Description
Supply Chain Management: SCM is not the management of suppliers but rather the integration of NASA Project Elements and all associated functions, Centers, Facilities, third party enterprises, Industrial Base (Suppliers), orbital entities, space locations, and space carriers that network/partner together to plan, execute, and enable an Exploration mission that will deliver an Exploration product (crew, supplies, data, information, knowledge, and physical samples) and to provide the after delivery support, services, and returns that may be requested by the customer.
Making the Business Case for Industrial Base
and Supply Chain Management for the
Aerospace and Defense Industry
A 10 Step Guide to adopting SCM* and review of current SCM Projects including
an Interagency Supply Chain Interoperability Pilot Study
* Supply Chain Management: SCM is not the management of suppliers but rather the integration of NASA
Project Elements and all associated functions, Centers, Facilities, third party enterprises, Industrial Base
(Suppliers), orbital entities, space locations, and space carriers that network/partner together to plan, execute,
and enable an Exploration mission that will deliver an Exploration product (crew, supplies, data, information,
knowledge, and physical samples) and to provide the after delivery support, services, and returns that may be
requested by the customer.
4 November 2009
Presented by:
Michael C. Galluzzi
NASA HQ
ESMD and Constellation Supply Chain Manager
National Aeronautics and Space Administration
www.nasa.gov
10 Steps to Product Support Business Model (PSBM)
www.nasa.gov
National Aeronautics and Space Administration
Better accuracy in procurement, leverage Vendor Managed
Inventory, Technology Insertion built into process
Comprehensive visibility and analysis of supplier capability,
performance and quality
Higher volume gives better supplier viability and pricing
while improving product quality
Duplicates get identified based on comparison of multiple
part numbers: Reduced Inventory.
Benefit Potential*
Value Source*
Reduced Obsolescence Mitigation Costs
Reduced supplier management and
maintenance labor cost
Effect of demand aggregation: reduced cost
due to increased volume
Reduction due to reduced duplicate parts
Industry Improvement
Range (in %)
30 – 50%
20 – 50%
3 – 8%
8 - 15%
*Source: SAP America, Inc.
Adopt Industrial Base and Supply Chain Management Best Practices
1. Establish SCM contract language to ensure Product Lifecycle Management and mission goals.
2. Obtain visibility of the lower tier suppliers and continually assess the health of the IB
3. Institutionalize IB considerations into strategic processes e.g. Mfg Readiness Level (MRL) during DDT&E.
4. Enhance Interagency processes to increase product demand pressure and collaborative demand planning
5. Define the measurement framework to enable the Prime Contractor, but don’t totally delegate to the
Prime. Set targets and thresholds for the key supply chain performance indicators (SCOR KPI) then
integrate into the budget process.
6. Vendor Managed Inventory, a driver to J IT “Make-to-Order” than “Make-to-Stock”
7. Establish a common enterprise information architecture to provide consistency
and synchronization between supply chain participants (ERP,MRP,CAD,CAM)
8. Involve suppliers during the DDT&E phase of the product lifecycle.
9. Eliminate process proliferation and maverick procurement
10. Ensure technology insertion is the rule not the exception
Project Overview
National Aeronautics and Space Administration
www.nasa.gov
? Supplier Mapping
? Department of Commerce Industrial Base Study
? Integrated Modeling and Simulation (IM&S)
? Economic Stability Indicator Model
? Value Engineering Assessment of IB and SCM
? Integrated Enterprise Architecture Initiative
? Interagency Interoperable Supply Chain Pilot
? DoD ManTech Program www.dodmantech.com
? Network Centric Manufacturing “Supplier City”
? Interagency collaboration and coordination
? Assess Policy, Contracts, Organization
? Acquisition Strategy
? Agency and Program Risk
Cost of DoD Reset
Production in DoD Maintenance Depots
? FY98-02 capacity reduction driven by BRAC
95 closures of major depots
? Major production increases seen beginning
in FY04 –driven by Army and USMC-Army
24M DLH from 10.3M -USMC 3M DLH from
2.2M
? Overall, depots operating at about 101% of
capacity, but Army depots at ~115%
Past costs exceed $56B
? Army -$38B
? Marine Corps -$10.9B
? Navy -$4.3B
? Air Force –$1.9B
Future costs . . .
