AFMC Management Sciences Division logistics analysis. (Current Logistics Research).

Questions are never indiscreet. Answers sometimes are.

-- Oscar Wilde

Air Force logisticians are constantly faced with difficult decisions. "Should I buy part X or part Y?" "Which requisition should I satisfy first?" "Which part should I repair first?" Not only are these questions themselves difficult, but the tremendous impact the answers have on the readiness of the Air Force intensifies the decision. The incredible number of these decisions being made every day can be overwhelming, but through the prudent application of professional analysis, logisticians are able to make the best decisions supporting the warfighter.

Providing professional analysis support for these types of decisions is the primary business of the Management Sciences Division of the Air Force Materiel Command (AFMC). The majority of the analysts have advanced degrees in technical areas such as operations research, mathematics, engineering, and management sciences. Although the division is a part of the Directorate of Plans and Programs, it often performs studies and analyses for clients outside the directorate, particularly in the AFMC Logistics Directorate

In 2001, Management Sciences devoted a major portion of its efforts toward implementing and improving methods for managing materiel spares and further expanded its scope to other AFMC mission areas (product support, depot maintenance) where it could provide decision-support products and analytic tools could be applied. Generally, the tools and products helped the mission areas determine requirements, allocate resources, execute support actions, and assess impact. The following summary highlights three of the most significant spares management studies and provides an overview of other contributions.

Customer-Oriented Leveling Technique

The depots have fixed funding each year for buying Defense Logistics Agency (DLA)-managed spare parts in support of depot-maintenance operations. The funding varies from $600M to $800M a year, which can be spent on roughly 300,000 parts across the three depots. How should this money be spent to best support the depot maintainers and, ultimately, the warfighter?

Each of the air logistics centers (ALC) had developed its own answers to this question, but none adequately accounted for various factors that affect supply support:

* Available spares budget

* Expected responsiveness from DLA for each part

* Cost of each part

* Variability in demand for each part

Even more important, none of the previous policies explicitly targeted customer support when setting spares levels.

Management and Sciences worked with the Supply Division and the depots to develop a standard depot-stockage policy for AFMC. The policy became embedded within a Management Sciences-developed, database-driven tool--the Customer-Oriented Leveling Technique (COLT). A COLT was developed to determine optimally which DLA-managed parts the depots should buy to achieve the lowest possible, expected customer wait time for a given amount of General Support Division funding. With COLT customer wait time, reductions of up to 80 percent may be possible for the same level of funding.

COLT was implemented across all three depots by November 2001. The actual customer wait time across all depots was baselined on 1 October 2001 at 6.94 days and, as of 1 July 2000, had fallen to 3.88 days--a 44-percent reduction. As a result of these dramatic successes at the depots, efforts have begun to expand COLT to the base level at other major commands (MAJCOM).

Evaluation of Commercial Off-the-Shelf Forecasting Packages

Which spare parts will my customers be requesting in the future? There is no more fundamental question in spares management than this; yet, it is also one of the most difficult. If the answers were known, the savings in inventory costs and improvements in readiness would be tremendous. Because of this, the search for this logistics Holy Grail has led many to suggest that commercial industry must have better forecasting techniques than the Air Force. Management Sciences evaluated the performance of commercial-off-the-shelf (COTS) packages relative to the performance of the forecasting techniques in AFMC's Secondary Items Requirements System (SIRS or D200A), which is used to compute future spares requirements for recoverable items.

The purpose of the study was to determine whether or not a commercial forecasting software package with an expert selection capability could generate more accurate forecasts than the four techniques currently being used in D200A. A forecasting software package with expert selection capability automatically determines what technique, from a set of different forecasting techniques, to use when forecasting future values of a time series. The study examined six different COTS forecasting packages. Each package was used to generate forecasts for stock numbers from several samples of data--including random samples, a sample of items with high mission-incapable hours, a sample of items with high demand-to-program ratios, and a sample of low-demand items. The forecasting accuracy of each commercial package was compared to the forecasting accuracy of the 8-quarter moving average technique from D200A. The 8-quarter moving average was selected as the baseline for comparison because it is currently the most frequently u sed forecasting technique in the system.

