The Defense Logistics Agency September 21, 2006

1. The Defense Logistics Agency September 21, 2006 Mr. Larry Glasco Director, Customer Operations and Readiness Defense Acquisition University (DAU) Sense & Respond Logistics (S&R L) Forum-Defense Panel

2. Overview • DLA – who we are • DLA – past, present and future • How would S&RL work in DLA? • Panel discussion • Questions

3. The DLA Enterprise Scope of Business FY01 Sales/Services: $17B FY02 Sales/Services: $21.5B FY03 Sales/Services: $25B FY04 Sales/Services: $28B FY05 Sales/Services: $31.8B FY06 Projection: $35.0B • 54,000 Requisitions/Day • 8,200 Contracts/Day • #58 Fortune 500 – Above Sprint Nextel • #2 in Top 50 Distribution Warehouses • 26 Distribution Depots • 5.2 Million Items – eight supply chains • 24.7M Annual Receipts and Issues • 1411 Weapon Systems Supported • 132.8M Barrels Fuel Sold • $14.6B Annual Reutilizations/Disposals • Land/Maritime: $3.3B • Aviation: $3.5B • Troop Support: $12.9B • Energy: $11.7B • Distribution: $2.5B • Other: $1.0B • ~95% of Services’ repair parts • 100% of Services’ subsistence,fuels, medical, clothing & textile, construction & barrier materiel People • 20,805 Civilians • 519 Active Duty Military • 754 Reserve Military • Located in 48 States/28 Countries Foreign Military Sales • Sales: $1.18B • Shipments: 535K • Supporting 124 Nations

4. Future Environment Dominant Maneuver Precision Engagement Full Spectrum Dominance Innovation Information Superiority Focused Logistics Full Dimensional Protection Joint Vision 2020 states that “the overall objective of the continuing transformation in America’s Armed Forces, is the creation of a force that is dominant across the full spectrum of military operations."  • JV 2010 serves as the foundation for JV 2020 • Operational Concepts Remain Key • Dominant Maneuver, Precision Engagement, Focused Logistics, and Full Dimensional Protection • 2010 is expanded to include: • Strategic Context • Narrowed to three critical aspects: global interests, diffused technology, adaptive enemies • Information Superiority • Moves emphasis beyond technology • Introduces idea of “decision superiority” • Innovation • Goes beyond “technological innovation” of JV 2010 • Points toward innovation in all aspects of force • Benefits include: • Impact of information superiority: • Increased choices for commander • Increased information at all levels • Participation of multinational and interagency • New tools and procedures for commanders Radio Frequency Identification (RFID) Sense and Response Logistics (S&RL) represent some technological advances

5. DLA Moving Closer to S&RL Yesterday • Operated as a large wholesaler • Forecasting based on historical demand • Traditional depot operations • Legacy system • Service Retail - FISC • SPR Buyback • No PBA to set expectations • Outside Lead time only • Non-web based collaboration Today • Collaborate with customers • Demand Forecasting • PBA to set expectations • Worldwide stock placement provides reduced customer wait time, reduces transportation costs and demand for critical airlift • IDE/Asset visibility provides improved material visibility • DoD wide supply chain data exchange and interoperability • RFID tags facilitate a coordinated DOD Supply chain • Historical demands • BSM • DPMS options optimize placement of assets to minimize customer wait time Tomorrow • Enables more optimization of the Distribution process • Begin sustainment during design and engineering • Product Data Management to maintain accurate BOMs • Reutilization of product returns to support production, customers • Integrate RFID/sensors actuator with existing and future logistics information systems • Deploy a suite of RFID technology that provides initial capability and allows for future upgrades • Enabled by forward stockage distribution support structure vs the traditional distribution method • Enhance with imbedded health management system

6. DLA Tomorrow – Looking Out Further Visibility Into Operations Reduction of Inventories Compression of Cycle Times Acceleration of Information • Nature of customer engagement changes – becomes more strategic • Strategic infrastructure – tactical interaction • Some interactions become automatic – freeing up valuable customer-facing resources (i.e., CSRs) • Customer wait times are reduced and time definite delivery is a reality • Supply Chain Management of DoD’s service maintenance organizations are transformed • Conditioned based maintenance • Parts and systems enhanced with imbedded health management systems

7. A DLA Customer - PM Heavy Brigade Combat Team Condition-Based Maintenance Pilot Imbeds State of Art Autonomics into Legacy Platforms • Works with Digital Controller Assembly (DCA) to broker data to a server in the Motor Pool. • Service-Oriented Architecture approach enables future interoperability with current or future Army capabilities (SALE, ILW) TACOM NAC Wheeled Vehicles • Sensor Data • Call for Support • future capabilities M2A3 • Secure 802.11b Wireless Network • 100% Assured data transfer (technology used in Automated Teller Machines (ATM)) 802.11b/g • Can Include MRLN/SBCT PoE/OBIS Capabilities M1A2 SEP V1

8. Future S&RL Scenario Part Failure Sensors on exhaust system indicate pending failure on an M2A3 during patrol operations in Iraq. Aircraft notifies supply system and algorithm tells DLA that Kuwait DDC is closest able source of supply. CSR engaged for oversight. Part is sent to M2A3 basing. Part is replaced and weapon system is service ready. Germersheim Sigonella Pearl Harbor Korea Yokosuka Kuwait Guam • Weapon System self-diagnoses failure • “Phones home” and IDs service support level • Cognizant CSR is engaged to provide exception management and monitor change in customer requirements • Available parts located from DDC network, based on contracted TDD • Parts issued • Parts and technician arrive at customer site for repair • Unserviceable DLRs shipped to Service source of repair • Unused parts shipped to new stock location based on daily global demand knowledge • CSR follows-up with customer to ensure satisfaction

9. S&RL Defense Panel Members • U.S. Navy: Ms. Bree Hartlage, Command Science Advisor, NAVSUP HQ • U.S. Army: Mr. Jeff Fee, Deputy Division Chief, Logistics Innovation Agency • U.S. Marine Corps: Mr. Nicholas M. Linkowitz, Logistics Innovation & Transformation Advisor to the Deputy Commandant, Installations and Logistics (DC, I&L) at the Logistics Vision & Strategy Center (LPV) at Headquarters, Marine Corps • U.S. Air Force: Mr. James M. Conner, Chief, Transformation Management Division, HQ USAF