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Case Study: Performance Based Logistics SAP Implementation for a Major Helicopter Supplier

SAP – Performance based logistics portfolio management

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Abstract

A global supplier of helicopters needed to understand what elements of the SAP solution would best support its contract commitments. The interim performance based logistics (PBL) contract it signed was to support a helicopter fleet over the next five years. It formerly used legacy systems, but it lacked several important capabilities necessary for success. 

The Challenge

Key PBL challenges of this company included:

  1. New contractual commitments – Financial incentives were linked to non-mission-capable supply rate and part fill rate performance metrics.
  2. Tangible long-term risk – Interim agreement required it to undergo a performance evaluation period as a precursor to a longer-term, more-profitable contract.
  3. Distinct capability gaps – Legacy systems lacked several key features required to successfully execute the PBL contract, including the ability to:
    • Trace serialized repair parts throughout extended processes at customer sites
    • Track serialized parts in use on aircraft as well as in stock in the warehouse
    • Track hours/cycles of usage against the projected life of installed parts on delivered aircraft
    • Provide advance notice of anticipated repairs so that components can be ordered ahead of time
    • View maintenance, repair and overhaul (MRO) history for components and aircraft, generate accurate forecasts of future needs and spot opportunities for improvement
    • Provide a single planning system for standard repair schemes
  4. Complex solution – The repair business is imbedded in manufacturing, making it difficult to integrate the solution with the current environment.
  5. Aggressive timing – One year implementation commitment.

How We Helped

  1. Determined best approach to meet contract commitments – Provided company with strategic input to determine which elements of the SAP solution would best support its contract commitments.
  2. Created the operational design
  3. Electronic order processing directly from Air Force systems
  4. Inventory management – Total asset visibility across sites and deployed locations.
  5. Reorder point planning – Ability to plan inventory levels based on forecasted reorder points.
  6. Configuration management – Tracking the aircraft configurations for serialized parts.
  7. Maintenance event history – Recording of events that occur during the supported lifecycle of the aircraft as well as failure modes. An electronic interface with the military’s REMIS/NALCOMIS system was developed to download this information.
  8. Task list planning – Ability to develop repair plans in a consistent manner. Custom reporting capabilities also were developed to provide visibility of parts in transit and meet specific government requirements such as DD1149 as well as to provide important figures for reliability and maintainability analysis.
  9. Built live connections to government and legacy supply chain – Direct interfaces with the Air Force’s REMIS and NALCOMIS maintenance systems were established to track part removal history to support trending analysis, update aircraft configuration and to trigger orders for new spares and repair items. These were linked to legacy order management as well as procurement systems.
  10. Obtained regulatory approval – Conducted user acceptance testing and obtained Defense Contract Management Agency (DCMA) sign off.

Solution

This company started using the MRO and supply chain functionality of SAP 4.6C2. The implementation not only went live well ahead of the deadline but also came in under budget. Here are some steps to take to accomplish this:

  • Leverage the solution – It is expanding the footprint of the solution to other Air Force bases and plans to leverage the solution to win significant near-term PBL contracts for its other products.
  • Communicate – Executing PBL effectively means changing what you do. From engineering to manufacturing, contracting to billing, through requisition to payment, old processes require change. Make sure you identify your internal and external stakeholders and budget enough time and resources to help them understand the change implications of what you are trying to accomplish.
  • Make time for data cleansing – PBL requires closing traditional blind-spots in the supply chain. This means accessing and processing customer technical data. Make sure the team takes the time to understand and plan for the quality of the data it receives from the customer and charter a dedicated team to work the issues.
  • Measure sponsorship and ownership – Ensure that the program manager responsible for the overall PBL contract execution is engaged, supportive and takes ownership for the overall result.
  • Collaborate - Make sure regulatory authorities such as the DCMA and the Defense Contract Audit Agency, as well as the customer, are involved early in the program. Be as inclusive during the planning and execution phases as you are during the integration and acceptance testing phases. Include them on your project steering committee so that they feel part of the process and, more important, take ownership for the final process.

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