The results showed that none of the commercial forecasting packages consistently generated significantly better overall forecasts than the eight-quarter moving average for each of the data samples. Allowing the expert selection function to choose from all the available techniques generally resulted in less accuracy than limiting the set of available techniques to more conservative techniques; in other words, techniques that do not project a linear or cyclical trend into the future. This is because the errors associated with the forecasts from these techniques can be large when the trend projected into the future does not materialize, especially when forecasting 2 or 3 years into the future. The results of the study were briefed to the AFMC Logistics Directorate and the Air Force Directorate of Supply, and based on the results, the decision was made to not implement a commercial forecasting package within D200A. Instead, a tool is being developed that automatically selects between the four forecasting techniq ues already within the system. This tool should be fielded as part of D200 in January 2003.

Spares Campaign Development and Deployment

"What improvements can the Air Force make to its spares management processes?" Much of what Management Sciences does involves improving spares processes, but in 2001, much time was spent supporting an Air Staff-led initiative called the Spares Campaign, to corporately answer this question. The purpose was and is to transform fundamental spares support processes to reverse the declining readiness trends of the 1990s.

The initiative began with the formation of five cross-functional teams of subject-matter experts from across the entire Air Force tasked with identifying shortcomings in the current spares support processes and developing options for fixing them. Management Sciences played a leading role on two of the teams: cochaired the Requirements Determination Team and was a significant contributor on the Requirements Allocation, Execution, and Distribution Team. After meeting for 3 months and developing hundreds of pages of issue papers, the recommended fixes from all the teams were aggregated into eight key initiatives, which were approved for implementation at the fall 2001 Corona:

* Establish virtual single-inventory control point.

* Improve demand-and-repair workload forecasting.

* Improve spares budgeting.

* Change depot-level reparable pricing structure.

* Improve financial management.

* Align supply chain management focus.

* Standardize role of regional supply squadrons.

* Adopt improved purchasing and supply management.

Each of these initiatives has many specific recommendations, which total 37 across the eight areas. AFMC is responsible for implementing 12 of the 37 recommendations, and Management Sciences has significant involvement in 5 of them:

* Centrally compute buy or repair priorities to meet weapon-system availability targets.

* Push full-funding stock levels to users; rely on execution processes to ration funds.

* Implement a commercial forecasting methodology in the AFMC Secondary Item Requirements System (D200A).

* Correct inconsistencies between requirements and execution.

* Modify D200A to identify requirements based on weapon-system availability, specific readiness goals.

The analysis efforts to help the Logistics Directorate implement these recommendations are documented throughout Management Sciences 2001 report. Despite the significant effort committed to the Spares Campaign, an increased effort is anticipated to support Spares Campaign deployment.

Other Contributions

Management Sciences also helped the logisticians of the Air Force in the following areas:

* Developed estimates of joint strike fighter (JSF) spares requirements for various readiness targets. Assisted with an evaluation of Air Force and Navy computational tools, and based on these efforts, the JSF program office selected the Air Force tool (Aircraft Sustainability Model) for calculation of initial spares quantities.

* Recommended whether the AFMC depot-repair process should use requisition objective holes or back orders to identify customer spares shortages. Demonstrated that back orders are the more accurate statement of shortages and highlighted numerous data disconnects affecting both methods and impacting AFMC decisions to buy and repair parts.

* Explained to the Air Mobility Command Director of Logistics why the AFMC stock-leveling process (readiness-based leveling [RBL]) sets stock levels on some parts to zero and highlighted the impact on overall spares availability. Resolved the concerns and showed that the process is functioning as intended.

* Provided technical and analytical support for the implementation and enhancement of the RBL system, resulting in an improved and more efficient RBL model. Also provided quarterly reports to the Logistics Directorate senior management, highlighting changes in spares levels at each air logistics center.

* Provided technical and analytical support for the implementation and enhancement of the D200A, primarily focusing on the Aircraft Availability Model. Working with the Logistics Management Institute, the efforts produced 27,000 additional units of spares at a cost of only $16M. Also computed additional spares for consumable items to increase base fill rates by 6 percent.

