Science and Technology News

Monday, August 3, 2015

Demand methodology developed at Tinker wing yields millions in savings

by Ron Mullan
72nd Air Base Wing Public Affairs

7/31/2015 - TINKER AIR FORCE BASE, Okla. -- In an effort to provide better support to the warfighter and generate both cost-effective readiness and combat power for America, the 448th Supply Chain Management Wing developed, base-lined and implemented a method of measuring the demand on the supply chain system, called Demand Forecast Accuracy, for the first time in 2008.

"DFA is a measure of how well demand on the supply chain is predicted relative to the actual demand that is generated," said Belinda Slavick, 948th SCMG director. "DFA is expressed as a percentage of actual demand that was correctly forecast."

Today, demand forecasts are generated by the 448th SCMW's equipment specialists who maintain application records and calculate replacement rates and factors using the D200 Requirements Computation System. The 448th SCMW's Demand Planning team and equipment specialists have been implementing annual and quarterly DFA improvement initiatives that have garnered significant and steady improvements since its inception.

The 948th Supply Chain Management Group began dollarizing the impact that improvements in DFA had on its budget submissions in 2012 in order to capture savings under the Logistics & Installations Efficiency initiative. Dollarizing DFA improvements is complicated, said Slavick. It includes annualizing the demand quantities plus lead-time and multiplying demand quantities by either buy or repair costs depending on computed deficits in the requirements computation.

"Basically, we are calculating the cost of buys and repairs we would have budgeted for if we hadn't made improvements to our forecast and comparing the results to budget submissions with the improved forecasts," Slavick said. Dollarizing 2010 through 2013 improvements to DFA resulted in net budgetary reduction of $125 million.

"We transitioned to an Office of the Secretary of Defense developed standard dollar-demand weighted formula demand in 2014," said Slavick. "It provides additional emphasis on high dollar and high demand item forecast accuracy."

Improvements to DFA resulted in $191 million in savings to the spares budget in 2014.

With the demand planners in the 448th SCMW continued emphasis on accurate forecasting using today's systems, methods, and improvement initiatives, they are also looking to the future.

"We are participating in the AF analysis of PEAK and NextGen, processes which offer new ways to forecast for items with low demand and highly variable demand patterns, as well as implementation of an Advanced Planning System," Slavick said.

An APS is a state of the art requirements determination system for demand, supply and inventory planning. It is more robust and more responsive then the current Air Force legacy requirements determination systems. According to Slavick, the current system uses eight-quarter moving average, four quarter moving average or exponential smoothing and is limited to quarterly requirement computation capability. The APSs of today offer multiple algorithms to choose from and can generate requirements computations as often as daily.

Great systems and methods are only as good as the people who use them.

"The dedicated demand planning professionals of the 448th SCMW continue to achieve remarkable improvements in Demand Forecasting year after year," Slavick said. "They have made the 'Art of the Possible' a reality across the Air Force supply chain."

Despite unprecedented times of culture change, operational tempo and fiscal constraints, the demand planners of the 448th SCMW have achieved steady success culminating in a current wing DFA of 65 percent. The rest of the Air Force is at 62.9 percent, which is significantly higher than any of the other DOD services. In addition, the unit has contributed $316 million to the Air Force Sustainment Center's Road to $1 billion to date.

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