By Emily Tsambiras, Defense Logistics Agency Distribution, Office of Command Affairs
FORT BELVOIR, Va. — The most efficient solution to a business problem isn’t always the most cost- effective. But when it comes to storage and distribution, Defense Logistics Agency (DLA) Distribution has discovered that performance-based logistics (PBL) provides the best value for the agency, its customers and its vendors.
PBL relies on commercial industry to support and sustain materiel readiness, and focuses on outcomes rather than individual transactions. PBL contracts can motivate manufacturers to produce premium-quality products, saving customers money by reducing the number of necessary repairs, which also decreases parts and labor expenses, said Joe Faris, director of DLA Distribution’s Business Development Office.
The idea isn’t new to DOD. The military services have been using PBL contracts to set performance metrics on unit equipment for several years. DLA has also started combining item support contracts for weapon system parts into single performance-based agreements. Now, DLA Distribution is taking the concept one step further by expanding DLA’s weapon system acquisition strategy to include organic storage and distribution on major end items and repair parts for co-located industrial maintenance activities.
“It was a natural evolution for DLA to expand on the success of PBL by leveraging existing storage, distribution and transportation capabilities to drive best value to DOD,” Faris said.
Early PBL models frequently segmented storage and distribution functions for industrial customers. Contractors were required to store items until requested, and typically they used a third-party warehouse, with that cost passed on to the military customer.
DLA’s first venture into integrating storage and distribution functions into PBLs occurred in November 2014 with a memorandum of understanding among DLA Aviation, DLA Distribution and General Electric to support the U.S. Air Force’s F-series engines. Specifically, DLA is providing supply chain management and materiel procurement and distribution to the F101, F110 and F118-100 engine programs at Tinker Air Force Base (AFB) in Oklahoma City, Oklahoma.
Rather than moving the engines and repair items from a General Electric-contracted, third-party logistics provider to the Air Force’s maintenance activity on Tinker AFB, DLA is using existing warehouse space and transportation contracts to store and distribute these assets through its Oklahoma City distribution center, also located on Tinker AFB.
The result is reduced customer costs for duplicate storage and distribution, shortened delivery times for end items and parts, and a verifiable inventory on a DOD-accountable record, according to Faris.
Since the initiative’s June 1, 2015 launch, DLA Distribution has provided storage and distribution for approximately 140 separate parts accounting for a total of 23,500 items.
“Ensuring the readiness of U.S. and coalition forces in support of our national interest is paramount,” said Army Brig. Gen. Richard Dix, DLA Distribution commander. “Maintaining these weapon systems within DLA’s global network of distribution centers is integral to the integrity of these critical items. In our hands, these items are properly maintained, accountable and fully auditable,” he said.
“And when you consider that our organization can store this materiel at a cheaper cost to the services while providing a time benefit because of our proximity to the customer’s maintenance shops, it’s really a no-brainer,” Dix added.
Faris said his team hopes to take advantage of other potential partnerships by regularly meeting with industry leaders and weapon system program managers to encourage including DLA Distribution in upcoming PBL contracts.
The activity is also partnering with the U.S. Marine Corps’ Light Armored Vehicle program to support maintenance shops in co-located areas such as Barstow, California, and Albany, Georgia, under an initiative set to launch in FY17.
This new integrated approach will leverage the core competencies of the services, industry and DLA to deliver cost-effective performance levels to eliminate redundancies in the network and fully utilize DOD’s existing infrastructure, Faris said.
Dix added that these types of initiatives and “out-of-the-box” thinking will keep the organization relevant into the future.
“We can’t hang our hat on what we’ve done in the past; this is a ‘What have you done for me lately?’ business,” Dix said. “We need to be on time, on target, all the time.
“It’s simple: if everyone knows our capability, and every time a customer calls that call is answered, we remain relevant to our nation’s strategic readiness.”
Future PBL partnerships will allow DLA to assist those organic service industrial complexes in meeting their production schedules efficiently and effectively, and at a better cost as we all operate within a new fiscal environment, he added.
“If we maintain this strategy, DLA Distribution will remain the premier storage and distribution provider for DOD,” Dix said.
As a DOD combat support agency, DLA provides the Army, Navy, Air Force, Marine Corps, other federal agencies and joint and allied forces with a variety of logistics, acquisition and technical services. The agency sources and provides nearly 100 percent of the consumable items that America’s military forces need to operate, from food, fuel and energy, to uniforms, medical supplies and construction and barrier equipment. DLA also supplies more than 88 percent of the military’s spare parts. Headquartered at Fort Belvoir, Virginia, DLA has about 26,000 employees worldwide and supports more than 2,430 weapon systems.
For additional information on DLA Distribution, go to www.dla.mil/Distribution.aspx