Diminishing Manufacturing Sources and Material Shortages (DMSMS) and Parts Management Synergies and Interrelationships
Institute for Defense Analyses
Presented to theParts Standardization and Management Committee Meeting
April 25 – 27, 2017
2
Presentation Objectives
• Describe parts/DMSMS management roles and interactions throughout the life cycle as well as activities in support of them
• Generate discussion on the efficiencies and effectiveness of the interactions– Discussion questions throughout
• Potentially identify initial steps for improving those interactions
3
Outline
• Roles and interactions throughout the life cycle• Activities in support of those roles
– Establishing contract requirements– Developing plans and forming teams– Selecting parts for designs– Facilitating supply chain integration
• Conclusions
4
Life Cycle Structure for Hardware Intensive Programs
Source: DOD Instruction (DODI) 5000.02C
Not unusual to take more than 5 years from Milestone B to reach Full Rate Production
5
Upfront Observations on the Roles• DMSMS management is a parts management
requirement if Military Standard (MIL STD) 3018 is on contract
• Parts management is primarily concerned with part selection processes while DMSMS management is mostly focused on identifying and cost effectively rectifying obsolescence issues
• DMSMS and parts management roles complement one another early in the life cycle up to Low Rate Initial Production– They should interact in a way that steers clear of
selecting parts susceptible to DMSMS issues in design • During production and sustainment, parts
management activities are primarily associated with modernization and parts replacement
6
Summary of Technology Maturation and Risk Reduction Phase Roles
• Parts management– Preliminary parts management plans should be developed– Although parts management requirements for prototypes
are not anticipated, architecture and technology decisions affect part selection
– All initial determinations and collaborations between the acquisition activity and the contractors concerning the parts management requirements as stated in MIL-STD-3018 should be considered in the development of preliminary designs before Milestone B
• DMSMS management– The technology development contractors and their subcontractors along with
the DOD program office in an oversight role should develop designs for prototypes that are resistant to DMSMS issues by employing DMSMS design considerations
– DMSMS management plans should be developed– To the extent that part selection is done, the contractors should be required to
deliver parts lists to the government– All high-risk parts should be monitored for actual or pending DMSMS issues;
results should be identified to the government program office; and plans should be developed to eliminate these parts as the design matures
7
Technology Maturation and Risk Reduction Phase Desired Interactions
Note: It is possible for thesame person to have bothDMSMS and parts managementresponsibilities
DMSMS community reviews new parts
lists to identify obsolete and high DMSMS risk parts
Parts management community
establishes parts selection criteria
Design community develops prototype
designs
Parts management community
identifies options
Design community tentatively selects
parts
DMSMS considerations
8
Summary of Engineering and Manufacturing Development Phase Roles
• Parts management– Requirements as stated in MIL-STD-3018 should be
implemented under an approved parts management plan– Requirements should be flowed down to subcontractors,
and the contractor should review their processes for approval
– As subcontractors come “on line,” they should implement their approved parts management process
• DMSMS management– The prime contractor and its subcontractors along with the DOD program
office in an oversight role should develop designs resistant to DMSMS issues by employing DMSMS design considerations
– DMSMS management plans should be updated– Contractors should be required to deliver bills of material (BOMs) to the
government– All high-risk parts should be monitored for actual or pending DMSMS issues;
results should be identified to the government program office and plans should be developed to replace these parts before production begins
9
Engineering and Manufacturing Development Phase Desired Interactions
DMSMS community reviews new parts lists and BOMs to identify obsolete and high DMSMS
risk parts
Parts management community
establishes parts selection criteria
Design community develops
preliminary designs for production
Parts management community
approves and rejects parts and provides options
Design community tentatively selects
parts
Design community revises designs and
reselects parts where necessary
Design community finalizes designs
DMSMS considerations
10
Summary of Production and Deployment Phase Roles
• Parts management is required for changes or modification to the baseline design, such as value engineering changes or parts obsolescence issue resolutions
• DMSMS management– The prime contractor and its subcontractors along with the DOD
program office in an oversight role should develop designs resistant to DMSMS issues by employing DMSMS design considerations for new designs and engineering change proposals
– DMSMS management plans should be updated– Contractors should be required to deliver updated BOMs to the
government– All high-risk parts should be monitored for actual or pending DMSMS
issues; results should be identified to the government program office and plans should be developed and funded to resolve DMSMS issues before production is impacted
11
Production and Deployment Phase Desired Interactions
DMSMS community reviews new BOMs to identify obsolete
and high DMSMS risk parts
Parts management community
approves and rejects parts and identifies options
Design community revises designs and
reselects parts where necessary
Design community finalizes designs
DMSMS community continuously
reviews existing BOMs to identify obsolete and high DMSMS risk parts
Engineering community
approves changes
Parts management community
establishes parts selection criteria
Other changes proposed
DMSMS considerations
12
Summary of Operations and Support Phase Roles
• Parts management is required for changes or modification to the baseline design such as value engineering changes or parts obsolescence issue resolutions
• DMSMS management– DMSMS management plans should be updated– Contractors should be required to deliver BOMs for system changes
and checking new designs for DMSMS resilience– All high risk parts in the BOMs should be monitored for actual or
pending DMSMS issues • Monitoring should be conducted by support contractors and/or government
program offices as a function of the life cycle support plan. When contractors are monitoring, actual and pending DMSMS issues should be identified to the government program office. The government program office oversees all contractor DMSMS management activities.
