1.   Dispatchers Assess Quality of Supplier Information & Materiel Risk from Forecasts to Create Quote Scenarios.


You accepted parts with incomplete supplier information & unacceptable quantity determination, failing to obtain correct prices resulting in misdirected fiscal allocations. Supplier should fix excess charges, plus applicable corrective action when defective cost or pricing information used to negotiate prices.

You did not do good job of seeking contract adjustment when parts item pricing based on unacceptable quantity determination when Navy usage considered. Good decisions must be made not to pay excess commercial prices when all parties are aware item could be found for much lower price.

Even though your effort in meeting intent of recommendation is recognised since you obtained future requirements at much lower price, current Navy inventory will not satisfy needs for next mission period. You have not provided evidence demonstrating fiscal benefits related to part prices & did not perform cost review of supplier certified proposal, which did not provide cost justification, only prices.

You did not provide evidence for your assertion that there is substantial cost risk to supplier, but is has been demonstrated that supplier may need to make additional investment in material if demands are significantly lower. However, supplier risk of loss is diminished since Navy is not only customer for parts so they can roll over quantities not purchased to future periods.

You accepted price of spare parts proposed by supplier so you paid too much for product. Since cost information was not obtained & reviewed supplier has responsibility to refund excessive prices paid.


Supplier reviewed pricing information determining notable errors & submitted voluntary adjustment proposals for items, which are still under review by our team. Supplier reviewed pricing, to reduce price as we asked why it sold items directly to Navy for one price & to other entities for another price.  Price was based on commercial pricing & items priced for Worst Case Scenario because of history of cancelled orders.

Documentation showed all parties were aware of price negotiated by Navy & tried to negotiate lower price. Supplier performed cost assessment which is common practise when large quantities of items are at stake with the goal of passing savings on to Navy through both production & parts contracts.

We have insisted that contactor assumes risk for price increases in firm-fixed-price scenario & acted to reduce prices before exercise of next option period. Supplier stated that their information on availability of materials put risk of loss into equation. We obtained agreement obligating supplier to purchase minimum of material in the forecast quantity in year of delivery.

Should supplier fail to purchase forecasted quantity of materials in any period, it will assume cost risk. We conducted review on parts & requested supplier to adjust pricing to be more in line with expectations.

2. Dispatchers Enact Proposal Adjustments for Materiel Quotes Subject to Escalation Conditions.


You have not done good job specifically addressing pursuit of refunds, even though you made attempt to review labour/material costs provided to justify effectiveness of escalation factor. Escalation factors should be based on appropriate economic index instead of flat period percentage to better control contract prices.

Supplier signed price agreement for materials well before the material certification date & also before negotiations of contract escalation occurred.  You need to perform cost/price review & obtain adequate support for large price increases to ensure multi-tier, certified material prices are properly evaluated.

You have recurring problem of suppliers negotiating lower prices for materials after completing negotiations with Navy. You must be aware of this inherent risk using long-term, firm-fixed-price contracts & take appropriate steps to share in reduced prices for supplier materials.

Navy actions to lower prices by reducing current contract prices are a step in the right direction. You have difficulty in obtaining reasonable prices, so you should negotiate or obtain cost-based prices for materials using long-term contract.  You should perform review & adjust pricing for limited sample of high-risk, high-dollar items before exercising the next option or pursue fixed-price incentive contracts.

Suppliers often negotiate lower prices for receipt of materials after negotiations with Navy are complete. Navy must be aware of this risk when employing long-term, fixed-price contracts & take appropriate steps to share in reduced prices. Navy actions to reduce cost-based prices using long-term contracts would be step in right direction. Navy should perform cost reviews & adjust pricing of limited sample of high-risk, high-dollar items before exercising next option or pursue fixed-price incentive contract.


Navy assumes supplier proposals are based on economic order quantities. It is common for suppliers to make adjustments from quotes to purchase orders following provision of cost/price certification. Suppliers say disciplined processes are in place to review make/buy items, considering capacity & demand to ensure supplier can support delivery of quality part at agreed on price.

Common supplier practise is to make adjustments are made from quotes to purchase orders, with disciplined processes for structure of make/buy items. Capacity & demand are considered, ensuring qualified suppliers can deliver with quality parts. Navy negotiated escalation factor based on known market conditions, with buying office substantiating that resulting escalation factor was reasonable for out years.

During proposal evaluation, supplier provided information from market Part Price Index. Navy reviewed most of total dollars of the bills of material, using supplier Cost/price quotes & purchase history. We focused on evaluation of proposals to drive efficiencies in large-dollar acquisitions & established new directorate for cost/price review, conducting training to focus on price evaluation for negotiated procurements.

3. Dispatchers Establish Quote Certification Subject to Side Deals & Excess Materiel Quantity/Demand.


You are required to develop equitable plan to use transferred consumable items based on Demand signals. Your standard practise should be to use on hand & due-in Navy parts on all performance-based logistics & partnering agreements. When commercial sources are used for performance-based logistics arrangements, part levels & forecasting need to be appropriately adjusted to meet changes in demand.

You must strengthen policy to emphasise the use of Navy parts before procuring items owned by suppliers & not enter into contract when items will not be supported in the future. Supplier parts were priced with unacceptable quantity determination & not reviewed to avoid excessive prices, even while all parties were aware of lower prices.

Current inventory will not satisfy next requirement period & no effort was undertaken to obtain refund for parts. You must obtain refunds from supplier for unnecessary pass-through costs & correct prices to avoid excessive profits. Since part costs are fixed no savings were realised .

Pursuant to Material Pricing Considerations, adequate cost reviews of each supplier-certified proposal must be conducted. Only prices were addressed in supplier review, costs were not certified. Reasonable prices for parts should be determined.


We have tools to identify quantities & prices of consumable parts, but it is not a tool to identify excess parts, because excess part levels are based on demand at a given time. Supplier information indicated that pricing for materials were reviewed in order to lower price, even while different prices were in play for Navy demand signals.

Supplier price was based on deals with other entities & priced worst case demand scenarios because of history of cancelled orders.  Supplier documentation showed all parties were aware of price negotiated by Navy & tried to negotiate lower price.

We agree on reducing prices before the exercise of the next option period with cost reviews performed as common practise for suppliers with large quantities of items, passing savings through materials & parts contracts. Supplier assumes the risk for price increases in a firm-fixed-price scenario & materials price from supplier was in line with the market.

4. Dispatchers Create Materiel Demand Forecasts Protected by Escalation Conditions.


Supplier may need to provide additional investment in material if demands are significantly lower. However, supplier has no risk of loss because they have many customers & can roll over quantities not purchased to future years.

Prices of parts were accepted as proposed by supplier, resulting in Navy paying excessive prices. Since supplier did not perform by obtaining & reviewing cost drivers & negotiate fair prices for its materials, supplier bears responsibility for excessive prices paid.  You must reconsider your position & address the efforts to obtain lower prices for these items when adequate cost review of materials was not performed by supplier.

Navy must review information related to labour & material costs to determine effectiveness of escalation factor. Contract escalation is added to protect both supplier & Navy from significant fluctuations in labour & material costs. Navy must base contract escalation on appropriate economic index instead of flat period percentage to better control contract prices. Supplier purchase history does not match amount of material escalation you claim.

Supplier cost/price reviews considered escalation for materials base by period. Parts supplier price for costs & price agreements were determined well before the material certification date & also before negotiations of contract escalation occurred.  Reviews of actual quantities purchased showed Navy paid excessive profits for parts assembly due to escalation. You must document situations where high-dollar parts were applied to price of materials.


We negotiated the escalation factor based on known market conditions & held supplier responsible for contract out years.  During proposal evaluation supplier provided information from Part Delivery Price Index & actual escalation was reviewed.