? Army estimates $13+ billion per year
required for the foreseeable future
? Marine Corps estimates annual future
funding requirements of $3+ billion
? Navy assumes three years to
complete reset after hostilities end at
added cost of $11+ billion
Pending DoD FY 2008 GWOT
? Supplemental contains $46.4B for
Reconstitution requirements:$
? 13.7B has been funded to date
Restoring and enhancing combat capability . . . Collaboration +Integration =Success
Page 1
Objective
? To demonstrate the value of creating
interoperability between the NASA and DoD
supply chains
? Utilizes excess supplier capacity by shaping
product demand pressures to maintain product
viability for both NASA and DoD
? Provide 3-D official data and process data files on
parts and demonstrate how a common Product
Data Management warehouse and 3D data helps
enable interoperable supply chains
? Identify adoption issues for interagency
interoperable supply chains
? Creates “safety net” from failed supply chains
? Suppliers are Transitioned and Optimized for
Rapid Manufacturing (STORM)
NASA and OUSD/DoD Interoperable Supply Chain Pilot
Suppliers Transitioned and Optimized for Rapid Manufacturing – Project “STORM”
www.dodmantech.com
Interagency Collaboration and Coordination
SQIC
1
st
& 2
nd
Tier
Critical Technology
Working Group
Space Industrial Base Council (SIBC)
Co-chairs DoD EA & DNRO
Exec Sect : NSSO
Sponsors
(NASA, NRO, NAVY, MDA, SMC, DCMA, NSSO)
SSC
Lower Tier
I
n
d
u
s
t
r
y
G
o
v
e
r
n
m
e
n
t
? Supply Chain Mapping
Standards
? Section H RFP
language
? Supplier Rating
Systems
? Supplier Early
Involvement
? Make/Buy Decisions
? Requirements Flow
Down
Supply Chain
Management Efforts
LTG Patrick J . O’Reilly
Director
Missile Defense Agency
Maj Gen Ellen M. Pawlikowski.
Deputy Director
National Reconnaissance
Office
Mr. Bryan D. O’Connor
Chief Safety and Mission
Assurance Officer
NASA
Lt Gen J ohn T. Sheridan
Commander
USAF Space Command
Agency Sponsors
Mr. J oseph D. Rouge, SES
Director
National Security Space Office
Mr. Charlie E Williams, J r., SES
Director
Defense Contract Management
Agency
RDML M. Elizabeth “Liz”Young
Program Executive Officer
Space Systems
*added Apr 08
National Aeronautics and Space Administration
www.nasa.gov
Value Engineering Assessment
Enhancing operational efficiencies through a
sustainable supply chain improvement strategy.
Investigate the following:
? Reducing the recurring and non-recurring indirect costs
? Eliminate process proliferation and process optimization
Strategic
Planning
Process
Based / Operational
Planning
Tactical
Planning
Sustainment
Effectiveness
Operational
Effectiveness
? Vehicle Operations Planning
? Collaborative Demand Planning and Forecasting
? Inventory and Asset Control Planning
? Supply Planning
? Supplier / Vendor Managed Inventory (VMI)
? Supplier Collaboration
? Manufacturing Readiness Level (MRL)
? Production Planning and Detailed Scheduling
? Flexible Upside Supply Chain Order Promising
The benchmarking study includes analysis across
3 primary Supply Chain Planning processes
National Aeronautics and Space Administration
www.nasa.gov
Neglected Opportunity
“The Iceberg effect”
The Indirect Costs
Flow of Materials,
Information,
Services and
Finances ? 90%
Direct Touch
Labor Costs
Supply Chain Management: SCM is not the management of suppliers but rather the integration of NASA Project Elements and all associated functions, Centers, Facilities, third party enterprises, Industrial Base (Suppliers), orbital entities, space locations, and space carriers that network/partner together to plan, execute, and enable an Exploration mission that will deliver an Exploration product (crew, supplies, data, information, knowledge, and physical samples) and to provide the after delivery support, services, and returns that may be requested by the customer.
