AAFA

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AAFA DSCP Update
PRESENTED BY Dennis Dudek Director of Supplier
Operations CLOTHING TEXTILES March 2006
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Why We Are Here
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Why We Need Your Support
Thanks !
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Agenda

• The Year in Review
• Support to the Warfighter
• BSM Update
• Dollars and Sense
• Issues

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The Year in Review
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The DLA / DSCP Enterprise
DLA (20,804 Civilians / 1267 Military)
DSCP (2706 Civilians / 71 Military)
FY 02 Sales/Services 7.8B FY 03
Sales/Services 10.4B FY 04 Sales/Services
11.5B FY 05 Sales/Services 12.7B FY 06
Projection 12.3B
FY 02 Sales/Services 21.5B FY 03
Sales/Services 25B FY 04 Sales/Services
28B FY 05 Sales/Services 31.3B FY 06
Projection 34.3B

• Land/Maritime/Missiles 3.3B
• Aviation 3.6B
• Troop Support 12.9B
• Energy 11.0B
• Distribution 2.5B
• Other 1.0B

• CT 2.5B
• Medical 3.6B
• Subsistence 3.9B
• Construction Equip. 2.7B

Scope of Business
Scope of Business

• 50 Fortune 500 Above Intel
• 5.2 Million NSNs
• 1411 Weapon Systems Supported
• 48 States / 28 Countries
• 26 Distribution Depots

• 172 Fortune 500 2 Above Nike
• 2.7 Million NSNs / LSNs
• 1200 Weapon Systems Supported
• 14 States / 11 Countries
• 22 Distribution Depots with DSCP Stock

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DSCP - 4 Supply Chains
CLOTHING TEXTILE CLASS II
SUBSISTENCE CLASS I
FY05 12.7B

• Recruit Clothing
• Readiness
• Organizational Clothing Individual
  Equipment

• Food Service
• Produce
• Operational Rations

3.86B
2.54B
CONSTRUCTION EQUIPMENT CLASS IV / VII
MEDICAL CLASS VIII

• Facilities Maintenance
• Equipment
• Wood Products
• Safety Rescue Equipment

• Pharmaceutical
• Medical/Surgical
• Readiness
• Equipment

3.60B
2.71B
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FY05 The CT Big Picture
INVENTORY FY 01 - 1.2B FY 02 - 1.1B FY 03 -
1.0B FY 04 - 1.4B FY 05 - 1.4B FY05 - 1.5B
SALES
FY 01 - 1.2B FY 02 - 1.5B FY 03 - 2.1B FY 04 -
2.6B FY 05 - 2.5B FY06 - 944M to date

• MAGNITUDE
• 3,600,000 orders
• per year
• 31,000 different
• items
• -2B spent
• each year
• - FY06 1,049,000,000

PEOPLE Customers 14,000 Vendors
220 Employees 295
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CT Cost Recovery Rates FY96 - FY06
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CT FY05/06 Budget Execution
Backorders
Demands/Sales
Backorders _at_ Cost (9/30/04) 831.8M
End of FY05 Net Demands _at_
Cost. 1,962.1M Net Sales _at_ Cost
2,222.1M Backorders _at_ Cost 571.7M
CT sold off some of their backorders
Demands 213M less in first five months of FY06
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Supply Chain Management (SCM)Support to the
Warfighter
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The only thing harder than getting a new idea
into the military mind is to get an old one
out.
Source B.H. Liddell Hart, Marine Corps Gazette,
January 2003
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Logistics Challenge OEF / OIF
Demand is Erratic
Average Monthly Demand
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OEF / OIF Top Sales Items
Clothing TextilesThe BIG Picture
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Support to MNSTC-I

• Currently Working
• Chocolate Chip Desert Uniform
• Initial Requirement 280K sets Coats/Trousers
• 255K set delivered
• 50 other items
• Boots, Helmets, Cold Weather Items,Tents,
  Gloves, Duffel Bags, Berets, ECWCS

BeretsDelivered 255K (2.4M)Flash removal
25K/month
Delivered 47K (2.2M)Ponchos
Totals to date 175M ordered / 95M filled
Winter Aviator Gloves 164K order RFI Item
Delivered 4K (153K)
Delivered38K (1.3M)Poncho Liners
Delivered 242K (16.8M)Boots, HW Combat
Delivered 80K Trousers, 88K Parkas(21.8M of
ECWCS)
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Army Direct Ordering (ADO)Web-Based Logistics
WINNER OF 2005 SUPPLY CHAIN EXCELLENCE OSD
AWARD (announced Feb 06)