• Plans should be developed and funded to resolve DMSMS issues before they impact the system
13
Operations and Support Phase Desired Interactions
Sustainment
Modernization
Parts management community
approves and rejects parts and identifies options
Design community revises designs and
reselects parts where necessary
Design community finalizes designs
DMSMS community continuously
reviews existing BOMs to identify obsolete and high DMSMS risk parts
Engineering community
approves changes
DMSMS community reviews new parts lists and BOMs to identify obsolete and high DMSMS
risk parts
Design community develops
preliminary designs for production
Parts management community
approves and rejects parts and identifies options
Design community tentatively selects
parts
Design community revises designs and
reselects parts where necessary
Other changes proposed
DMSMS community reviews new parts lists and BOMs to identify obsolete and high DMSMS
risk parts
14
Discussion of Roles and Interactions
• To what extent do the desired interactions of the two communities reflect reality?
15
Outline
• Roles and interactions throughout the life cycle• Activities in support of those roles
– Establishing contract requirements– Developing plans and forming teams– Selecting parts for designs– Facilitating supply chain integration
• Conclusions
16
MIL-STD-3018 Parts ManagementRequirements (1 of 2)
• Parts selection baseline shall be maintained• Parts selection and authorization process shall be
established• Obsolescence management procedures which include
proactive obsolescence forecasting for applicable part types (e.g., microcircuits) and plans for reacting and achieving solutions to obsolescence impacts as they occur and affect the program shall be established. SD-22* provides guidance in this area
• Parts list or BOM shall be delivered as required by contract• Subcontractor management shall occur to ensure
satisfaction of parts management objectives• Part and supplier quality shall be assessed
But what about SAE 0016**?
* Diminishing Manufacturing Sources and Material Shortages: A Guidebook of Best Practicesfor implementing a Robust DMSMS Management Program** SAE-STD-0016 Standard for Preparing a DMSMS Management Plan
17
MIL-STD-3018 Parts ManagementRequirements (2 of 2)
• Part level documentation procedures shall be consistent with configuration management, logistics, and life cycle requirements
• Substitute and alternative part procedures shall be consistent with system engineering requirements
• Customer-contractor teaming shall occur for program verification• Counterfeit parts shall be addressed• Lead-free electronic parts shall be addressed• Additional elements shall be addressed as requiredDMSMS management is a specific parts management requirement, but there is ambiguity with respect to the applicability of SD-22 vs. SAE 0016 to a contract requirement for DMSMS plans.
Other parts management requirements tie-in to DMSMS elements.
18
Parts Management and DMSMS Management Contract Requirements
Parts Management• MIL-STD-3018 requirements
DMSMS Management• DMSMS in design• Technical data requirements• DMSMS Management Plan
(DMP)• DMSMS Management Team
(DMT) participation• Establishment of a risk-
based program• Management and oversight
of sub-tier activities• Roles for implementing
resolutions• Termination clause
19
Observations on Contract Requirements
• Summary– Putting MIL-STD-3018 on contract establishes a
requirement for DMSMS management, however, other contract clauses are necessary to conduct robust DMSMS management
– Contract requirements associated with DFARS* clauses may not appear in the statement of work, but are included elsewhere
• Questions– Is guidance sufficient?