Making the Business Case for Industrial Base
and Supply Chain Management for the
Aerospace and Defense Industry
A 10 Step Guide to adopting SCM* and review of current SCM Projects including
an Interagency Supply Chain Interoperability Pilot Study
* Supply Chain Management: SCM is not the management of suppliers but rather the integration of NASA
Project Elements and all associated functions, Centers, Facilities, third party enterprises, Industrial Base
(Suppliers), orbital entities, space locations, and space carriers that network/partner together to plan, execute,
and enable an Exploration mission that will deliver an Exploration product (crew, supplies, data, information,
knowledge, and physical samples) and to provide the after delivery support, services, and returns that may be
requested by the customer.
4 November 2009
Presented by:
Michael C. Galluzzi
NASA HQ
ESMD and Constellation Supply Chain Manager
National Aeronautics and Space Administration
www.nasa.gov
10 Steps to Product Support Business Model (PSBM)
www.nasa.gov
National Aeronautics and Space Administration
Better accuracy in procurement, leverage Vendor Managed
Inventory, Technology Insertion built into process
Comprehensive visibility and analysis of supplier capability,
performance and quality
Higher volume gives better supplier viability and pricing
while improving product quality
Duplicates get identified based on comparison of multiple
part numbers: Reduced Inventory.
Benefit Potential*
Value Source*
Reduced Obsolescence Mitigation Costs
Reduced supplier management and
maintenance labor cost
Effect of demand aggregation: reduced cost
due to increased volume
Reduction due to reduced duplicate parts
Industry Improvement
Range (in %)
30 – 50%
20 – 50%
3 – 8%
8 - 15%
*Source: SAP America, Inc.
Adopt Industrial Base and Supply Chain Management Best Practices
1. Establish SCM contract language to ensure Product Lifecycle Management and mission goals.
2. Obtain visibility of the lower tier suppliers and continually assess the health of the IB
3. Institutionalize IB considerations into strategic processes e.g. Mfg Readiness Level (MRL) during DDT&E.
4. Enhance Interagency processes to increase product demand pressure and collaborative demand planning
5. Define the measurement framework to enable the Prime Contractor, but don’t totally delegate to the
Prime. Set targets and thresholds for the key supply chain performance indicators (SCOR KPI) then
integrate into the budget process.
6. Vendor Managed Inventory, a driver to J IT “Make-to-Order” than “Make-to-Stock”
7. Establish a common enterprise information architecture to provide consistency
and synchronization between supply chain participants (ERP,MRP,CAD,CAM)
8. Involve suppliers during the DDT&E phase of the product lifecycle.
9. Eliminate process proliferation and maverick procurement
10. Ensure technology insertion is the rule not the exception
Project Overview
National Aeronautics and Space Administration
www.nasa.gov
? Supplier Mapping
? Department of Commerce Industrial Base Study
? Integrated Modeling and Simulation (IM&S)
? Economic Stability Indicator Model
? Value Engineering Assessment of IB and SCM
? Integrated Enterprise Architecture Initiative
? Interagency Interoperable Supply Chain Pilot
? DoD ManTech Program www.dodmantech.com
? Network Centric Manufacturing “Supplier City”
? Interagency collaboration and coordination
? Assess Policy, Contracts, Organization
? Acquisition Strategy
? Agency and Program Risk
Cost of DoD Reset
Production in DoD Maintenance Depots
? FY98-02 capacity reduction driven by BRAC
95 closures of major depots
? Major production increases seen beginning
in FY04 –driven by Army and USMC-Army
24M DLH from 10.3M -USMC 3M DLH from
2.2M
? Overall, depots operating at about 101% of
capacity, but Army depots at ~115%
Past costs exceed $56B
? Army -$38B
? Marine Corps -$10.9B
? Navy -$4.3B
? Air Force –$1.9B
Future costs . . .
