PARCconPSMBriefingAB udd

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U.S. ARMY MATERIEL COMMAND “Need To Be Faster, More Agile, Less Bureaucratic – Need To Fight This Everyday” Implementing Purchasing & Supply Management Ann Budd Contracting Policy Division


Agenda What is PSM and Why Change? What are AMC Goals for PSM? How will AMC Implement PSM? How does PSM integrate with other AMC initiatives? How does BRAC impact PSM pilot? Backup Data - Charts


What is PSM? Strategic, enterprise wide multi-functional approach to managing supply chain Reduces total ownerships costs, improves quality and performance Manages Risk and improves reliability

Why Change? How PSM Impacts AMC: 

Why Change? How PSM Impacts AMC AMC spend is 50% of total Army – PSM leverages AMC spend PSM – strategic enterprise wide approach that manages entire supply chain Increase Decrease

AMC Vision/Strategy for PSM: 

AMC Vision/Strategy for PSM VISION : Be the sustainment supplier of choice for worldwide weapons systems parts and equipment support MISSION: Improve readiness through PSM transformation PSM Strategy: Build long-term collaborative relationships with suppliers AMCOM pilot - AWCF secondary items Integrate purchasing and supply functions across the enterprise Develop strategic focus to supply chain management Develop PSM as a core competency across AMC Increase quality and performance Decrease delivery time, ALT and total costs Expand PSM best practices across AMC

What are AMC’s Goals for PSM? : 

What are AMC’s Goals for PSM? CUSTOMER FINANCIAL PROCESS LEARNING/ GROWTH Achieve end-to-end visibility Reduce end-to-end cycle time Reduce total supply chain cost Increase weapon systems availability Attain improved order fulfillment Build a flexible and empowered workforce Develop strategically-focused knowledge workers Simplify Business Processes Quantifiable goals to guide the PSM process design

How will AMC Implement PSM?: 

How will AMC Implement PSM? ESTABLISH A PILOT PROGRAM AT AMCOM Rotor Blades and drive train mechanisms Establish a Purchasing and Supply Management Cell at HQ’s Oversee PSM pilots Develop / provide PSM training and information Develop AMC wide implementation plan Launch Pilot at AMCOM Cross functional teams will test 3 echelons of PSM Supply management Commodity teams Joint Logistics support Proliferate PSM across AMC upon success of pilot Consider BRAC impacts throughout pilot implementation

Phased and Iterative PSM Implementation: 

Implementation Plan Developed and Approved Formed HQ IPT and PSM Cell Form Pilot Program IPT at AMCOM Review “As-Is” Base- line. Determine “To-Be” Processes Document Business Rules & Instructions Document Objectives, Metrics and Baselines 1 Iterative Methodology Collaborative IT Design and Deployment Daily Use of “To-Be” Processes Business Rules Adjustments As-Required Metrics Monitoring and Reporting Evaluation of Pilot Program Formation of AMC-wide Commodity Councils Roll-Out of PSM Business Practices AMC-Wide Perform Market and Spend Analysis Select Commodity, Supplier and Joint PSM Pilot Candidate Items Business Case Development & Management Reviews Workforce Training, Organizational and Job Role Adjustments Negotiate Flexible Long- Term PSM Contracts Phased and Iterative PSM Implementation 8 7 6 5 4 3 2 1QFY06 2QFY07

What Processes will the PSM Pilot use? 8 step process : 

What Processes will the PSM Pilot use? 8 step process Follows a proven and reliable process USAF and industry approach


How does PSM integrate with Ongoing AMC Initiatives? Commodity Councils Collaboration Logistics Modernization Program (LMP) PSM LEAN /6 Sigma Commodity Councils Strategic Sourcing Long term Contracts Contractor Logistics Support AMC Performance Based Logistics

How will BRAC impact AMC PSM Pilot? Mitigates Readiness Risk Consolidates DLR Buying Function: 

SERVICES RETAIN Logistics Support Processes Service Logistics Systems DLR Requirements Determination Item mgmt responsibility DLR Repair Management Title 10 Responsibilities -- Achieving readiness levels -- 50/50 compliance DLR Technical Support DLR Reliability Engineering DLR Deficiency Resolution Engineering Release Authority Service Stockage Policy How will BRAC impact AMC PSM Pilot? Mitigates Readiness Risk Consolidates DLR Buying Function DLR Purchasing Responsibility Service DLR “Buy” Cost Authority Contract Development Responsibility Service DLR Buy Support Personnel Remaining consumable items Transfer to DLA Pilot Focus on AWCF DLRs


Questions ?



Summary of FY04 DD350 Transactions Reveals Complexity of Army Materiel Command Purchases: 

Summary of FY04 DD350 Transactions Reveals Complexity of Army Materiel Command Purchases Prospective target areas $42 B in purchases 32 different purchase office codes 26,092 different contracts 10,229 different contractor I.D. codes 9,022 different parent company I.D. codes 1,184 different Federal Supply Class (FSC) codes Prospective challenges % of % of $s contracts Sole source contracts 47 36 Three or more bids 33 25 Small business contracts 13 59 Set aside contracts 3 9 Purchase orders 1 60 SOURCE: FY04 DoD-wide DD350 data; Army Materiel Command.

What an Analysis Reveals: 

What an Analysis Reveals Having Many Dollars in the Same Federal Supply Class May Indicate Prospective Targets for Leveraging Spend Having Many Contracts in the Same FSC May Indicate Prospective Targets for Reducing Transaction Costs Having the Same Supplier* with Multiple Contracts May Indicate Prospective Leverage Opportunities

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