Assertions that supplier had no risk of loss due to significant price changes was not supported by supplier documentation. Contract obligates supplier to purchase a minimum of materials in forcasted quantity for delivery period. Should supplier fail to purchase forcasted quantity during any period, supplier is required to immediately purchase the excess quantity of materials, placing substantial cost risk on supplier.

5. Dispatchers Apply Quantity Discount Quotes for Supplier Support to Determine Purchase Proposal Risk.


When you identify defective pricing, contract offsets should be addressed, but if supplier submits information available before material certification cutoff dates, contract prices are not supported. Recent purchase orders issued before the material certification cutoff date were for quantities similar to the contract requirements at unit prices less than the contract price so supplier contract price is not supported by purchase history for this part.

Contractor assumes risk in firm-fixed-price contracts. However, for selected sample parts, supplier purchased parts using combined buys, resulting in lower unit prices than proposed. Supplier quotes used to establish contract price was significantly higher than price supplier negotiated for materials after material certification cutoff date.

Supplier had part price quote with quantity discounts but did not apply discounted price when material quantity increased. Navy usually negotiated prices based on supplier quotes much higher than actual prices was recurring issue.  Follow-on contract must be fixed-price incentive instead of firm-fixed-price even while considering administrative burden associated with a fixed-price incentive contract exists.

Another option is to conduct an annual review of a limited selection of parts designed to identify instances where supplier quotes were significantly higher than negotiated supplier prices & take action to renegotiate prices before exercising future options.  Although suppliers sometimes do not break rules in pricing  parts, when supplier procures higher quantities of parts, resulting in much lower prices, Navy must also realise benefits of discounts.


We must first complete post award contract review & make adjustments if pricing problems are identified. Historical procurement quantities we used were not reasonably related to the firm price supplier used in its proposal. We based our calculation on a weighted average of supplier purchase orders included quantities similar to contract requirements.

Because contract is firm-fixed-price, bulk of risk is inherently to supplier. Supplier pricing based on prices for long-term contract adds risk based on a potentially changing fiscal scenarios.  In addition, requirements for supplier to provide all of material puts supplier at risk of acquiring material that may never be used because of changes to depot workload scenarios always in flux.

No justification exists to request refunds for pricing parts in our sample because supplier used quotes to establish proposed price, proposed quantities were based on our input, with calculations based on prices dated after the material certification cutoff date.

6. Dispatchers Determine Supplier Incentives & Materiel Markup dictating Cost/Benefit of Changes in Purchase Quotes.


Even with more administrative burden, you must negotiate a fixed-price incentive contract for the follow-on contract so both parties would benefit from supplier negotiating lower prices for materials. While fixed-price incentive contract would be best, another option is to periodically perform cost review on limited sample of high-risk, high-dollar value parts & make changes to prices as appropriate before exercising options.

You must include contract clause to addresses appropriate markup on materials obtained by supplier & negotiate refund for profit supplier made on purchases so Navy can set aside available inventory for use on partnership contract to address risk supplier assumes. Supplier purchases must continue to be reviews in order to ensure overall prices are not excessive, addressing appropriate markups on supplier materials through contract terms.


Review will address effectiveness of material cost reduction clause in contract for high-risk, high-dollar parts to validate individual prices before exercising follow-on orders. This action, in addition to the inclusion of material incentive clause in follow-on contract, meets intent of recommendation. Due to extreme variations regularly occurring in depot workload, fixed-price incentive contracts can create tremendous administrative burden & increase the probability of inaccuracies in determining earned incentives.

Follow-on contracts will include incentives to reduce material consumed in depot production and/or price of material, reducing total material cost to depot. Supplier purchased material to support requirements & realised profit on items.

Supplier still had material on shelf it had purchased & was not able to establish a long-term agreement to use them as firm source of supply for specific depot items on a recurring basis. Supplier ability to ensure parts availability was inhibited & creates risk for supplier in meeting contractual responsibilities to meet depot parts demands.

Supplier must ensure supply line stands ready to provide parts, considering cost of holding the excess inventory purchased as consideration  for some price increases applied to purchased items. Goal of partnership with supplier on contract aims to provide flexibility, ensuring parts are available when required, which may not always reflect lowest unit price for individual material, but total value of costs versus benefits of the total contract is validated.

7. Dispatchers Design Baseline Materiel Quote Incentive Process influencing Depot Work Information Factors.


Suppliers must pass on material cost reduction incentives. Calculation is based on negative material programme charges & quantities as well as incomplete obvious transactions errors warranting corrective action. Tradeoff of baseline periodic return readjustments for excluding material increases does not represent best value for Navy.

Navy position of focusing solely on material decreases, while ignoring material increases does not adequately measure performance is measured to ensure proper use of Navy funds. You must immediately remove the material cost reduction from outside sources contract terms unless reliable depot overhaul factor information is considered to provide for equal consideration of labour & material cost increases.

Suppliers do have ability to substantially influence depot labour. Techniques designed to reduce material costs will directly result in increased labour costs. Contract statement of work requires suppliers to improve production output, based on best commercial practices to incorporate new work instructions.


Focus of material cost reduction clause is to reduce material cost to depot by including incentives for material decreases and disincentives for material increases.  In order to obtain agreements for periodic baseline adjustments, Navy did not include a disincentive for material increases. Evidence of benefit to Navy from periodic baseline adjustment of  material costs existed because programmes reflected reductions.

Some programmes reflected increases in material costs & Navy is investigating reasons behind increases, making manual adjustments to properly account for material & information used to calculate incentive payments reflected these adjustments. Under current terms of contract based on a review of all information, supplier earned incentive payment.

Depot labour cost calculations are not part of measuring performance of contract. No evidence exists of increased labour costs resulting from contract & supplier lacks ability to substantially influence depot labour. We have noted corresponding reduction in material required & significant portions of changes can be attributed to some process improvements supplier brought to depot & training to provide more detailed level of contract oversight.

Suspension of  material cost reduction incentives have been negotiated for remaining programmes pending results of material cost increases. No contract disincentive exists even though it is preferred method in performance-based contract terms. If suppliers could have influenced reductions, Navy will require adjustments to contract to obtain benefit from recalculating periodic baselines & evaluation of performance metrics.

8. Dispatchers Address Performance Quote Markups for Parts influencing Changes in Depot Workload.


You must determine if Navy has excess inventory for all consumable items being procured from sources under either contractor logistics support or performance-based logistics sustainment strategies. Quantify excess inventory & develop a plan to use any excess inventory. You must reinforce Navy policy requiring programme units to collaborate with material sources to assess inventory strategies.

Collaboration is good practise & tools must be used to identify existing inventory before procuring from contractors.  You must obtain lower contract prices for Sample part items on follow-on contracts. Your approved techniques used in determining original contract prices could be improved.

Techniques must be established to ensuring suppliers produce complete, current & accurate proposal, performing appropriate cost & price review of proposals for materials before negotiations with Navy to prevent pricing problems.  When programme changes result in significantly higher quantities of parts being procured & lower costs to suppliers, discounts must be passed on to Navy.


Delays in delivery or failure of supplier to meet quality requirements is not deemed as caused by Navy so adds risk to supplier. Supplier techniques for procuring material from many sources  functions to support  markup to be negotiated in follow-on contracts to ensure overall supplier prices are not excessive.  Not taking responsibility for costs results in inconsistent application of rates & cause supplier to be noncompliant with Cost Accounting Standards Disclosure Statements.  

We have tools to be used in identifying quantities & prices of consumable inventory, but it is not a tool to identify excess inventory, because excess inventory levels are based on demand at a given time.  We have requested supplier participation to select performance-based part support strategies & process is also used to assess  best inventory strategies.

We used approved review techniques to determine reasonable prices based on information available at the time contract negotiations & also participated in reviewing the proposed bill of materials.  For the follow-on contract, some parts were priced lower than expected & some were more in line with expectations.