? Army estimates $13+ billion per year
required for the foreseeable future
? Marine Corps estimates annual future
funding requirements of $3+ billion
? Navy assumes three years to
complete reset after hostilities end at
added cost of $11+ billion
Pending DoD FY 2008 GWOT
? Supplemental contains $46.4B for
Reconstitution requirements:$
? 13.7B has been funded to date
Restoring and enhancing combat capability . . . Collaboration +Integration =Success
Page 1
Objective
? To demonstrate the value of creating
interoperability between the NASA and DoD
supply chains
? Utilizes excess supplier capacity by shaping
product demand pressures to maintain product
viability for both NASA and DoD
? Provide 3-D official data and process data files on
parts and demonstrate how a common Product
Data Management warehouse and 3D data helps
enable interoperable supply chains
? Identify adoption issues for interagency
interoperable supply chains
? Creates “safety net” from failed supply chains
? Suppliers are Transitioned and Optimized for
Rapid Manufacturing (STORM)
NASA and OUSD/DoD Interoperable Supply Chain Pilot
Suppliers Transitioned and Optimized for Rapid Manufacturing – Project “STORM”
www.dodmantech.com
Interagency Collaboration and Coordination
SQIC
1
st
& 2
nd
Tier
Critical Technology
Working Group
Space Industrial Base Council (SIBC)
Co-chairs DoD EA & DNRO
Exec Sect : NSSO
Sponsors
(NASA, NRO, NAVY, MDA, SMC, DCMA, NSSO)
SSC
Lower Tier
I
n
d
u
s
t
r
y
G
o
v
e
r
n
m
e
n
t
? Supply Chain Mapping
Standards
? Section H RFP
language
? Supplier Rating
Systems
? Supplier Early
Involvement
? Make/Buy Decisions
? Requirements Flow
Down
Supply Chain
Management Efforts
LTG Patrick J . O’Reilly
Director
Missile Defense Agency
Maj Gen Ellen M. Pawlikowski.
Deputy Director
National Reconnaissance
Office
Mr. Bryan D. O’Connor
Chief Safety and Mission
Assurance Officer
NASA
Lt Gen J ohn T. Sheridan
Commander
USAF Space Command
Agency Sponsors
Mr. J oseph D. Rouge, SES
Director
National Security Space Office
Mr. Charlie E Williams, J r., SES
Director
Defense Contract Management
Agency
RDML M. Elizabeth “Liz”Young
Program Executive Officer
Space Systems
*added Apr 08
National Aeronautics and Space Administration
www.nasa.gov
Value Engineering Assessment
Enhancing operational efficiencies through a
sustainable supply chain improvement strategy.
Investigate the following:
? Reducing the recurring and non-recurring indirect costs
? Eliminate process proliferation and process optimization
Strategic
Planning
Process
Based / Operational
Planning
Tactical
Planning
Sustainment
Effectiveness
Operational
Effectiveness
? Vehicle Operations Planning
? Collaborative Demand Planning and Forecasting
? Inventory and Asset Control Planning
? Supply Planning
? Supplier / Vendor Managed Inventory (VMI)
? Supplier Collaboration
? Manufacturing Readiness Level (MRL)
? Production Planning and Detailed Scheduling
? Flexible Upside Supply Chain Order Promising
The benchmarking study includes analysis across
3 primary Supply Chain Planning processes
National Aeronautics and Space Administration
www.nasa.gov
Neglected Opportunity
“The Iceberg effect”
The Indirect Costs
Flow of Materials,
Information,
Services and
Finances ? 90%
Direct Touch
Labor Costs