* Evaluated the results of an external analysis that suggested AFMC was expending resources to repair items that the MAJCOMs never use (buy), resulting in major cash losses. Found no evidence that AFMC was repairing the wrong item and highlighted data issues that affected the external analysis.

* Determined whether the parts most impacting customer readiness were being repaired by the depots. Found that only 44 percent of these critical parts were candidates for repair as part of the AFMC standard organic depot-repair process, and only 25 percent of these were being repaired in sufficient quantities to satisfy all customer needs.

* Continued to support the implementation of the Execution and Prioritization of Repair Support System (EXPRESS), which prioritizes depot-repair and distribution actions. Developed a new prioritization math model for EXPRESS to support MAJCOM centralized intermediate repair facilities; demonstrated an approach that was eventually approved for improving spares demand-forecasting capabilities in EXPRESS.

* Identified the readiness impacts of alternative spares support policies (contingency flags) for actively engaged units on those units and the remainder of the Air Force fleet. Working with the Air Force Logistics Management Agency, showed that strictly enforcing the existing policy can make spares available to repair 43 grounded aircraft; limiting the existing policy to only actively engaged units makes spares available to repair 93 broken aircraft. The Chief of Staff approved limiting the current policy to only actively engaged units.

* Correlated workload and the number of item managers at each air logistics center as a baseline for determining future manpower requirements. Developed a mathematical relationship between workload and number of item managers based on regression analysis. Integrated product team members are reviewing the preliminary model for potential use at each air logistics center.

* Evaluated whether unifying the processes for prioritizing depot repairs (EXPRESS) results in better support for AFMC's customers. Analysis showed that an increase in expected aircraft availability of up to 8 percent could be realized when computing spares using a unified computation, versus a separate computation for each air logistics center.

* Developed a tool for supply chain managers to objectively develop defensible metric targets (for example, issue and stockage effectiveness, back orders). Provided a prototype tool to two supply chain managers (WR-ALC Support Equipment and Vehicle Management Directorate and OO-ALC Commodities Directorate)

* Initiated and validated an offline process, motivating bases to evacuate unneeded broken parts. This will save spares funding and maintenance workload by preventing the base-level repair of items that have more assets than requirements.

* Evaluated the processes and benefits of the WR-ALC Workload Planning Trial, which overrides the automated process (that is, EXPRESS) for inducting items into depot repair. The test was inconclusive as the performance for the items in the test closely followed those items not in the test.

* Evaluated the responsiveness of depot-repair support received by foreign military sales (FMS) customers compared to Air Force customers. Although the results showed that FMS customers did not receive worse depot-repair support, the study was well-received by FMS representatives because it provided objective analysis of a perceived problem.

* Developed a database interface tool to facilitate Air Force and FMS logistics response-time analysis for recoverable items. The tool automates a previously cumbersome analysis process and makes statistical results readily accessible resulting in more satisfied FMS customers and more informed Air Force decisionmakers.

* Supported the performance-based, delivery-on-demand initiative for contract repair by designing a convenient means of monitoring contractor performance. After discovering deficiencies in required data systems, the focus has shifted to enhancing the systems before developing the automated tool.

* Ensured the Forward-Looking Availability and Reliability Simulation Model reacts to changes in inputs as expected and is accurate in forecasting availability rates. After numerous changes were submitted to the contractor, the model was verified and validated for use on the E-3 aircraft.

* Developed a simulation model for the Focused Logistics Wargame 2001 that provides quantitative insight into AFMC's projected capability to support a multiple-war scenario. Provided a prototype model that simulates 90 days of flying activity and associated depot-maintenance activity for 35 weapon systems in a wartime environment.

* Investigated alternatives to improve the subjective process for establishing wartime stock levels for electronic warfare components. Initial efforts examined several sources for parts demand data and identified the Standard Base Supply System as the most suitable; project is ongoing.

* Helped AFMC understand more clearly the relationship between notional readiness spares package policy changes and computed stock levels. Several factors cause the computation to be relatively insensitive to certain changes in the scenario being modeled; research is ongoing to identify the broad impact of these factors.

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Mr Moore is chief Analytic Applications, Management Sciences Division, Air Force Materiel Command, Wright-Patterson AFB, Ohio.