• CSA authorized a test of Internet ordering
  capability

• DSCP solution
• Use an existing web-based program which
  currently supports 631,000 Guard/Reservists
• Serves 360K Army National Guardsmen
• ANG saving 10M / year
• Test Case 7 Units deployed in Iraq
• Ran from Jun-Oct 2004
• Very Successful all orders filled complete
• 311 orders worth 36K
• Expansion on-going
• Afghanistan (16K soldiers), Horn of Africa(100
  soldiers) Iraq (90K soldiers)
• 872 units ordering, 57,000 Orders shipped
• Overall totals 395,000 items / 6.0M
• Next Step
• Possible expansion to support OCIE Concept

3. Places Order Via Army Knowledge On-Line
1. Deployed Soldier Needs Item
2. Accesses Internet
6. Order Ships Via US Postal System To
Individual Soldier
4. Order Received Stateside at DSCP site (KyLOC)
5. Items Picked Patches / Insignia Sewn on
Boots, Caps, Hats, Cold Weather Coats, BDU Coats
/ Trousers, Helmet Covers, and more
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Business Systems Modernization Update
BSM
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Clothing TextilesCustomer Operations
Clothing Textiles Customer Operations
Directorate Director Paul C. Diamonti, Mil
0-6 Deputy Director Gary Shute
Recruit Customer Facing Division
OCIE Customer Facing Division
Other Customer Facing Division
Item Planning Division
Customer Support Division See DSCP Customer
Operations Directorate
Army Recruit Cell
Other CT Customers Cell
Army CIF Cell
Dress Clothing IPT
Navy Recruit Cell
Operating Forces Support Team
USMC, Navy, USCG OCIE Cell
Field Clothing IPT
USMC Recruit Cell
AF IEE Cell
Other FMS Support Team
Organizational Clothing IPT
AF Recruit Cell
Installation Support Team
Individual Equipment IPT
USCG Recruit Cell
Clothing Sales Stores Cell
National Guard Reserves Cell
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Clothing TextilesSupplier Operations
SMSG
Clothing Textiles Supplier Operations
DirectorateDirector Dennis Dudek Deputy
Director Sally DiDonato
Organizational Clothing Division Donna Pointkouski
Individual Equipment Division Terri Scheetz
Dress Clothing Division Bill McClellahan
Field Clothing Division Bob Panichelle
ECWCS IST Florence Robinson
Safety IST Dave Johns
Footwear IST Tom Hutchinson
Dress Uniforms IST Suzanne Kershaw
Individual Equipment IST Mark Twardziak
Gloves/Wet Weather IST Kevin Peoples
Battledress IST Susanne McHale
Outerwear IST Bob Spadaro
Tentage Shelters IST LouAnn Graham
Accessories IST Harry Veneri
Coverall/Special Purpose IST Cindy Small
Dress Shirts/Headwea Cherly Reynoldsr
Heraldics IST Tom Zassick
Chemical IST Marie Brywka
Non-NSN IST
Chemical IST Marie Brywka
Product Services Branch
Product Services Branch
Product Services Branch
Product Services Branch
Supplier Support Div
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Business System ModernizationBSM

• Release 1.1 Battledress Uniform
• Went live 1 December 03
• Release 2.1.1 Flags Insignia
• Went live 1 Jan 05
• Release 2.1.2 Chemical Suits
• Went live 1 Apr 05
• Release 2.1.3 Tents
• Went live 1 Jul 05
• Release 2.1.4 Accessories
• Went Live Nov 05
• Release 2.1.5 Org Clothing
• Went Live Mar 06

Whats Left? Jun 06 Dress Clothing Aug 06 -
Footwear
Done!!
Change Happens!
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Dollars, and Sense
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Recruit Clothing PlanKey Drivers M
FY05 941.5M
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Individual Equipment and Clothing PlanKey
Drivers M
Projected
FY05 1146.6M
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ACU Award Breakout
Total Base Year 321.5M
Large Business
NISH
140.0M
43.6
39.7M
UNICOR
11.6
Mandatory Sources
12.3
37.1M
28.8
92.7M
Other Small
4.9
Hub Zone
SBD
7.5
Wmn Owned
NIB
4.4
9.1
15.9M
6.6
Small Business
Large Business 5 Firms Small Business 11
Firms NISH 1 Workshop
NIB 7 Workshops UNICOR
5 Plants
88.8M
27.6
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ISSUES
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Joint Meetings of Industry and DSCP
ADDRESSING THE FIVE MAJOR AREAS

