News | Aug. 28, 2016

STARs of Retail

By Chris Erbe



Historically, the Defense Logistics Agency has served as the wholesale inventory manager for the Department of Defense, procuring consumable items from commercial vendors and storing those items in distribution warehouses. DLA is still very much a wholesale-oriented organization in which military service logisticians requisition material from the agency through their supply systems, thus keeping DLA employees at least one layer removed from the retail end users. 

However, in the past decade or so, DLA has taken on retail responsibilities at 20 of DoD’s industrial activities, which include Navy fleet readiness centers, Army depots, Navy shipyards, Marine Corps logistics bases and Air Force logistics complexes. As the retail manager at the industrial sites, DLA manages the supply, storage and distribution of material, and provides needed items directly to the end user. In this case, the end users are the individuals, artisans and teams maintaining and upgrading aircraft, ships, tanks and other critical weapon systems.

Simply put, there are important differences between DLA’s wholesale and retail activities.

To bring focus to the retail side of the agency, DLA held the Semi-Annual Total Retail Sustainment Review, called STAR, May 24-25 at the Portsmouth Naval Shipyard in Kittery, Maine. The purpose of the event was to explore ways to bring more efficiency to DLA’s retail activities and to increase overall agency awareness about the challenges facing DLA’s retail industrial operations. DLA’s Retail Operations Division, in coordination with DLA Land and Maritime, sponsored the event.

Participants included DLA headquarters personnel, DLA process owners, personnel from primary-level field activities and commanders from the DLA industrial support activities that have a direct impact on retail industrial operations.

This was the second STAR summit. Organizers plan to hold future STAR events at a different industrial site each time so that participants can see firsthand the mission each industrial activity performs and how DLA affects their operations. The first STAR event was held in October 2015 at the Oklahoma City Air Logistics Complex at Tinker Air Force Base.

As part of the most recent summit, shipyard officials gave participants a tour and overview of the Portsmouth Naval Shipyard, the oldest continuously operating Navy base in the nation. The shipyard’s primary mission is the maintenance, repair and modernization of the Navy’s nuclear submarine force.

“It’s a tough business to deliver these ships, but we’ve had great success delivering on time and on budget,” Navy Capt. William Greene, commanding officer of the shipyard, said in his presentation to the group. “A portion of that success is due to part support, which is where DLA comes in. It takes a team effort, and DLA is part of the team here at the Portsmouth Naval Shipyard.”

Greene discussed how a submarine must undergo an engineered overhaul after about 20 years of duty. While in dry-dock, workers maintain a strict schedule, removing parts for repair or replacement in sequential order, and reinstalling them in the reverse order. Any delay due to a problem procuring a single part can disrupt the schedule, creating devastating financial consequences and loss of military readiness.

“Just one back order on a component causes a chain reaction that can cost hundreds of thousands of dollars a day,” Greene said to the group. “The last sub that we worked on [USS Alexandria (SSN 757)] was the fastest engineered overhaul on record. It was completed two weeks early and $9 million under budget. We’re very proud of our part in national defense — we could not do it without all of you.”

The level of urgency in procuring parts is one of the most important contrasts between DLA’s wholesale and retail activities. While DLA wholesale focuses on replenishing inventory stocks for wide distribution to many retail customers, DLA retail often focuses on procuring a single critical item directly to employees in a work area or a maintenance line.

“As Capt. Greene conveyed, for the lack of a part, they could be impacted by days if not weeks, and millions of dollars,” said Navy Capt. Ronald Carr, who at the time of the STAR summit was serving as DLA retail process owner and retail operations division chief, with only one week to go before his retirement from the Navy. “We’ve got to make sure it’s understood that one part is as important as 10,000. We’re trying to achieve that with STAR, by bringing attention to this issue.”

The role of DLA’s retail operations originates from the 2005 Base Realignment and Closure Commission round and a June 2005 decision by the under secretary of defense for acquisition, technology and logistics that required the services to transfer to DLA all of their retail inventory supply, storage and distribution functions at their depot-level industrial sites.

After more than a decade, the services have transferred these functions to DLA in varying degrees. Air Force air logistics complexes and Navy fleet readiness centers have transferred all retail functions to DLA. The Army and Marine Corps have transferred control of storage and distribution functions to DLA while retaining management of their supply functions. The Navy shipyards transferred supply, storage and distribution functions to DLA, but kept their legacy processes and systems that used to be operated by sailors, but that are now operated by DLA personnel.

While DLA can certainly point to successes in supporting the services at the retail level, the lack of consistent processes and procedures throughout all of DoD’s industrial sites poses an increasing challenge to efficiency and progress. Pressure to streamline is especially acute in DLA’s climate that stresses audit readiness, process excellence, continuous process improvement and end-to-end process management. DLA Director Air Force Lt. Gen. Andy Busch made process excellence a significant part of his Strategic Plan 2015-2022.

Adding an external push, the Government Accounting Office published a report in June addressing DLA’s retail support to the service industrial activities and measuring DLA’s progress in accordance with the original BRAC 2005 law. In the report, GAO recognized the benefits already realized by the Air Force air logistics complexes and the Navy fleet readiness centers. Among those improvements were reduced inventory, increased warehouse efficiencies, improved demand signals, enhanced information sharing and improved supply performance. But, GAO made several recommendations, including that DLA, Army, Marines Corps and the Navy shipyards should conduct business case analyses to help determine whether further transfer of retail functions is warranted. GAO also recommended that DLA and the military services develop better metrics to measure planning accuracy and track disruption costs.

In light of these developments, organizers of the STAR summit brought together the various elements of DLA to educate, inform and, ultimately, take action to improve DLA’s retail operations.

Carr said that he often gets asked if the STAR summit is worth the investment.

“I don’t think we have any other venue four days a year that gives us this level of integrated, dedicated focus on retail operations,” he said. “As we are seeing the cost and impact of those back orders for our industrial activities, the impact of not getting that process streamlined and more effective, it’s certainly worth the time and effort that we put into this.”

With one week to go before his retirement, Carr was recognized for his outstanding support for his country and DLA retail operations. The incoming retail operations division chief, Robert Therriault, attended the STAR summit as well.

“We’re trying to go from the walk to the run,” Therriault said. “It’s about trying to standardize these processes so we can streamline and be vertically integrated. There used to be [military] service logisticians serving their customers — they are now DLA logisticians. At these sites, DLA is in direct support of a maintenance line, and it’s a different level of urgency.”

And retail is an area DLA should continue to focus on, according to James McClaugherty, the acting director of DLA Land and Maritime. “We need to put more investment and management attention into retail,” he said. “There’s a lot to do, and maybe the most important thing we can take away from this meeting is to go back and advocate and inspire the rest of the agency. We’re still a wholesale-oriented agency that’s got to learn that retail is different,” McClaugherty noted. “So let’s go back and start spreading the gospel about retail.”