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

2. 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

3. 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

4. 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

5. 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

6. 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

7. 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

8. 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

9. Questions?