1. Department of Defense Supply Chain Material Management Regulation DOD 4140.1-R 23 May 2003 Office of the Deputy Undersecretary of Defense for Logistics & Material Readiness

2. DOD 4140.1-R DOD 4140.1-R (Chapter 1 – Guiding Principles) Goals –Size secondary item inventories to minimize investment –Consider all costs of material management –Implement COTS or DOD standard systems –Maintain material control and visibility of secondary inventory down to and including retail inventory DOD Components shall use the supply chain operational reference (SCOR) processes of Plan, Source, Maintain/Make, Deliver, and Return as a framework for developing, improving, and conducting material management activities 2

3. DOD 4140.1-R DOD 4140.1-R (Chapter 2 - Plan) The DoD Components should ensure that all supply chain functions and organizations understand their impact on supply and demand balancing. (C 2.1.2.4) Where feasible, Readiness-Based Sparing (RBS) shall be used to determine organic weapon system support provisioning requirements (C 2.2.1.2) DOD Components shall use quantitative models to forecast future demand except : –Catastrophic events –Historical demand/future engineering estimates are too small to support and quantitative effort Since no universal model exists for forecasting demand for all items, the DoD Components may choose to use multiple models for the same application or different models for different applications (C 2.5.1.3.1) 3

4. DOD 4140.1-R DOD 4140.1-R (Chapter 3 - Source) 4 The DoD Components shall develop and implement strategies for sourcing and acquiring materiel that provide for best value competition among materiel sources and minimize support costs of weapon systems throughout their life cycle (C 3.1.1.1) The objective of evaluating and selecting materiel support alternatives shall be to ensure the timely, accurate, and complete satisfaction of customer requirements at minimum cost (C 3.2.1.1.2)

5. DOD 4140.1-R DOD 4140.1-R (Chapter 4 – Make/Maintain) The DoD Components should provide for the management of materiel for the production, manufacturing, repair, modification, overhaul, and testing functions performed at organic or private sector facilities or through public and private partnerships at those facilities. (C 4.1.1) The DoD Components shall seek to optimize their relationships with commercial sources providing the materiel that DoD customer use. In doing so, they should differentiate between make-to-stock, make-to- order, and engineer-to-order materiel requirements. They should: –Establish make-to-order relationships with commercial sources when those sources are the preferred support alternative –Make economical make-to-stock buys from commercial sources. (C 4.1.1.1 – C 4.1.1.1.2) 5

6. DOD 4140.1-R DOD 4140.1-R (Chapter 5 – Deliver) The DoD Components shall operate an integrated, synchronized, end-to-end distribution system to meet customer requirements for information and materiel. That system shall be comprised of requisitioning channels, distribution depots, and other storage locations, transportation channels, tracking systems, and other activities involved with the delivery, sale, or disposal of materiel. (C 5.1.1.1) 6

7. DOD 4140.1-R DOD 4140.1-R (Chapter 6 – Return) The DoD Components shall establish criteria and implementing procedures and systems for managing and authorizing materiel returns to the wholesale supply system based primarily on the contribution of such returns to improvement of inventory performance as prescribed in subparagraph C2.4.2.2., above. (C 6.1.1.1) C2.4.2.2., (C2.4.2.2 – in PLAN) For secondary items managed by DoD materiel management activities (e.g., wholesale inventory control points (ICPs) and retail supply activities), those activities shall establish and use applicable inventory performance goals as an integral part of the process to compute stockage requirements and asset allocation… 7