Vendor Initiated Parts Resupply (VIPR) partners DLA, AMC -- <br>Vendors gain increased visibility and responsibility
Michael W. Wynne, acting undersecretary of defense for acquisition, technology and logistics, tasked Army Materiel Command Commander, Gen. Paul J. Kern, and Defense Logistics Agency Director, Vice Adm. Keith W. Lippert to create a formal partnership based on the vendor process system of the successful retail chain Wal-Mart.
A team from this AMC/DLA partnership went to Wal-Mart headquarters in Bentonville, Ark., to clarify their perceptions of the retail chain's supply and distribution system. This allowed DLA and AMC to compare their vendor systems with Wal-Mart's.
They found that DLA's distribution is quite similar to Wal-Mart's system in some aspects, but considerably different in others. Wal-Mart takes ownership of stock upon receipt at their distribution centers. However, a sizeable portion of the vendor shipments received at the Wal-Mart distribution centers are immediately cross-docked via a conveyor system, never stopping within the center until they are reloaded for delivery to a retail store.
"The perception was that their vendors [Wal-Mart] have free rein on how they re-supply the Wal-Mart stores and that the vendor maintained ownership of everything in the stores, said" DLA Project Lead Col. Dave Rohrer. "But this was not reality. We discovered that Wal-Mart shares inventory and point-of-sale information with all their vendors. Some vendors are allowed to recommend resupply quantities and locations to Wal-Mart. This collaborative approach is described as "co-managed inventory."
This co-managed inventory concept is quite different from systems within DoD. Wal-Mart, as a private retailer, incorporates a proprietary system called, "Retail Link", where vendors are able to access information on Wal-Mart sales and inventory of their supplied items. This helps them, and Wal-Mart, make better business decisions.
DLA and AMC incorporated this co-managed, information-sharing system into a six-month pilot program titled "Vendor Initiated Parts Resupply." They will assess if sharing consumption information levels at the store level, or in this case, at multiple inventory points, will improve effectiveness in supply readiness, better in-transit visibility, reduce cost, and improve re-supplying parts to troops at stateside and overseas locations.
Like Wal-Mart, the vendors participating in VIPR will have visibility of consumption and inventory information on only their items through the VIPR Web portal. In addition, the vendors, AMC and DLA meet frequently to discuss and resolve issues to improve the VIPR process.
"During the pilot," Rohrer said, "we will share information with the vendors. This will include consumption and on-hand inventory data at specific sites to include 8th Army tactical supply support activities in Korea, an AMC maintenance depot (Red River Army Depot), and wholesale inventory managed by DLA and AMC."
This model created its own type of "Retail Link" to share information with the pilot vendors. With inventory levels at all sites visible to the vendors, plus consumption information on these items, the vendors will make recommendations on the quantity of items needed to be re-supplied to keep up with the requested inventory levels. They will also be responsible for shipment of the approved resupply quantities to the appropriate inventory location.
Information sharing began April 1 and the vendors assumed responsibility for resupply recommendations April 19.
"What it boils down to is that we are providing more consumption information to the vendor than they have ever seen in the past, all the way down to the tactical level storage activity in the Army," Rohrer said. "We also have a system in place to ensure the government approves vendor recommendations. We want to make sure that we don't buy 4,000 items when we only need 40."
With the short timeframe to perform the pilot, DLA selected sole source vendors OshKosh and A&M General to participate. They will provide land component items such as vehicular component boots, shock absorbers, oil pans, and engine crank shafts. AMC selected additional vendors to include Goodyear, Michelin and Barnes PSP.
The pilot items were based on tactical requirements at all the locations so that there would be consumption data available for the duration of the pilot, according to Rohrer. One of DLA's field activities, Defense Supply Center Columbus, is heavily involved in managing the DLA items for this initiative.
"On the DLA side," Rohrer continued, "we are doing a sanity check to see if their [Wal-Mart's] management process works any better than ours - whether we can pass additional responsibility to the vendors while maintaining the same, or better, level of readiness."
The U.S. Transportation Command, an enabler in this pilot as well as a partner with DLA and AMC, will aid in providing visibility of shipments via the Global Transportation Network. USTRANSCOM was designated as the Distribution Process Owner last year.
"We are requiring the vendors to use a commercial carrier that is capable of providing linkage into GTN," Rohrer explained. "We want to know where the items are en route. Part of this test is to find out if they can provide any better visibility than we are currently providing."
The decision-makers, Kern and Lippert, will determine in October whether all or portions of the pilot have been successful. If the pilot is deemed a success and produces greater effectiveness than the current system, elements of this program would be incorporated into DLA's and AMC's operating procedures, according to Rohrer: "We're also exploring the incorporation of this co-managed concept on a DoD-wide basis."
Both DLA and AMC are headquartered at Fort Belvoir, Va. DLA provides supply support, and technical and logistics services to the U.S. military services and several federal civilian agencies. The agency is the one source for nearly every consumable item, whether for combat readiness, emergency preparedness or day-to-day operations.
AMC provides major item and secondary item supply support, and technical and logistics services to the Army and other services and to several civilian agencies.
Media Contact:
Jack Hooper (703) 767-5121
Jack.Hooper@dla.mil
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