Impacts of change on depot workload are significant, such as major programme adjustments or depot overhaul factor changes.  Changes regularly result in fluctuations of parts quantities required & contract type needs to be flexible enough to allow for changes, even while recognised efforts may not lead to the lowest price solution.

9.  Dispatchers Identify Combined Materiel Purchase Order Markups affecting Quote Instances of Limited Part Usage.


You must perform post-award review of contract to identify instances of unacceptable pricing. If such conditions exist, contractor offsets should be addressed.  Suppliers had information reasonably available before material certification cutoff dates that was not used to support contract prices.

Supplier used firm-price quote instead of procurement history to establish the proposed price for part & historical procurement quantities in review were not reasonably related to the firm price supplier used in proposal.  You must make calculation on a weighted average of supplier purchase orders including quantities similar to contract requirements.

Most recent purchase orders issued before the material certification cutoff date were for quantities similar to the contract requirements at unit prices less than contract price.  Supplier assumes risk in a firm-fixed-price contract, but supplier purchased materials using combined buys for sample parts, resulting in lower unit prices than proposed.

Supplier quotes used to establish contract price was significantly higher than price supplier negotiated for materials after the material certification cutoff date.  Recurring issues with Supplier include price quote for parts with quantity discounts not applied when contract quantity increased.

Follow-on contracts between supplier & materials source must be fixed-price incentive instead of firm-fixed-price while recognising administrative burdens associated with a fixed-price incentive contract.  Another option is to conduct periodic review of limited parts selection to identify instances where quotes were significantly higher than negotiated supplier prices & take action to renegotiate prices before exercising future options including discount.


We conducted post-award review of pricing in contract to make appropriate adjustments to supplier deal for parts. Supplier decided to pursue recovery from materials source for excessive markup on parts. Follow-on contract quantity for parts are to be supplied with material in existing Navy inventory.  Because contract is firm-fixed-price, bulk of the risk is inherent to supplier who bases pricing on Produce/delivery costs & materials prices for contracts.

Requirement for supplier to provide all of material puts at risk acquiring material potentially never be used because of changes in depot workload scenarios.  No justification exists to request better deals for pricing of some parts in our sample because supplier used quotes to establish proposed prices & proposed quantities based on input from dated numbers calculated by Navy after material certification cutoff date.

10. Dispatchers Evaluate Materiel Consumption Incentives influencing Parts Quote Basis Adjustments.


You must negotiate fixed-price incentive contract for the follow-on contract so both parties benefit from supplier getting lower prices for materials. While fixed-price incentive contracts create bigger administrative burden, fixed-price incentive contracts would probably be best but other options could be considered like periodically performing cost reviews on limited samples of high-risk, high-dollar value parts to validate price before exercising follow-on orders & make changes to prices to address effectiveness of the material cost reduction terms in contract.

In addition to the inclusion of the material incentive clause in the follow-on contract, you must include Contracting Price Redetermination of units & Economic Price Adjustment for adjustments to deals with suppliers. You must conduct  Unit prices redetermination & total price each period of contract, completing periodic reviews of supplier cost basis for parts purchased multiple times on long-term contracts.


Due to extreme variations regularly occurring in depot workload, fixed-price incentive contracts create tremendous administrative burdens & increase probability of inaccuracies in determining incentives earned. Follow-on contract instead will include incentives to reduce material costs & consumption in depot production and/or price of materials.

Parts price decisions must be made solely using contract economic, not prospective, price adjustment terms to provide basis for adjusting prices, but this determination was not documented in contract file.  Navy considered not establishing technique as best practise & determined contract modification did not need to be used for removing Contracting Price Redeterminatation . However, more studies are required to validate decisions made by current administration.

In single-source procurement, DoD must take the place of the missing competitive pricing pressure by challenging supplier price of equipment required for Upgrade/Repair Operations. New single source contract frameworks will support the DoD ability to negotiate good prices in deals with suppliers by providing an underpinning condition/performance reference framework that defines how prices should be determined using better quality and more standardised historic work order outcome information.

Rules will introduce standard reports at the beginning & end of each single-source contract to allow for the construction of  Logistics information system of equipment condition/performance benchmarks used to identify pricing assumptions  at odds with other comparable Upgrade/Repair work orders & embed tough, but achievable targets into contract quotes.

DoD condition/performance benchmarks can also be used to support capability planning & improve accuracy of fiscal budgets. By allowing capability planners to make high-level trade-offs for a given level of equipment cost, DoD will be better placed to optimise equipment specs & make more robust long-term cost forecasts in the early procurement phases.

In a competitive active status for contract quotes, suppliers must continuously improve or risk  being overtaken by competitor contract quotes, whereas in single-source procurement, lack of an alternative means that follow-on work orders are less dependent upon any improvement. The single-source framework must help provide a proxy for the missing on-going upgrade/repair efficacy incentive.

Techniques based on Supplier connection evaluations have been designed with a Tickler system containing contract quotes derived from installation inspections of equipment condition/performance metrics & parameters designed to turn up instances that do not need to be corrected immediately but upgrade/repair action is required the next time quotes are issued.

When upgrade/repair work orders are opened at installations, auto systems display reminders that ticklers are open for contract quote determination w/ summary information of  equipment condition/performance, collecting & compiling quotes & other metered expenses on a scheduled basis. This information appears on automatic generated reports to provide a complete expense notification detailing upgrade/repair work order status.

Getting equipment prices for upgrade/repair operations right requires a number of things. DoD has described how new work order frameworks will improve understanding of cost drivers & how proposed rules will improve supplier competencies & skills. However, suppliers will always know more about their costs than DoD does.

Single-source suppliers must use appropriate pricing assumptions for upgrade/repair operations. If supplier costs for equipment turn out to be lower than expected, DoD should investigate if the price was genuinely based on the best estimates of suppliers at the time. If DoD believes contract quote pricing assumptions were not used, it will have the power to require the supplier to provide for new work order standards accordingly.

Our recommendations would allow DoD to learn true costs related to single-source contracts in a much more timely fashion so upgrade/repair schedules can move forward to quickly meet mission requirements. Stronger supplier efficiency incentives & standard cost pricing reports would enable benchmarking across work order projects & suppliers to better challenge supplier prices.

Greater transparency should be required by DoD to ensure suppliers are looking for continuous improvements once contract quotes for critical equipment are issued. Recommendations that establish links between suppliers costs/profit must not be undermined by work order projects where suppliers do not meet high standards

DoD must be able to investigate whether supplier  pricing assumptions are appropriate at any point work orders are in effect, instead  just at the end. Standardised reports must allow DoD to target investigations into supplier processes appropriately when equipment costs are much higher/lower than anticipated. New reports from suppliers would support a pre-approval process for significant overhead costs, & require suppliers to be more transparent with DoD regarding capacity. Suppliers must demonstrate that overhead costs are appropriate.

An installation site design of equipment supply line tracking must be reviewed & based on substitute resource sourcing when use has been established in work orders—tagging & tracking of condition/performance instances has several iterations:

Equipment supply line information is paired to correspondence in the contract procurement systems in the entrance to work order scenario builder so there exists operational commitment & contract quotes are dispatched. Work order directives pass through a bottleneck to be tagged in the contract quote system when supplied with a redundant logging system & condition/ performance metrics are entered when equipment deployment proceeds from installations where use is monitored.

Our recommendations offer the following general conclusions. With regard to DoD sourcing strategies, for any pricing scheme, the only time a single supplier sourcing strategy is preferred is when the lowest cost supplier has adequate capacity to meet the entire work order demand for DoD. In all other cases, a multiple sourcing strategy is the general choice for contract quotes.

With supplier quantity allocations, for the case where a multiple supplier sourcing strategies is preferred, our upgrade/repair simulations determined optimal supplier quantity allocations only hold when each supplier quotes a constant price. When suppliers quote quantity discount pricing schemes, optimal quantity allocations are difficult to determine.

