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News | Sept. 18, 2019

Progress made on suspended stock reductions, $305 million worth remains 

By Beth Reece

With a sister who flies Apaches for the Army, Mandy Brechbill isn’t about to let shoddy parts go out the Defense Logistics Agency’s doors to warfighters.

“I can’t send something into the field that’s going to hurt her. Even a minor quality defect in something as small as a bolt can do a lot of damage to an aircraft,” said Brechbill, program manager for suspended stock at DLA Distribution in New Cumberland, Pennsylvania. 

Reducing stock that sits in DLA warehouses because it’s mislabeled, packaged wrong, defective or counterfeit is incessant work. The agency created an integrated process team in 2017 to address what was then $463 million in suspended stock. Training and material assessments by DLA quality assurance and engineering specialists have reduced the amount of suspended stock to $305 million, said Jennifer Smith, who co-manages DoD stock readiness for DLA Logistics Operations’ Technical and Quality Programs branch with George Berkery. But it’s an ongoing struggle with 2% of all the material coming into DLA Distribution each day having labeling, packaging or other issues, she added.

Distribution process workers can often spot material destined for the suspended stock pile with a glance. If items arrive with missing labels or in packages with dents or other damage, it’s suspended. Items that arrive in perfect condition but with information on the label that doesn’t match what’s in DLA’s systems is also suspended. Same with items not packaged according to DLA’s contract with the vendor.

“Maybe the contract says material has to be packaged one each and in a padded container, but they sent it to us in an envelope,” Brechbill said. 

And occasionally, what should be in the box isn’t.  

“We once had a counterfeit vendor who was supposed to send us parachute harnesses. When we opened the box to inspect the contents, we found dog harnesses,” she added. 

As boxes with discrepancies arrive, DLA Distribution initiates Supply Discrepancy Reports detailing the problem. Storage Quality Control Reports are also created for items already on the shelves awaiting issue that are later reported to have technical defects or are recalled due to nonconformity issues like counterfeiting. According to DoD standards, the agency has 50 days to respond to SDRs and SQCRs. 

“DLA Distribution’s role is to report the discrepancies. Then packaging, product and acquisition specialists from major subordinate commands like DLA Troop Support and DLA Aviation respond with instructions on what action DLA Distribution is to take,” Smith said, adding that representatives from functional areas like inventory management may also assist.

In the past year, reviews resulted in about 41% of suspended stock being upgraded to an issuable state. In those cases, distribution process workers were able to resolve discrepancies by printing new labels or repacking the material. About 12% was returned to vendors for repackaging or other actions, and about 47% was disposed of by DLA Disposition Services for reasons like being damaged upon arrival or not meeting physical specifications outlined in the contract.

Though most suspended stock is due to such issues, about $130 million is under investigation pending legal action or undergoing testing at a DLA Product Test Center to ensure contractual compliance, Smith added. Bolts, for example, might be sent for chemical and destructive testing to ensure they’re made from the proper metal. 

The cost of storing suspended stock and paying employees to focus solely on assuring its accountability and condition is high.

“It drives a lot of our workload because every piece of suspended stock has to be stored somewhere. And it has to be stored the same as issuable material that’s going out the door because I don’t know if it’s condition will eventually be upgrade so it’s issuable,” Brechbill said.

The negative effect on readiness is a bigger consequence.

“In a lot of cases this material could be filling backorders,” she continued. “Instead, customers are rebuying the material, which means they’ve bought the item twice and put all that money out there that may not be recouped.” 

Smith and Berkery are using the integrated process team developed in 2017 to address the root causes of suspended stock in each of DLA’s 25 distribution centers. Specialized training on packing and labeling requirements has been created and presented to DLA employees, and is available for vendors and customers shipping returns back to DLA. 

Tiger teams have also traveled to distribution centers in Pennsylvania, California, Oklahoma and Virginia to physically review material and provide on-the-spot instructions for resolving some discrepancies. One team won the DLA Strategic Goal Award for the fourth quarter of fiscal 2018 for reducing suspended stock by more than $35 million, filling backordered lines for almost 60,000 items and freeing up warehouse space by sending $1 million in material to DLA Disposition Services for disposal. 

DLA recently piloted a virtual tiger team project at DLA Distribution Susquehanna with participants from DLA Distribution’s Mobile Readiness Team and DLA Land and Maritime in Columbus, Ohio, using Skype and other online technologies to share close-up pictures of material with quality assurance specialists conducting reviews. 

“It was very successful, pretty much on par with the on-site tiger teams,” Smith said. “We’ll be doing more virtual teams in the future to continue working toward our goal and to reduce travel costs.”

To address discrepancies in stock transfer orders that go from one distribution facility to another, such as a military-run depot to DLA Distribution San Joaquin, California, Smith and Berkery are updating DoD’s Joint Stock Readiness Regulation. 

Smith said DLA has been more consistent than other DoD components in reducing suspended stock. Using a monetary goal to measure DLA’s efforts is difficult, however, because while one box of material might be worth $1,000, another could be worth $10,000. She noted that the value of suspended stock owned by the services is far more than what DLA owns because service-owned material generally accounts for items like vehicles and aircraft. Measuring the number of SDRs and SQCRs DLA Distribution has to initiate is a more accurate way of judging the agency’s progress, Smith continued. 

“DLA has reduced its suspended stock by about 30% in the number of SDRs and SQCRs. That’s really good news,” she said. “But with 2% of all new receipts coming in having discrepancies, we have to maintain our focus on clearing up this stuff. It’s a long-term effort.”

The following videos provide more detail on proper shipping and labeling.

• - Outlines supply discrepancies
• - Consolidation and containerization for vendors
• - Processing military returns