* Defense Federal Acquisition Regulation Supplement
20
Outline
• Roles and interactions throughout the life cycle• Activities in support of those roles
– Establishing contract requirements– Developing plans and forming teams– Selecting parts for designs– Facilitating supply chain integration
• Conclusions
21
DMSMS and Parts Management Plans Have Similar Structure
Parts Management Plan• Scope
• Parts Management Infrastructure
– Team tasks, responsibilities, meetings, and tools
• Parts Management Operations
– MIL-STD-3018 requirements
DMSMS Management Plan• Purpose/Scope/Applicability
• DMSMS Management Team– Tasks, responsibilities, meetings
• Funding
• DMSMS Analysis and Risk Management
– Risk-based identification, analysis, and resolution of issues
– Reporting– Tools
• Metrics• Contract Requirements
Separate from the Plan
22
Observations on DMSMS and Parts Management Plans
• Summary– The parts management plan described in the SD-19* is a
tactical plan written by industry for industry– There is no parts management plan written by the
government for the government– The DMSMS management plan described in the SD-22 is
written by the government for the government • It is generally more strategic than tactical, but individual
program offices may tailor it to their needs– Industry’s tactical DMSMS management plan is
described in SAE 0016 and should be aligned with the government’s plan
• Questions– Should there be closer integration among the plans?
* Parts Management Guide
23
DMSMS and Parts Management Teams Described in Guidance Have Similar Structure
Parts Management• Design engineering• Procurement• Engineering standards• Manufacturing• Reliability• Quality• Subcontractors and suppliers• Customer
DMSMS Management• Program office lead (often the
product support manager) • DMSMS subject matter experts• Engineering authority• Software• Supply/maintenance repair • Value engineering• Contracting • Prime/subcontractor • Foreign military sales• Others as needed:
– Budget– Legal– Environmental and materials engineering– Change configuration board
24
Observations on DMSMS and Parts Management Teams
• Summary– The parts management team described in the SD-19 is an
industry team– While there will be a point of contact (POC), there usually is
no formal parts management government team– The DMSMS management team described in the SD-22 is a
government led team that meets regularly, including industry participation to the extent required by contract
– Industry’s internal DMSMS management team is not described in the SD-22
• Its structure may be similar to industry’s parts management team• Questions
– How does the necessary communication take place?• There is no direct interface between the industry parts
management team and the government DMSMS management team
25
Outline
• Roles and interactions throughout the life cycle• Activities in support of those roles
– Establishing contract requirements– Developing plans and forming teams– Selecting parts for designs– Facilitating supply chain integration
• Conclusions
26
SD-19 Parts Selection Criteria are Applicable to DMSMS
• Availability (DMSMS concerns, aging technology, number of sources)
• Application (derating, operation, use of the part, type of environment in which the part will be used)
• Cost-benefit analysis• Part screening• Qualification test data or past performance data• Supplier selection• Part technology/obsolescence (use of DMSMS databases,
Government Industry Data Exchange Program)• Compliance with contract performance requirements• Technical suitability• Government life cycle cost optimization
27
Systems Engineering Design Considerations per the Defense Acquisition Guidebook (DAG) (1 of 2)
• Parts management– Standardization provides policies on when to
standardize, how to document standardization decisions, and a discussion of the tailoring of standardization documents through rewriting, extracting, or eliminating requirements
– Parts management is a standardization design strategy available to Program Managers. Benefits of parts standardization include:
• Reducing the number of unique or specialized parts used in a system (or across systems)
• Reducing the logistics footprint• Lowering life cycle costs
– In addition, parts management can enhance the reliability of the system and mitigate part obsolescence due to DMSMS.
28
Systems Engineering Design Considerations per the DAG (2 of 2)
• DMSMS management– Practices that the program should consider to
minimize DMSMS risk throughout the life cycle of the system:
• Avoid selecting technology and components that are near the end of their functional life
• During the design process, proactively assess the risk of parts obsolescence while selecting parts
• When feasible, use an Open Systems Architecture to enable technology insertion/refreshment more easily than with design-specific approaches
• Proactively monitor supplier bases to prevent designing in obsolescence
29
Observations on Selecting Parts for Designs
• Summary– Parts and DMSMS
management interact with other DAG design considerations
– Robust parts management delays DMSMS risk
– Both contribute to producibility, quality, manufacturing readiness, supportability, and ultimately affordability
• Questions– How well do interactions
with designers work?
