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DLA gets tough with non-compliant shippers

The clock is ticking for suppliers to the Department of Defense. Starting next week, the Defense Logistics Agency will require suppliers to include RFID tags on all items being shipped to its 25 supply depots.

The DLA, the supply chain arm of the DoD, has made this request before. However, the agency is adding teeth to its mandate by tagging all non-compliant passive RFID shipments with a negative rating on the supplier’s performance scorecard. The move is expected to jump-start the approximately 50 percent of DLA suppliers who have not fully complied with previous tagging requirements.

In another development, DLA is aggressively pursuing item level tagging for apparel goods like uniforms and boots. Some estimates say the DLA is tagging about 10 million apparel items annually. DLA has reduced the time it takes to get new uniforms to boot camp troops at Lackland Air Force Base in San Antonio from 165 minutes to 45 minutes.

As for the DLA’s Oct. 1 mandate, Carl Brown, CEO of Simply RFID, which provides software and services to help vendors become RFID compliant, says that the final DLA holdouts should start to convert quickly.

“It’s going to make [compliance] 100 percent with 60 days,” he says. “Anyone who wants to ship to the DLA will need to become compliant instantly. It’s important that suppliers maintain a 99 percent or above (DLA) rating because they don’t want to lose their ability to win bids. So this is a pretty simple way for DOA to get instant compliance.”

Under the system, suppliers who fail to tag cases and pallets of goods shipped to DLA will receive a negative mark on their past performance history, just as they do for late or cancelled shipments.

Separately, the inventory error rate at Lackland Air Force Base was reduced from 5.1 percent to .2 percent after item level RFID took hold for apparel goods. Prior to RFID, one of every 20 boxes arriving at the Lakeland facility contained incorrect items.

“The goal of DLA is to make sure each trainee gets proper equipment and is fully equipped with a proper fitting uniform,” says Jack Vandenberghe, a Senior Fellow with LMI, a non-profit government consulting firm that supports the DLA in conducting business case analysis. “So it’s important that trainees get the right quantity of items in the right size.”

The DLA’s item level initiative got underway in 2007 when it sought interested parties to become partners in the Customer Driven Uniform Manufacture program (CDUM). From one pilot supplier in 2008, the program has grown to include a dozen or more apparel suppliers who apply RFID tags at the source.

While the gains for the DLA have been substantial, apparel manufacturers have noted benefits as well. Specifically, they now get paid instantaneously once an RFID-tagged shipment hits the dock doors at the DLA depots. That’s allowing suppliers to increase cash flow by receiving payments 15 to 21 days earlier than usual. In addition, suppliers have uncovered big gains in operational efficiencies.

Jose Luis Ortega Jr., vice president at Excel Manufacturing, which supplies about 5,000 pieces of apparel to the DLA each week, says his company has eliminated redundancies such as double and triple checking orders to ensure that the right product is being shipped.

“RFID takes all the guess work out of it and allows us to free up the people on the floor for other more important tasks,” he says. RFID has also removed labor from the packaging process, which now is basically automated when it comes to counting items.

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