DLA Transformation Improves Automation, Service, Savings
By Sgt. 1st Class Doug Sample, USA
American Forces Press Service
WASHINGTON, Dec. 11, 2003 Though several factors got the Defense Logistics Agency into the transformation business, the primary focus is to provide better service and cost savings to the warfighter, Navy Vice Adm. Keith Lippert, DLA director, said here today.
Lippert spoke at the Defense Logistics 2003 conference at the Ronald Reagan Building and International Trade Center. The three-day conference, which ends today, brought together military and civilian industry leaders to look at ways of improving military readiness from a logistical standpoint.
Lippert said that over the past several years, DLA has implemented a series of modernization and cost-effective initiatives that are "paying dividends" for his organization. He pointed out that $1.8 billion has been saved through DLA's transformation efforts -- money he said will be "passed to the customer" through cost recovery by lowering future prices.
As an example of how efficient his organization has become, Lippert said that the Marine Corps, which had began to buy its uniforms outside of DLA, has now returned because the agency's cost recovery rate is so competitive.
"When you're looking at transformation, these are key things, in terms of returning money back to the services, because DLA is a much more efficient organization," he said.
Lippert told the group that transformation at DLA has meant several changes that have greatly affected the 26,000-strong operation that includes civilians and military members, operates in 48 states and 28 countries, and has $24 billion in annual sales.
DLA provides supply support and technical and logistics services to the military services and federal agencies. With headquarters at Fort Belvoir, Va., the agency is the one source for nearly every consumable item, whether for combat readiness, emergency preparedness or day-to-day operations.
Lippert said one of the first factors that led to transformation at DLA was a need to replace the agency's two outdated legacy material management systems. The Standard Automated Materiel Management System and the Defense Integrated Subsistence Management System were designed by the government in the 1960s and were written in Common Business Oriented Language, or COBOL, a programming language no longer in widespread use. The systems were used primarily for ordering repair parts, industrial and general supplies, electronics and construction parts, clothing and textiles, and food for all military services.
Lippert said those system put DLA "five generations" behind where world-class companies are, and should have been replaced long ago.
The supply management system is being replaced by ERP -- Enterprise Resource Planning -- supply-chain management solution software, part of DLA's $582 million Business Systems Modernization effort. Lippert said ERP will allow DLA to create a centralized supply chain management system that will improve demand planning, order fulfillment, procurement and financial management.
"Our customers, the warfighters, had alternatives other than coming to DLA if, in fact, we weren't competitive and we weren't giving them their materials on time and at a reasonable cost," he explained. "This system solves many of those problems." DLA lacked the information technology capabilities to provide its customers with what they ask for, he said.
However, he added, once Business Systems Modernization is fully implemented, the system will allow DLA to monitor assets by location. "It means we can position material to meet customer response times and to eliminate, or certainly reduce, retail levels because DLA will be positioning material much more optimally." He said pilot programs are being worked with each of the services.
Lippert said another factor behind DLA's transformation was that the agency had not been as "engaged with its customer" in the past as the agency might have been.
To remedy to this problem, he said, DLA created what it terms "seamless partnering," where agency liaison officers are assigned to work with combatant commanders and customer support representatives for its major customers.
Improving customer service has led DLA to create "evolving organizations" within itself. The purpose of the new Customer Operations Directorate, which was formalized in October, he said, "is to focus on the customer."
Lippert also pointed out that DLA's transformation means retraining its work force. He said the average age of a DLA employee is 48. And that employee, he noted, "has used the same software system his or her entire professional career. And we've now just pulled the rug out from under them." And though retraining the work force is a very difficult process, Lippert said, "without that step, transformation just simply will not work."