Dispatchers administer installation-only requirements to monitor equipment involved in upgrade/repair operation & contract quote determination. Installation will be able to carry out missions with condition/performance instance information stored during upgrade/repair operations & downloaded at a later date.

Installations must enact simple equipment contract quote systems, involving an on-board  monitor of  condition/performance instances. Although system instance alerts are not real-time in this case, areas for concern are marked & stand out when information is compiled. This can alert command as to when equipment issues involved in upgrade /repair operations require additional attention.

Finally, DoD sourcing scenarios where supplier bases offer quantity discount schemes for contract quotes, if all suppliers in the base possess enough capacity to individually provide equipment units, it is optimal to single source from the least cost supplier evaluated units.

In cases where quantity discount quoting supplier capacity is individually inadequate for equipment units, making smart sourcing decisions for upgrade/repair operations can become extremely complex when the following Top 10 Logistics Limitations are considered:

1.     Automated information systems for upgrade/repair operations consist of multiple integrated functional supplier modules to perform accounting, equipment cache status forecasting, purchasing, distribution & scheduling work orders lack internal controls.

2.     Current contract quote systems are fragmented, functionally constraining, outdated technically & unable to support tracking of equipment item Location throughout its life span & across multiple supply lines using unique identifier codes.

3.     Logistics systems cannot exchange information directly between services, instead operates through translation process lacking item lot & serial numbers, leading to sending/receiving process of sharing work order information that is yet to be completed .

4.     Requisitions limited by outdated processes documenting instructions/exceptions detailing what lots of equipment should be pulled from upgrade/repair depots form the great majority of communication processes with suppliers.

5.     Manual instructions increases processing time & lacks visibility b/c no confirmation requisition/order is received or completed. Work orders do not contain definition for “Total Asset Visibility” –defined as “access to complete & accurate information on item contract quotes & location in DoD Supply System”

6.     Since different contract quote information exchange formats are used between installations, additional work order instructions must be issued for standardisation of upgrade/repair processes for uncompleted requisitions.

7.     Manual processes are still used to check & make corrections to upgrade/repair depot item storage capacity are not clear, concise, consistent, accurate, up-to-date & accessible, resulting in overestimates, increasing cost & time required to transform & translate work order information on items appearing to be identical.

8.     Current work order systems do not account for items shipped from upgrade/repair depots to other locations; items are dropped from contract quote records during transit w/o receipt confirmation from destination, resulting in accountability & visibility gaps.

9.     Current contract quote systems lack capability for generating risk assessments of mission condition/performance metrics such as verification of accuracy rates comparing physical levels of items to presence of accountable supply line connection.

10.     Information exchanged between services fails to differentiate between equipment items intended purpose on work orders & supplier details, assigning different lot numbers following upgrade/repair operations but keeping previous number on record, resulting in double counting.

Modernised automation of Spare parts supply systems plays an important role in achieving desired availability of fleet equipment components for meeting work orders at optimum cost to mission. Installations should shoot for capital intensive, deployment-oriented & integrated technology. Downtime for spare parts system integration can at times be too expensive to carry out. Dispatchers have recognised non-availability of spare parts supply at installations when required for repairs, contributing to much of total down time.

Cost of spare parts is a significant portion of the total impact of upgrade/repair activity at installations. Upgrade/repair systems face non-availability of spare parts supply to meet deployment requirements w/ fiscal costs of fleet equipment components being classified as locked up capital, signifies vital importance of automated spare parts system integration for installation work orders.

Unique work order problems faced by installations in controlling spare parts integration are characterised by elements of supply uncertainty as to when a part is required & also the quantity of upgrade/repair requirements b/c failure of a fleet equipment component due to overuse cannot be predicted accurately. Spare parts are not readily available from many suppliers since they are not fast moving items. Original suppliers deploy spares in most cases.

Dispatchers have introduced new supplier connection models to incorporate auto system design integration, phasing out stove-piped information desks in order to integrate work orders, so spares for outdated transmission models are not readily available. These factors are significant in cases of sourced fleet components since equipment design changes move at different speeds at multiple installations.

Quantity &variety of spare parts to be integrated into new supplier connection models are often times too large, making close auto system control more & more tedious.  Also, there exist tendencies for work order transitions from sourcing stages of fleet equipment components to spare parts use stages. As such, requisitions for spare parts at increased number than actually required results in accumulation at installations.

Each installation must proceed systematically & establish an effective spare parts information integration system. Supplier connection codification policy helps to minimise duplication of spare parts stocking & aids in establishment of solid work order process to facilitate integration of spare parts control systems. 

Auto system integration must be carried out on the basis of different characteristics of spare parts techniques to establish good work order policy such as monitor of annual consumption value, mission criticality, supplier lead time, unit cost & schedule frequency of use. Installations must direct ambitions efforts on integration & establishment of suitable policies for selective supplier control, focusing efforts on real-world mobile operation problem areas.

Good auto system controls will help to integrate supplier policies involved in sourcing procedures & achieve optimum levels of spare part cache control for work orders. In addition, installations must optimise replacement policies for selected spare parts with increased down time costs. Installations must identify required spare parts and carry out supplier connection exercises for integrating optimum replacement policies.

For sourcing expensive spare parts, it is essential to recognise useful life for equipment is extended by appropriate applications of reconditioning & upgrade/repair techniques. Installation work order efforts must be made to integrate spare parts in view of difficult sourcing processes. Installation establishment of spare parts supplier register banks goes very long way in reducing the total cost of holding expensive spare parts in stock.

For different installations, it is imperative to establish spare parts supplier register banks & suitable integrated information system for spare part exchange. Automated applications for processing of spare parts information & operation of effective spare parts control systems will assist installations with scheduling of upgrade/repair job work orders.

Objectives of spare parts system integration include ensuring spare parts are readily available from suppliers for upgrade/repair of fleet components as & when required at optimum cost.  Also, there exist absolute work order requirements for spare parts to be of high quality in order to meet the requirements of subsequent deployment to meet mission requirements.

Finally work order reviews have established results indicating spare parts consumption rates for some installations are very high, while other installations experience lower consumption & varied deployment patterns, highlighting the utility of building systematic spare parts integration with supplier connection models.

Multiple actions following from establishment of supplier connection episodes are required to ensure that spare parts system integration is effective to meet mission requirements of installations.  Top 10 Mandates for systematic actions in building integrated spare parts systems are as follows:

1.     Establish auto system operations control, transform service level supplier contract architecture, portfolio process & active work order monitor report

2.     Solve auto system scope problems w/ directed action for supplier visibility & situational awareness, auto operations root cause, work order upgrades

3.     Satisfy auto system requirements & work order goals to identify supplier solutions, establish quant for evaluation, assess ability of alternate measures

4.     State auto system scope for cost estimate, work order information source & supplier risk rationale results

5.     Implement supplier characteristics of high-quality, reliable auto system cost estimates, document comprehensive, accurate, credible work orders

6.     Authorise auto system deploy to support supplier testing for achieving capable mission to verify with independent testing of work orders

7.     Plan supplier programme requirements, budget & execute auto system process w/ work order goals conform to fiscal, security, architecture & investment areas

8.     Assess current supplier reporting tool capable for auto system support, establish work order service process, design requirements, tool integration specs

9.     Evaluate & validate current auto system supplier  infrastructure consist of tech, assets, configuration items & work order evaluation components

10.     Disclose auto system ground rules & work order assumptions for supplier register notes, tech refresh baseline & implement at installations

Give examples of times when equipment maintenance/modernisation was going smoothly & deployment deadlines were on schedule. 

Contrast with times when, over the course of upgrade/repair operations, your team realised some logistics processes needed to be changed.

What if more work would be required, but better mission outcomes could be achieved?