Affordability(production)
Affordability(O&S)
Producibility, Quality, and
Manufacturing Readiness
SupportabilityDMSMS
Reliability, Availability,
Maintainability
Open Systems Architecture
Standardization
COTS
Parts Management
30
Outline
• Roles and interactions throughout the life cycle• Activities in support of those roles
– Establishing contract requirements– Developing plans and forming teams– Selecting parts for designs– Facilitating supply chain integration
• Conclusions
31
Supply Chain Integration Elements to be Discussed
• New product development• Technology• Procurement• Strategic sourcing• Quality• Technical data• Inventory and demand management• Supply chain risk management
32
Parts/DMSMS Management Aspects of Supply Chain Integration Elements (1 of 6)
• New product development– Parts management is concerned with selecting the
appropriate parts for the design– DMSMS management is concerned with ensuring
that the selected parts are not obsolete or not immediately prone to obsolescence
• Technology– Parts management is concerned with avoiding
technologies that are too immature or do not meet the requirement
– DMSMS management is concerned with avoiding technologies that either are too mature and will soon become obsolete or have not yet been proven in the marketplace
33
Parts/DMSMS Management Aspects of Supply Chain Integration Elements (2 of 6)
• Procurement– Both parts management and DMSMS management
are concerned with the availability of sources of supply
• Strategic sourcing– Both parts management and DMSMS management
are concerned with foreign sources, sole source suppliers, counterfeiters and vulnerabilities in the supply chain
34
Parts/DMSMS Management Aspects of Supply Chain Integration Elements (3 of 6)
• Quality– Parts management is concerned about initial and
replacement part quality during design, development, and production
• There is a requirement in MIL-STD-3018 to have “provisions for assessing part suppliers and part quality such as statistical process control data, audits, past performance, etc.”
– DMSMS management is concerned about the quality of the replacement item if the original item can no longer be procured throughout the life cycle
35
Parts/DMSMS Management Aspects of Supply Chain Integration Elements (4 of 6)
• Technical data– Parts management is concerned with using
technical data to assure that the part can perform in a way that meets all requirements
– DMSMS management is concerned with having sufficient technical data to allow for monitoring for obsolescence and resolving issues if an item can no longer be procured
Note: Tech data requirements are often established as configuration management requirements
36
Parts/DMSMS Management Aspects of Supply Chain Integration Elements (5 of 6)
• Inventory and demand management– These are principally DMSMS management
concerns• For an obsolete part that can no longer be procured,
a resolution is only needed if the expected demand exceeds the supply
• If a life of need buy is executed as part of the DMSMS resolution, demand must be estimated for the proper time period
37
Parts/DMSMS Management Aspects of Supply Chain Integration Elements (6 of 6)
• Supply chain risk management– Parts management
• Identifies critical application parts for others to evaluate and mitigate cyber security risks
• Mitigates counterfeit risk– DMSMS
• Counterfeiters and malicious actors target DMSMS items
• The prevalence of reactive DMSMS management increases the likelihood that DOD will deal with unauthorized suppliers
• Resolving issues in sustainment should continue to take criticality and protection into account
38
Observations on Supply Chain Integration• Summary
– DMSMS and parts management are key elements of supply chain integration; their contributions are quite similar in concept
– Proactive DMSMS management and robust parts management decrease supply chain risk
– Robust supply chain integration reduces DMSMS risk– Numerous DFARS clauses deal with supply chain risk
and with counterfeit prevention• Questions
– Is there duplication of effort and sufficient communication at the tactical level?
– Are the interactions among headquarters offices sufficient?
– Are these subjects sufficiently addressed in policy and guidance?
39
Outline
• Roles and interactions throughout the life cycle• Activities in support of those roles
– Establishing contract requirements– Developing plans and forming teams– Selecting parts for designs– Facilitating supply chain integration
• Conclusions
40
Conclusions (1 of 2)
• DMSMS management and parts management are closely connected– They complement each other throughout the life
cycle– MIL-STD-3018 requires proactive DMSMS
management– They both require plans, operate in teams, and rely
on contract language– They reinforce each other as design considerations– They both have strong connections to supply chain
integration• There are questions concerning the efficiency and
effectiveness of those connections as well as connections to other activities
41
Conclusions (2 of 2)
– To what extent do the desired interactions of the two communities in program offices reflect reality?
– How can the program office teams, plans, and contract language be better integrated?
– Is there any duplication of effort or lack of communication that can be avoided in program offices?
– Can communication be improved at the headquarters level?
– Are changes needed to parts/DMSMS management policy, guidance, training, or outreach?
Are there ways to improve how each is managed by better taking advantage of their synergies to answer
the following?