Fleet Readiness Center Southwest - Eliminating Waste and Improving Efficiency

For over 100 years, Fleet Readiness Center Southwest (FRCSW) has provided the men and women of the Navy and Marine Corps with the highest quality products and services in the most efficient manner possible. One of the state of the art management systems that makes this possible is the “Lean” process which focuses its attention on eliminating waste and error. FRCSW began the command’s most recent “Lean” process by integrating pre-expendable bins (PEB). Lieutenant Commander Jeffrey Legg, Maintenance Repair and Overhaul (MRO) Industrial Supply Officer, in collaboration with the other PEB managers, played a pivotal role in the improvement of PEB inventory.

“After assessing the aircraft and figuring out what needs to be repaired or replaced, parts are ordered typically through the Defense Logistics Agency (DLA) supply system which takes time to get here. There are numerous parts that are low in cost, frequently used, and would make more sense to have an on-hand supply rather than to place an order,” Legg said.

Material under a $300 threshold and frequently utilized within a year are deemed eligible to buy in bulk rather than ordering through the DLA system.  Not only does this provide immediate access to the artisans, but it also reduces the time that they would have used to locate and source the material, thus making the command more efficient by “returning” those hours directly to the aircraft workload. One example demonstrating this “Lean” process is when artisans are in need of a specific type of screw. If there are 30 F/A-18s that require fifty of a certain type of screw, the artisan would have access to the nearby PEB to select the screw they would need to perform the repair. Without the PEB, each order would have to be placed separately vice in bulk thus increasing costs. The PEB system helps to eliminate waste and line item costs, reduces physical floor space requirements, and significantly reduces the manpower requirements. A lack of PEB would cause a decrease in manpower on the aircraft and instead contribute to the hours used to source material; thereby increasing hours away from the aircraft and increasing costs, especially in excess material.

Although this improvement of inventory sounds simple, “there is a balancing act to it,” Legg says.  “The purpose of PEB is to make everything as close to the artisan as possible; but when they are given unlimited supply, costs increase. The money is not billed directly back to the customer and instead is billed to the command in a tax-like cost called a material recovery rate (MRR). The MRR is a percentage applied to every part requisition we place against a repair item. Suppose we order a part to fix a plane and it costs one hundred dollars. The MRR is a percentage “taxed” on top of that amount. A portion of the MRR is allocated for PEB costs. PEB analysis is trying to find the sweet spot – just the right amount and type of material needed so that waste or costs are not incurred.”  Unlike most parts, PEB is not billed per unit since it is smaller and more economical to the command to order in bulk. Access to unlimited supply in the absence of a balanced PEB inventory creates unused items incurring waste and increasing cost.

A quarterly PEB analysis informs managers of the utilization frequency and if it is needed for immediate use. The balancing act comes into play during the negotiation between controllers and managers to determine what can be taken out of PEB to reduce waste by finding an alternative use for it. While the current PEB inventory system is an improvement, Legg is optimistic about the navy’s future advanced technology to eliminate even more waste, error, and increase efficiency.
FRCSW is looking forward to the implementation of digital bins with software that would provide exact usage data and generate re-order requirements based on minimum and maximum requirements. These digital bins would “provide instant inventory visibility, replenishment reports, foreign object identification, ordering and receiving timeline reports, and artisan item search capability.” Legg said.