When we first joined forces with DoD years ago, we were given the impossible task of creating dispatch training logistics models for equipment upgrade /repair operations required by commanders in the field.

Our goal was to ensure that equipment upgrade/repair operations we were preparing would meet & exceed mission requirements of the Fleet & new work order routing techniques would now go on without a hitch. 

The supply line product was ready to launch & everyone was eager to have the orientation finalised & deployed immediately. We were under lots of pressure to get this project done quickly to meet expanding contract quote schedules.


During initial real-world, mobile operations, we worked really hard to get the dispatch training models created & collaborated with existing divisions stocked with trainers who were not yet fully briefed on new logistics plans for work order routing technical specifications.

We were originally right on schedule to meet supply line deadlines organised by new grouping of equipment upgrade/repair contract quotes.

By chance, we overheard in Congressional Briefings we were extremely attentive to that an accelerated launch of the supply line product was required to meet unanticipated missions tasking the fleet.

Commanders in the field were now caught scrambling to get new equipment upgrade/repair instructions incorporated into day-to-day operations as soon as logistics resource assignment was possible to support our team.


We reached out to Senior Levels at DoD to ask if we should be also be working on adaptations of the work order routing models to meet new mission requirements. After checking, we quickly found out our answer.  Yes, the logistics training materials would also need to be incorporated into real-world mobile operation ahead of schedule.

Someone in the field had forgotten to pass critical upgrade/repair contract quote information along to our team.  We requested help from DoD as to how our logistics materials could be immediately updated without additional resources.

With the arrival of more resources, we were able to locate qualified dispatchers quickly. DoD signalled that approved field site teams could begin work as soon as we had each supply line section created & approved.


Fortunately, our logistics training materials were incorporated into day-to-day equipment upgrade/repair operations right when they were needed by teams in the field thanks to our ambitious & diligent work.

 If we had not heard about the early launch & new work order routing resources were not requested, we would have experienced major delays in launching our supply line product.

DoD Officials were very pleased with our efficient efforts to route work orders required to group equipment upgrade/repair contract quotes & timeliness of our supply line product launch.

Deriving contract quote determination for equipment condition indices is a dynamic process with outcomes represented as the aggregated impact from factors such as Fleet deployment types & sizes of supply routes, equipment upgrade/repair operations to meet surge contingency scenario demand & structural capacities.

Valid operational results based on capacity prediction & procedures have been designed to develop new mechanistic supply route modules. During this process, the transition installation instances between any two equipment upgrade/repair states can be represented by considering the conditional probabilities in sequential series.

Supply route prototype capacity for accurate contract quote determination involves fiscal trade-off value determinations to compare security deployment values for multiple installations to capital investment programmes among competing supply route projection candidates, ranking equipment upgrade/repair project type by rate of return on the stated evaluation instance values.

Sourcing suppliers for the Fleet Type & Size substitute components source each contract quote system containing equipment upgrade/repair schedule for tracking of condition/performance metrics instances, adjusted quantity & deployment date. Installations choose to accept any subset of supply route offers from substitute equipment sourcing suppliers who have submitted specs to meet contract quotes based on the ratio of free capacity to expected total deployment capacity in the cache of substitute equipment components to be utilised.

Roughly, the offered value is determined by identifying: 1) Individual constant baseline substitute components 2) Expected value of uncommitted substitute component capacity up to the deployment date 3) Expected value of total substitute component capacity up to the deployment date.  Expectations are derived using the capacity registered in the contract quote system as the expected capacity at the end of schedule frequency termination based on upgrade/repair operations at installations.

Sourcing valuations of all contract quotes involved in the process must be considered. The relationship between accuracy & equipment deploy patterns can be put in a supply route context for each force structure requirement used in meeting surge contingency scenarios by using more depicted contiguous valuations. Sourcing suppliers are assumed to incur linear substitute equipment component costs for upgrade/repair operations equal to the discounted base price per substitute components, all the way to sourcing capacities.

Sourcing formulations yield only a close approximation to the true equipment deploy capacity surplus, since sourcing decisions are not required to be available during similar contract quote schedule frequency periods as the required substitute components used for force structure requirements. That is to say, it allows for the supply route capacity of substitute components to be consistently available at set contract quote schedule frequencies utilised in assembling upgrade/repair operations to meet force structure requirements. Equipment schedules are tracked so long as installation request constraints are independently satisfied by contract quotes.

Control of Equipment upgrade/repair schedules dictates timing of fiscal determination for condition state, with the goal of coordinating with installations involved in each contract quote systems to ensure that the equipment condition/performance assessment instances can be compacted within the required time window to meet schedules.

Within contract tracking quotes, as each schedule frequency frame is drawn, current & previous position of the instance is passed on to the equipment deploy supply route to determine which, if any, installation points have been passed over and updates priority status as necessary. As the transparent states of each installation point are updated, supply routes status is determined accordingly. The supply route also determines contract quote query of each installation for the new position of each instance schedule frequency frame.

Sequential series design allows for great flexibility in supply route pattern layout without making the design & definition of installation location too complex. Supply routes in each equipment contract quote are defined as a set of one or more segments between installations, with route segments defined as either continuous or discontinuous. By using combinations of the route segment types, more complex relationships between installations can be created.

The Equipment deployment supply route pattern defines a single installation class and creates an instance of this installation for each force structure requirement. Each installation instance is subject to upgrade/repair techniques based on condition/performance states of equipment & position which exposes the contract quote system to the core operation similar to a real-world force structure adjustment to meet changes in demand-centered surge contingencies.

When a point on the supply route pattern has not been subject to equipment tracking & upgrade/repair, installations are required to relay condition/performance instances & also provide documentation when upgrade/repair operations are in effect & equipment is tracked. Contract quote system Passes between none & optimal are recorded proportionally between the two. When an installation point on equipment deploy supply route pattern is overly subject to upgrade/repair, instances are shifted until the maximum number of passes though the contract quote system is reached when there is no longer modification by scheduled supply route activity.

Each instance determination at installations is subject to equipment condition/performance state with contract quote position exposure to the core operation & determination of force structure requirements, with continuous & discontinuous supply routes established between installations. As each schedule frequency frame is drawn, properties of upgrade/repair operations are queried for the new & previous locations of the installations.

Information results are dispatched to equipment deploy supply routes to determine if any installations have been passed over. One or more condition/performance metrics elements are placed in the force structure requirement files to define techniques for equipment tracking & upgrade/repair operations for each installation.

Upgrade/repair operations follow a process to include conversion of planned contract quote orders into supply route service, scheduling, capacity, materiel availability checks, order confirmations, sourcing ticket receipts & order close-out. Installation terminals become stressed by capacity constraints, so more accurate contract quotes must be applied to substitute equipment component sourcing tickets.

Contract quote systems must adhere to multiple condition/performance indicators designed to reduce the amount of information processed to understand the key trends in the overall deployment status of different types & sizes equipment components providing for new supply route modules.

For an installation instance, single indicators is built to represent characteristics of sound supply route service. Establishment of aggregate condition/performance elements is function of several more detailed indicators & capacity predictions are expected to provide accurate information to installations charged with meeting force structure requirements.

Installations must detail requirements for schedule frequency frames of instance reporting back to the central station, another issue that distinguishes contract quote system accuracy. Most installation systems are now moving toward exception reporting, where equipment component tracking operations only report into the central station when outside pre-established on-time performance/condition parameters are realised, with information collected at existing schedule intervals according to operational tempos.

Schedule times for individual substitute equipment condition instances must be built & serve as time points for exception reporting. It is essential that contract quote systems utilised by installations are designed with key internal controls to find out when & where supply route insertion is required. Installations can refer to established capacity signals & correct any upgrade/repair problems regarding timing of supply route origins & destinations.