• Contract Length Will maintain long-term
  contracts will stress advanced notice and
  timely placement of orders
• Solicitation Improvements Will track buy times
  in FY06 and address specific industry concerns
  from a supply chain perspective (new mgmt
  position)
• Min / Max Will use correct base figure to
  calculate and will be more flexible depending on
  sub-industry particulars not a one shoe fits
  all approach will also be able to adjust
  production lead-times based on material
• Information Sharing Will provide current
  vendors with a 12 month window at the beginning
  of the fiscal year (Oct) and a 6 month window at
  mid year (Apr) - based on demand figures
  Advance notice the key, even for bad news
• Technology Issues Will continue to inform on
  latest changes RFID, VIM-ASAP, BSM, etc.

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The Forecast

• Comprehensive review of items
• Every 6 months (start and mid-point of fiscal
  year)
• Reviews past data / customer input
• Establishes future projected demand
• Prepares projected contract delivery schedules
• Passed on to vendor community
• Reviewed on a monthly basis
• Compares actuals vs. projected
• Demand / Delivery / Stock Levels / Sales
• Makes adjustments based on the numbers
• Projected deliveries are just that projections
• Our Best Guess based on all of the data
• As much customer input as we can obtain
• Depends on
• Demand occurring as projected
• Inventory hitting goals
• Customer item changes (e.g., Army Combat Boot or
  ECWCS)
• Projected Delivery Schedules
• OCT Beginning of our fiscal year (12 month
  look)

USE IT AS A GUIDE PCO IS YOUR MAIN CONTACT
Be Prepared - Change Happens!
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JWOD Program

• DSCP is a Large User of JWOD Program
• NIB and NISH production facilities
• Always with the intent to broaden base of a
  product line
• Demonstrated by use of the Pie Chart (next slide)
• Dollars may go up and down, should remain
  relatively constant
• One Exception was the JSLIST program
• Now undergoing review
• The Committee holds ultimate responsibility for
  Regulation Compliance
• Procedures now being analyzed
• DSCP has asked for a re-check of certifications
• BOTTOM LINE
• DSCP will continue to use JWOD
• Tighter controls will be needed

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Share of Business
Chem Suits Account for 264M
213.3M
464.0M
1130.3M
128.4M
665.4M
73.0M
Final FY05
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Berry Amendment

• DSCP is bound by the Berry Amendment
• Had always been very stringent
• As decided in Oct 05, the component needed to be
  of a general textile nature to be included
• Allowed some relief for some items contributing
  to making end item
• New Requirement (as backed by the AAFA)
• Jan 06 Section 833 of Authorization Act
• Revised Berry to all materials and components
• Much more definitive in what is covered
• Feb 06 Implementing guidance received
• Vendors must confirm Berry compliance prior to
  orders
• Will immediately affect many recently acceptable
  product lines
• Examples Steel Toes for Shoes/Boots Gloves
  Sneakers
• Will need to pursue Relief
• All of these will now require a DNAD exception
• Basically a waiver request signed by an Under
  Secretary of Defense
• Will require synopsis for Sources Sought to
  prove need
• May require investigation of positive responses
• Will require the Services to provide written
  statement of need
• Assume this will not be a short timeline
  process

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Major Uniform Changes

• Army Utility Uniform
• The ACU is still being rolled-out
• Demand much less than anticipated
• Army Dress Uniform
• Changes still being developed
• Timeline
• Air Force Utility Uniform
• The ABU is being readied for initial roll-out
• Timeline
• Navy Task Force Uniform
• Developing the Roll Out Schedule
• Timeline

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Other Issues

• Unite Now
• DLA was contacted to respond to allegations of
  sweatshops prior to a scheduled news conference
  (Declined)
• Always with a threat of involving Congress
• We do investigate any specific allegations (never
  verified)
• Informational
• TENTNET
• A new development for the tentage product line
• Joint effort of Govt / Industry / Academia
• VIM-ASAP
• Need to continue to use improves payment
• BSM rqmts on ship dates may be forthcoming

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Timing is Everything !!
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BOTTOM LINE

• DSCP Will Strive To Make Improvements As Noted
• However, we are bound by regulatory limitations
• Need the Help / Understanding of Industry
• Working Together to Improve the System

Focus on getting the Warfighter what they need,
when they need it, wherever they need it