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.

 


Comments

08/09/2016 10:39pm

Teacher and students relationship is very necessary for every learner because when each student have good relation then they can ask every question without any pressure. Teacher should to apply those method of teaching in which every students understand easily.

Reply



Leave a Reply