When attempting to troubleshoot a discrepancy without the aid of a troubleshooting chart, the first technician action step is to decide where to begin the process of examination. When experience does not suggest the point at which the troubleshooting should begin, the technician should consider the “Divide & Conquer” Technique.

The important aspect of this simple example is not the use of this particular schematic for this particular discrepancy, but rather to illustrate the advantages of the “Divide & Conquer” Technique as opposed to a “Hit & Miss” approach to troubleshooting.

In the “Divide & Conquer” Technique, the technician separates the system into two equal parts, either in regard to the number of components or in terms of a linear measurement, then testing the operation of each half of the system to that point.

Based on the results of the test, the technician knows whether the discrepancy lies in the first or second half of the system under investigation that is being tested. The discrepant half of the system is then divided into two equal parts and the system is again tested.

This process is repeated until the discrepancy is discovered. The use of the “Divide & Conquer” Technique offers, in the long run, the quickest way to identify a discrepancy & its possible cause.

When coupled with experience, the “Divide & Conquer” Technique is hard to beat. The technician may, after previous troubleshooting, note that one portion of the system rarely experiences failure. In such cases, troubleshooting may begin at another, more likely point.

Testing at any point in the system requires knowledge of the specific system involved in the investigation. The technician must be able to determine the inputs & outputs of the system at the test point.

Generally, it is best for the technician to determine what is to be expected at any point prior to making the test. Determining the acceptable test result criteria before testing lessens the tendency of the technician to accept invalid results.

The selection of the appropriate corrective action is the next step in the returning the aircraft to an airworthy condition. A description of corrective action techniques is beyond the scope of this report. The technician should remember that the repair is not complete until the cause & symptom are corrected.

The following example is designed to demonstrate the utility of “Divide & Conquer” Techniques on a Simple Aircraft Repair Scenario:

Assume the pilot reports that a left-hand low pressure warning light flickers. Also assume that all valves are in the position represented in operational instructions. The obvious things are checked first: Fuel supply & warning light bulb, and both are functional.

Assume the troubleshooting charts do not provide any direction for flickering problems. From the system schematics, it is determined that there are four locations from which troubleshooting may be accomplished: engine compartment, cockpit and either of the two fuel tank areas.

“Divide & Conquer” by selecting the cockpit as the middle location. Since the difficulty appears on the left-hand system, the right hand emergency shutoff valve is closed & tagged. Tagging of all switches and manual valves placed in non-operational positions during the troubleshooting process is accomplished to ensure that they are returned to operational positions before the aircraft is released for service. When the fuel-boost pumps are activated, the discrepancy is not duplicated.

When the left-hand emergency shut-off valve is also closed [not likely to be done in flight] the low pressure light illuminates but does not flicker. Chances are now good that the fault does not exist in the engine compartment. The emergency shut-off valve is opened.

Since no master warning of fuel bypass was reported, fuel bypass systems are assumed to be operational. The discrepancy may now be assumed to be in either of the fuel tank systems.

Each system may be checked separately by use of the cross-feed valve. With the cross-free valve open, the left-hand boost pumps are turned on with right hand boost pumps off. The discrepancy is not duplicated. From this, the left-hand system and the right-tank check valve may be considered operational.

Turning off left-hand pumps and turning on the right hand pumps results in the problem being duplicated. The problem lies in either the right-hand or left-had check valve. Closing the left-hand manual shutoff, the discrepancy continues, so the left-hand check valve is probably operational.

Closing the cross-feed valve and opening the right-hand emergency shutoff valve moves the discrepancy from the left-hand low-pressure light to the right hand light. The discrepancy is definitely in the right hand tank system.

Since the tank boost pumps do not indicate failure, the boost pumps are probably all right. The two remaining potential problems are the two check valves, either the fuel-ejector unit check valve or the check valve between the boost-pump check valves.

By dividing the system in half at the emergency shut-off valve, the portion of the system beyond the emergency shutoff was eliminated from consideration.

By dividing the faulty portion of the system in half again, the right hand tank system was identified as the culprit.

A cross-check verified this fact. After dividing the system in half twice and doing some investigation, the technician was able to limit the fault to one of two components from a potential of a few dozen components.


Situation - DoD is interested in a description of the general situation or circumstances you were faced with

We have simplified/streamlined procurement & delivery logistics for equipment deployment  to installations. We were doing regularly scheduled repair/upgrade operations on major Fleet equipment when we discovered contracts requiring more attention to get better deals with suppliers.

What was the Logistics situation/problem the organisation faced?

--Example: An equipment service Route was losing traction rapidly & work order dispatch was required to ensure repair/upgrade operations would lead to future mission success.

What was the Logistics question the organisation was trying to answer?

--Example: How do we enter into route contracts strategically based on quote dispatch between installations? 

We have introduced the complications/problems with the suppliers that needed to be addressed & resolved by the organisation.

We took the initiative to apply for contracts to fund route service scenarios. It's often difficult to quote equipment supply contracts required to meet deployment scenarios & it's important to meet work order deadlines for repair/upgrade jobs critical to future success of  operations dependent on the condition & performance of the Fleet.

We were responsible for training new route service dispatchers to help installations explore equipment repair/upgrade job options, write route service work orders, apply for contractors & learn how to conduct  deployment scenario searches.

We worked with dispatchers to schedule supplier conference calls for installations & teach dispatchers route service contract quote grouping techniques through daily interactive equipment work order sessions.

Most of our activities incorporated assessments of route patterns signal dispatch & deployment scenario simulations based on the state of equipment condition & performance metrics. We worked with several installations to create new techniques to deal with suppliers.


Task - DoD wants outline of specific tasks that you were required to undertake to address a real-world situational problem

Route service contract repair schedules need to be coordinated with installations to rebuild the existing work orders and return the Fleet equipment to service by speeding up repair/upgrade jobs.

We Stressed the high-level equipment repair/upgrade strategy we took to deal with the supplier conference calls complications set forth in the Situation & asked the following Questions:

What was the specific Logistics task the organisation had to achieve?  

What was operational success to look like and what were the goals Logistics operations met?

Was it a recommendation for advanced Logistics techniques? Contract Quote Inquiry? Supplier conference call Implementation?

--Example: The organisation may decide to fulfill one part of an equipment component procurement routing process or everything from contract quote inquiry to work order decisions implementing equipment repair/upgrade jobs.  

We researched procurement contract options & found several possibilities for addressing supplier requirements. Each had different quote schedule deadlines & different windows of time for which the work order strategy could be used.

We created a new equipment repair/upgrade training programme working with dispatchers to create work order materials & schedule training topics to better assess conference calls with suppliers. 

 Our goal was to be sure the dispatchers received all the route service information required to effectively advise installations how to deal with suppliers, while also making the equipment repair/upgrade job training enjoyable & interactive.

The work order routing programme required a lot of attention. Existing installations had no route service plans, no Fleet component quote scheduling materials & little dispatcher assistance.

We were given limited resources & little time for determining the Fleet component equipment we would need to achieve mission success, but nothing more. We oversaw all phases of the route service scheduling process, with the specific responsibility of initiating & constructing work order routing techniques to meet deployment scenarios.  

We had to choose & research a topical deployment scenario through the construction of Fleet equipment component catalogues, secure dispatcher interviewees & schedule all future route service repair/upgrade activities. Our objective was to identify route service patterns & develop detection mechanisms for condition & performance metrics detailed in fleet inspections to ensure proper disposition of work orders.

Action - DoD needs explanation of particular actions carried out to complete tasks, including how you interfaced w/ outside sources

To coordinate work orders, we interfaced with installations & told them we’d have to work with the route service contract providers. We developed a plan & briefed Supervisors on the plan creating quote groups to schedule the repair jobs.

We documented & reported our progress so the chain of command knew exactly where we were on the route service repair work orders each day, working with installations to purchase the right fleet component equipment & tools. To maintain continuity between installations, we used written contracts, direct vouchers & material-requisition purchases to promote new interactions with suppliers.

