercial as well as DLA’s organic supply chains in order to
deliver parts to production lines at the depots.”
The DLA-AM General arrangement has succeeded in reducing
inventory levels as well as line stoppers, situations necessitating a
work stoppage because of the lack of parts, according to Roberts. The
program has rebuilt over 43,000 HMMWVs since the inception of the
program.
Another example of such a strategic alliance revolves around the
supply of water purification systems. DLA engaged Aqua-Chem Inc.
through a competitive bidding process to perform demand forecasting
for water purification equipment as well as stocking and supporting
DLA customers directly with those systems.
WHEN
DLA, TACOM, LEAD, RRAD AND MMA WANTED A SURE-FIRE PARTS DELIVERY SYSTEM,
WE HAD AN ANSWER.
In fact, we helped drive the development of a Customer Pay program that mandates the only
time our OEM gets paid is when a part is delivered to the military assembly line. The following
results speak for themselves: No G-coded vehicles coming off the lines • Parts inventories reduced from $100 million to
$25 million • 28 million parts for 25,000 Humvees were delivered with only 52 misses • Named 2008 LEAD supplier of the year
For Warehousing & Logistics, Technical Services, Products, or Kitting
and Packaging, choose Williams Logistics and Consider It Done.
Albany, GA | Chambersburg, PA | Scranton, PA | New Boston, TX
Call 1-800-999-0933
www.wwwilliams.com
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