Toward a more responsive consumable materiel supply chain: leveraging new metrics to identify and classify items of concern

Abstract

We develop a classification system for U.S. Navy consumable items to give the Naval Supply Systems Command (NAVSUP) a better position for advocacy regarding these assets. The Defense Logistics Agency (DLA) is responsible for the procurement, storage, and distribution of the Navy's consumable assets. Its inventory system is highly dynamic, and items may be requisitioned for long periods without undue delay followed by sudden, unexpected shortages that directly affect Navy combat readiness. We propose a new metric, customer time limit (CTL), which normalizes the requisition fulfillment time according to priority level and the physical location of the customer. Using this metric, we essentially classify inventory items as problematical with respect to two different criteria: whether the median CTL exceeds a nominal threshold, and whether CTL exhibits an increasing trend. To apply this classification, nonparametric statistical methods are used based on consumable requisition data for calendar years 2013 through 2015, resulting in three categories: NSNs at Risk, Bad Actors, or Bad Actors with Trend. Collectively, we find that NSNs at Risk and Bad Actors with Trend constitute approximately 1% in both U.S. Navy consumable item population and annual consumable expenditure ($19 million out of $1.9 billion purchased), and that Bad Actors comprise approximately 2% of U.S. Navy consumable item population and 7% of annual consumable expenditure ($140 million out of $1.9 billion purchased).