We have Outlined specific Logistics tactics taken to link work orders detailing route service repair/upgrade jobs for equipment critical in meeting mission requirements to the high-level strategy outlined in the Task section.  We have answered the following questions in the written section memos:  

What Logistics actions did the organisation take to accomplish tasks & how was the solution created?

–Example: Contract Procurement quote systems were created to filter current fiscal work order requirements based on XYZ variables…

 What Logistics process strategy was used & how were work order filter problem-solving techniques approached? 

--Example: Work order Records & Files for each repair/upgrade  job were audited & focus reviews conducted for critical equipment.

What type of Logistics approach was taken to carry out supplier quote inquiries & how was installation buy-in and mission success ensured?

–Example: Created deployment scenario decision-making modes & maintained frequent contact with installations to ensure dispatch of work order jobs for engaging route service suppliers.

Route service Scheduling timelines required us to create contract quote groups organised by deadlines, purposes & windows of time in which they could be used based on the status of equipment condition & performance metrics under investigation. We identified & worked on materials needed for the dispatch training binder & created a deployment schedule for the daily work order training activities.

We held conference calls with suppliers before the installation work order creation sessions to agree on plans for the route service schedules, brainstorm & plan deployment scenario activities, gather required equipment repair/upgrade materials & delegate responsibilities for the signal dispatch sessions.

We brainstormed with every external reporting source we could find to come up with potential ideas for the training binder. We explored many potential leads to gauge their feasibility & eventually agreed on a topic:

Scheduling Automated Equipment Repair/Upgrade Work Order Routing Mechanisms for Supplier Sourcing Quote Tickets

We were given the assignment of creating innovative Logistics techniques for equipment repair/upgrade operations, so we exhaustively researched the subject matter to learn all the required background information. Once we had an understanding of the subject matter announcements were posted online for our techniques, requesting the participation of interested parties.

We researched large volumes of Fleet equipment component records, focusing on repair/upgrade work orders for route service scenarios by entering quotes into contract procurement systems to reveal the most important patterns. Equipment condition & performance criteria was defined & ranked for building the new route service detection training.

Result- DoD must confirm outcome of your actions in terms of delivered benefits & learning points gained from the experience

In the end, the installation logistics training was a solid success. It was well-organised & work order jobs for equipment repair/upgrade operations stayed on schedule. The Defence community has provided valuable feedback & signal dispatch trainees reported that promoting work order details required for success of equipment repair/upgrade operations was an informative & fun training paradigm.  

We quickly put together a last-minute response & aimed to update the route service supplier materials & Fiscal requirements for Fleet equipment component deployment scenarios accordingly. The Logistics training events were successful on multiple levels, including assessments of fleet condition & performance metrics.

The Fleet equipment component upgrade/replacement catalogue examples highlights not only our ability to meet multiple route service deployment deadlines in the procurement pipeline, but also to be organised, take initiative & be flexible when handling last-minute logistics problems & changes in operational work order dispatch requirements.

We have been specific as possible in describing work order routing requirements for repair/upgrade job logistics strategies for dispatchers at key installations, providing precise Fleet equipment Component Condition & Performance metrics and outcomes that have resolved the complications addressed in the Situation Section.

We have answered the following questions in our section memos:

What was the result of organisational action? What was the outcome of all the Logistics steps that were put into the project?

What Logistics techniques were employed to produce condition & performance-based metrics used in identifying potential route service suppliers for Fleet Equipment Components?

Did the dispatch techniques address the Logistics problems/objectives the organisation was trying to address & were lessons learned appropriately detailed?

The supplier conference call sessions developed for installation inquiry into procurement pipeline quotes have been a huge success. The work order training activities engaged & entertained dispatchers at multiple installations, while educating them about basic supplier conference call techniques designed  to resolve route service issues involved in deployment scenarios for Fleet Equipment Components. The lesson plans built upon one another & dispatcher performance improved as the Logistics training progressed.

Our persistent pursuit of innovative Logistics techniques detailing Equipment Component repair/upgrade job work orders for route service contract quotes with the suppliers finally paid off: Descriptions of our techniques have attracted numerous interested parties & we have continued to correspond with promising outside sources of information & successfully scheduled more installation conference calls with suppliers.

We have led creative efforts to promote innovative Logistics tactics to prepare deployment schedules for multiple route service patterns involving equipment component condition & performance metrics. DoD leaders will now be able to use this presentation of our techniques as the basis for developing advances in organisation-wide policies that maximise the fiscal & operational goals of the force.
We describe all possible limiting behaviour principles for contract type “Bucket Brigades” support supply line schedule series by multiple teams of dispatchers routing defined levels of work orders. 

The results of this report suggest caution should be taken in interpretation of equipment repair/upgrade simulations at installations under review by dispatch teams. Results also indicate sourcing ticket strategies should be established for partitioning dispatcher tasks into effective teams to establish new supply line connections.

In “Bucket Brigade” contract grouping for every supply line connection team, dispatchers move between schedule series stations in defined sequences where each dispatch team follows simple rules about what sourcing ticket to write next. 

Results confirm that dispatcher sequence organisation independent from schedule series station of origin establish stable work order routes automatically. Supply line connection rates converge to maximum possible value over all techniques of organising dispatch teams & schedule series stations utilised in equipment repair/upgrade simulations.

Most DoD installation business processes have special requirements & logistics characteristics derived from the reasons they got tasked for Fleet Maintenance/Modernisation operations in the first place. One example is a Repair Shop utilising Work order Reminder Sets with temporal equipment parts delivery guarantees.

To really make this happen without losing supply line deployment capacity, all kinds of operational factors have to be taken into account, such as estimates for purchase order-taking lead times & delivery constraints to meet localisation parameters for Fleet Equipment Part deployments.

To be sure, some business logistics underlying DoD operations cannot be completely automated because the success of missions relies upon personnel skill sets drivers/limitations, but certainly many parts of the purchase order process could be automated, such as ordering from contract quote interface configurations, automatically triggering the delivery of new supplies to installations in need of equipment spare part components required for Fleet Maintenance/Modernisation operations.

Automated techniques are used to prepare the purchase orders required to move the supply logistics lines forward. Ideally, DoD should be able to introduce as many successful operations/missions as possible with minimal cost to the fiscal constraints present in design of the equipment part supply systems involved. Specific work order instructive infrastructure based on Repair reminder sets can help.

RULE #1: Contract Order Logistics

Sourcing strategy can be characterised by three key interrelated decisions 1) criteria for establishing supplier base; 2) criteria for selecting subset of the supplier base who will receive an order from DoD; and 3) the quantity of goods to order from each supplier selected. Short-term contracts provide more flexibility and avoid fixed investments, but also forgo improvement and price certainty benefits afforded from long term contracts. Benefits of single-sourcing include quantity discounts from order consolidation, reduced order lead times, and logistics cost reductions as a result of a scaled down supplier base.

Supplier selection is concerned with identifying the subset of qualified suppliers who will be considered for order placement, and allocation focuses on splitting the required quantity between the selected suppliers. These decisions are interdependent and are also driven by the total delivered costs to DoD of an order quantity from each supplier.

RULE #2: Schedule & Unit Cost

In the presence of low ordering costs and highly variable lead-times, dual sourcing can be cost preferable. Key differences between an all-unit discount and incremental schedule is that in the former, all units ordered are supplied at the unit price, while in the latter; only the number of units in a specific break point are supplied at the unit price. Suppliers offer these types of schedules to encourage buyers to procure larger quantities and to reap the operating advantages associated with these larger quantities. While DoD may utilise a single supplier for a particular item, it may also address differences in contract type supply risk by sourcing from multiple suppliers. In particular, DoD  allocation decisions determining an appropriate supplier set and order allotment impacts on all competitive dimensions for deployment of defence equipment-  including cost, quality, reliability and flexibility.

