Life Cycle Logistics Perspective KC-46 Product Support Frank Washburn 11 April 2018

BLUF Purpose Provide the ICEAA Workshop with insight into how projected O&S cost influenced KC-46 product support decisions, specifically the supply chain strategy. Context The KC-46 program is approaching the seventh year on contract and the AF has remained firm with no requirements changes O&S was considered early in the acquisition strategy Led to decisions to leverage a commercial derivative aircraft and maintain FAA certification to gain access to commercial spare parts and reduce sustaining engineering cost A significant effort within the USAF to “think differently” regarding the KC-46 supply chain strategy in order to maintain a FAA certified aircraft and reduce life cycle O&S

Air Force Organic Supply Chain Business Analysis Consolidated Sustainment Activity Group – Supply Division Activity group within the AF Working Capital Fund CSAG-S $’s used to procure, repair, and stock AF managed depot-level reparable and consumable items CSAG-S is big business, but it’s also old business $5.8B in “revenue” for FY17– #450 in Fortune 500 ~90% of the spend in CSAG-S are for items related to weapon systems fielded prior to 1980

USAF Supply Support Evolution Reasons why the AF organic supply chain is in the legacy parts business Post Cold War modernization delays Average fleet age is 28 years Trends in acquisition culture Prior to 1990, organic support was the default choice for SCM Exceptions: small fleets, classified programs, and comm derivatives After 1990, a number of factors challenged the status quo Political pressure to push more work to the private sector Acquisition reform that encouraged CLS and PBL strategies The belief that private industry was more cost-effective

KC-46 Supply Chain Traditional organic supply chain approach Transactional Commodity centric “Hundreds” of commodity-based repair/buy contracts KC-46 supply chain “game changers” ~85% of KC-46 DLRs are commercial common Compliance with FAA certification Drive “new” approach to cost-effective KC-46 organic supply chain management

Post-ICS KC-46 Supply Chain Strategy Commercial Common KC-46 Military Unique Common to Other W/S Joint AF/DLA Competitive “Tip to Tail” PBL Outcome based Asset Availability Order Response FAA mandate Off-ramps for organic DLR repair transition Blend of organic and industry supply chain strengths/capabilities Leverage existing DLA Boeing “Captains of Industry” contract Evaluating outcome based vs. transactional approach Demand maturity Technical maturity Allow buffer for depot activation planning and off-ramps for organic repair Leverage existing organic supply chain capabilities “Add” KC-46 requirements to existing organic repair and new support strategies FAA certification may drive assignment of unique NSNs Integrated AF/DLA Approach

Leveraging Commercial Aviation Industry for KC-46 Common Parts Boeing 767-2C Derivative 95% Commercial 5% Military Unique Capitalizing on existing industry capabilities Open parts pool philosophy Minimize investment in excess stock I n t e g r i t y - S e r v i c e - E x c e l l e n c e

Desired Outcomes Reduce O&S cost through “thin layer” of inventory investment versus traditional large inventories held at wholesale level and at every operating location Execute a working capital funded “tip to tail” PBL to achieve warfighter outcomes versus managing “thousands” of individual transactional contracts Reduce life cycle sustaining engineering cost by leveraging commercial capabilities Leverage partnership with DLA to achieve mutual outcomes---versus operating in agency silos

Questions?