RULE #3: Orders & Demand

When all suppliers have different cost and reliability functions for contract types, one of our key recommendations is for DoD not to rely one dominant sourcing strategy. That is, under certain circumstances, it will be optimal to place a single order with the lowest cost supplier & under other circumstances, an order is placed with a subset of the suppliers. There are some interesting interactions between the uncertainty in demand & uncertainty in supply. When the uncertainty in demand is low, then it is optimal for DoD to address the uncertainty in supply by including different contract types in total orders amongst several suppliers. Conversely, when the uncertainty in demand is high, then DoD limits its fiscal risk and optimally relies only on the single lowest cost supplier.

RULE #4: Cost Structure

When suppliers have cost structures from different contract types & identical reliability distributions, then there is no one dominant supplier sourcing strategy. For supplier settings with uniform demand, our recommendations indicate that, in the absence of capacity constraints, there are circumstances under which it is never optimal to order from more than one supplier when reliability distributions of suppliers are identical. When suppliers have identical cost & identical reliability distributions, then it is optimal to order the same amount from all suppliers. Single sourcing strategies could be optimal only when there are differences in costs across suppliers.

On the other hand, if costs across suppliers are identical then multiple sourcing strategies are an optimal choice regardless of supplier reliability distributions. With homogeneous suppliers, the optimal number of suppliers remains the same but the total order quantity increases in response to either an increase in the mean demand or an increase in demand variability. To summarise, we recommend that DoD decrease the number of suppliers receiving a positive order and increase the total order quantity in response to higher levels of demand uncertainty.

RULE #5: Order Quantity

Supplier cost & reliability are the key factors to weigh for contracts coming into play when DoD is deciding whether or not to place an order with supplier in this sourcing case. Consequently, the lowest cost supplier in the prequalified pool will always receive a positive order. An exception to this rule can be shown in examples when the lowest cost supplier has a restrictively high minimum order quantity. It follows that if all pre-qualified suppliers have similar costs, then it’s optimal to place an order with all suppliers in the pool. Single supplier strategy is favourable when the mean demand is low. However, if DoD anticipates a significant increase in demand, our recommendations propose the consideration of enlarging the supplier base even when the low cost supplier could provide the full order quantity. Surprisingly, an increase in the variability in demand also favors a single sourcing strategy.

RULE #6: Reliability Criteria

When several suppliers are very close in cost, our recommendations propose that DoD consider qualifying them all such that they meet specific reliability criteria. Indeed, our recommendations indicate that sourcing cases with homogeneous suppliers are fairly robust with respect to changes in demand and supplier reliability. Specifically, when all suppliers in the pre-qualified pool have similar costs and reliability, then the total quantity ordered and the total DoD Fleet Component deployment efficacy is fairly constant even when demand and supplier reliability factors change.

Suppliers often offer discount schedules to induce larger purchases by offering progressively lower unit prices for progressively larger purchase quantities. Even for a single product purchasing decision, if it is available from many suppliers, each with various qualifying order sizes, identifying the optimal selected supplier set and corresponding quantity allocations is a difficult decision. Further complicating matters is that decisions must often be made quickly and with limited information due to time pressures.

RULE #7: Cost & Reliability

Our recommendations illustrate how the optimal sourcing policy changes with alterations in the first suppliers cost and reliability. While small increases in the first suppliers cost does not change the optimal number of suppliers, it does decrease the total quantity ordered and the total profit. Similarly, an increase in the first supplier reliability decreases the total number of units ordered and increases deployment efficacy. In general, DoD simply compensates for small changes in reliability by ordering proportionately more items since it does not pay for undeployable units.

 Our recommendations provide several insights, including that DoD consider the situation where supplier minimum order quantities are not assessed and when DoD does not obtain any explicit benefits by expanding its supplier base. First, DoD single sourcing practise is only optimal when supplier capacities are relatively large as compared to product demand. In such a case, DoDs optimal choice is to source all its requirements from the least cost supplier.

RULE #8: Capacity Ratios

When supplier capacities are relevant, our recommendations propose a good strategy for DoD is to source from multiple suppliers. Under this scenario, DoD total order quantity across all suppliers & expected deployment efficacy are both lower than that compared to the scenario where suppliers are uncapacitated. The difference in deployment efficacy could be regarded as the value to DoD realised if the lowest cost supplier could be motivated to increase capacity for convenient evaluation of the DoD decision to select suppliers, a ratio determines whether or not a single supplier strategy is appropriate. This ratio reflects a trade-off between the first supplier reliability and its cost advantage relative to other suppliers. Essentially, if the lowest cost supplier has a reliability distribution with a high mean and a low standard deviation, and has a large cost advantage, then a single supplier strategy is warranted.

RULE #9: Cost & Demand Certainty

Another key factor influencing supplier selection decision is DoD anticipated demand. Our recommendations include that a single supplier strategy is favorable when the mean demand is low. However, if DoD anticipations a significant increase in demand, it should consider enlarging its supplier base even when the low cost supplier could provide the full order quantity. Surprisingly, an increase in the variability in demand also favors a single sourcing strategy. In this case, DoD limits fiscal risk by sourcing only with the single lowest cost supplier when DoD anticipates great uncertainty in demand.


RULE #10: Capacity & Contract Type

Our recommendations indicate that when supplier capacities are relevant, the optimal strategy for DoD is to source from multiple suppliers. Under this scenario, DoD total order quantity across all suppliers and expected deployment efficacy are both lower than that compared to the scenario where suppliers are uncapacitated. The difference in deployment efficacy could be regarded as the value to DoD which could be realised if the lowest cost supplier could be motivated to increase capacity.

When benefits of taking contract type into account are incorporated without supplier minimum order quantities, our  key recommendations indicate that if suppliers are uncapacitated, multiple supplier sourcing strategies are always optimal where the number of suppliers is determined by contract type function. This recommendation implies that DoD should determine the total order quantity based on the least cost supplier. However, in placing orders, DoD should order the required amount from the least cost supplier and order marginal quantities from all the other selected suppliers. When suppliers are capacitated, DoD can use a similar simple decision rule when the number of suppliers which optimise contract type is larger than the number selected without contract type considerations.


1.       Equipment Sourcing process assess routine repair/upgrade work order provide situation info to discover trends & schedule pattern to formulate/revise material resource decision

2.       Equipment Sourcing risk control compare situation monitor repair/upgrade work order allocation report appraise schedule feedback loop & tech activity extent for clear structure change adjust

3.       Equipment Sourcing process determine qualities motivate assign conflict risk assess tech communicate schedule info require for effective & clear, measurable, achievable repair/upgrade work orders

4.       Equipment Sourcing project collect baseline equipment info & situation resource charting, action plan, implement schedule & monitor progress for repair/upgrade work order evaluation

5.       Equipment Sourcing action plan checklist activate accomplish schedule objective & resource location, coordinate/implement detailed fiscal monitor & evaluate repair/upgrade work order quality assurance

6.       Equipment Sourcing situation determine repair/upgrade work order goal expectations & critical schedule phase risks constitute basis for choosing factor evaluate & monitor time-bound activity during implement

7.       Equipment Sourcing consider realistic draft of objectives & constraints, assumptions detailed, schedule limitations determine to assess concrete repair/upgrade work order process goals

8.       Equipment Sourcing projects determine causal relationships behind repair/upgrade work order objectives consider combined requirements & shed light on how schedule links interact & consequences

9.       Equipment Sourcing process determine organisation account for repair/upgrade work order type assist, target group offers for real schedule change & mobilised structures

10.   Equipment Sourcing Brainstorming sessions address all identified schedule requirement baseline set with all stakeholders to prioritise info collection process for repair/upgrade work order review, method Q &A