INTRODUCTION TO PARTS

MANAGEMENT
Parts Standardization and
Management Committee

LMI

Approved for Public Release

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 THE “PARTS” IN PARTS
MANAGEMENT

The term “part” could denote different hardware levels

depending on how it is used.

A part is “one or more pieces joined together, which are

not normally subject to disassembly without destruction
or impairment of their intended design use.”

Several examples of these part types include:

Microcircuits Bearings
Connectors Valves
Resistors Screws
Capacitors Rivets
Fasteners
 OVERVIEW

Today’s weapon systems and equipment acquisition

environment are characterized by

• Rapidly changing designs

• Increased use of commercial part types
• Offshore manufacturing of parts
• Diminishing manufacturing sources and material
shortages (DMSMS)
• Counterfeit parts detected in the supply chain
• Use of lead-free electronic parts
 OVERVIEW
(Cont’d)

These factors have increased risk for Department of

Defense (DoD) weapon systems and equipment
acquisition contracts.

The need to have an effective Parts Management

Program is greater than ever before.

The Parts Management Program is an integral part of

the acquisition process for design, development, and
support of weapon systems and equipment.
 WHY IS PARTS
MANAGEMENT
IMPORTANT?

The tasks of selecting, specifying and ensuring proper

design applications, as well as managing parts used in
complex systems, are major engineering tasks.

Parts are the building blocks from which systems are

created and greatly impact hardware dependability and
readiness. Since the reliability, maintainability, and
supportability of the end item are dependent upon these
building blocks, the importance of selecting and applying
the most effective parts management program cannot be
overemphasized.
 WHY IS PARTS
MANAGEMENT
IMPORTANT? (Cont’d)

Parts management takes on even greater importance in

light of the current defense acquisition environment.
In recent DoD acquisition direction, “Better Buying Power
3.0,” the top two initiatives focus on cost efficiency:
• achieve affordable programs
• achieve dominant capabilities while controlling
lifecycle costs

» Better Buying Power 3.0

» Issued September 19, 2014
 WHAT IS
PARTS MANAGEMENT?
(Cont’d)

Parts management is an integrated effort to streamline

the selection of preferred or commonly used parts during
the design of weapon systems and equipment under an
overarching Systems Engineering framework.

This process determines the optimum parts while

considering all the factors that may affect program
outcomes.
 WHAT IS
PARTS MANAGEMENT?
(Cont’d)

MIL-STD-3018 defines parts management as:

“…the practice of considering the application,
standardization, technology (new and aging),
system reliability, maintainability,
supportability, and cost in selecting parts
and addressing availability, logistics
support, DMSMS, and legacy issues in
supporting them throughout the life of the
systems."
 WHY IS PART SELECTION
IMPORTANT?

The most crucial element of parts management is part selection.

The primary requirement is to meet the performance objectives
of the system or equipment. Many factors must be considered
when selecting the optimum parts.
These include:

• Technical characteristics • Qualification

• Reliability • Potential Obsolescence
• Life cycle costs • Standardization
• Commonality • Manufacturing
• Performance history • Maintenance
• Vendor performance
 WHY IS PART SELECTION
IMPORTANT?
(Cont’d)

Proper part selection can enhance

• Reliability • System performance
• Maintainability • Logistics readiness
• Economies of scale
• Operational readiness
• Supportability and interoperability
Proper part selection can decrease
• Logistics footprint
• Weapon systems and equipment total ownership costs
 WHAT ARE
THE BENEFITS OF
PARTS MANAGEMENT?

Benefits include:

• Cost avoidance
– Standardization of parts and replacing numerous
similar parts with one common part results in larger
part-type buys because the common parts are used
in multiple applications.
– Part standardization also helps the contractor avoid
the increased cost of maintaining technical data
and storing, tracking, and distributing multiple parts.
 WHAT ARE
THE BENEFITS OF
PARTS MANAGEMENT?
(Cont’d)
• Enhanced logistics readiness and interoperability
– When items or systems share common
components, repair time is shorter because
parts are more likely to be on hand.
– Using common components simplifies logistics
support and enhances substitutability because
fewer parts are stocked.
– This translates into savings in procuring, testing,
warehousing, and transporting parts.
 WHAT ARE
THE BENEFITS OF
PARTS MANAGEMENT?
(Cont’d)
• Increased supportability and safety of systems and
equipment
– Preferred parts reduce risk and improve the
chances of equipment reliability.
– Preferred parts have a history of proven reliability,
withstanding rigorous testing, and performing at
stated levels.
– Their use decreases the number of part failures,
reducing the number of maintenance actions, and
potentially precluding failures or loss of life.
 WHAT ARE
THE BENEFITS OF
PARTS MANAGEMENT?
(Cont’d)

• Reduced acquisition lead-time

–When preferred parts are used, the Government and

industry avoid the expenses and delays of designing
and developing parts and the issues of acquiring a
new item with no available history or documentation.

–Using preferred parts often reduces the time

between the purchase request and the receipt of the
part.
 COST BENEFIT
ANALYSIS

The average total cost for adding a single new part is

about $27,500. Historical acquisition program parts
management data has revealed that programs without
parts management requirements introduce 2.5 percent
more new parts into the logistics system than do
programs with parts management requirements.

Therefore, a program with 10,000 parts might easily

achieve a life-cycle cost avoidance of $6.8 million.
 COST BENEFIT
ANALYSIS
(Cont’d)

Six cost-related program activities:

• Engineering and design
• Testing
• Manufacturing
• Purchasing
• Inventory
• Logistics support

Detailed information can be found in the business case:

“Reduce Program Costs through Parts Management”
(developed by the PSMC)
(See https://www.dsp.dla.mil/app_uil/content/documents/partsmgt.pdf).
 COST BENEFIT
ANALYSIS
(Cont’d)

The cost of resolving part obsolescence problems can

range from a low cost for an administrative substitute
solution to a very high cost for a major redesign
effort.

The DMSMS resolution cost elements are addressed in

SD-22, “Diminishing Manufacturing Sources and
Material Shortages (DMSMS) Guidebook.”
 COST BENEFIT
ANALYSIS
(Cont’d)

Reliability, Availability and Maintainability (RAM) are

system design attributes that have significant impacts
on the sustainment or total Life Cycle Costs of a
developed system. Additionally, the RAM attributes
impact the ability to perform the intended mission and
affect overall mission success.

***DoD Reliability, Availability, and Maintainability, and

Cost Rationale Report Manual of June 1, 2009
(Prepared by OSD)
 APPLICABILITY OF
PARTS MANAGEMENT
REQUIREMENTS

• Acquisition contracts
– New design
– Modification of DoD weapon systems
– Dependent upon program business and support
strategies

• Not applicable to
– Off-the-shelf
– Not intended for Space systems such as satellites
and launch vehicles
 DEFENSE
STANDARDIZATION
PROGRAM
DoDM 4120.24, Defense Standardization Program
Procedures, September 24, 2014

Encl 4: MANDATORY STANDARDIZATION CONSIDERATIONS

2.c. Parts Management. Program offices must apply

standardization processes to improve parts commonality…
Program offices should ensure that a parts management
process is used to reduce the proliferation of parts and
associated documentation and promote the use of parts with
acceptable performance, quality, and reliability, as specified
in MIL-STD-3018. Total ownership cost analysis must also
be applied in the selection of parts for the program.
 DEFENSE ACQUISITION
GUIDEBOOK

Parts management information is referenced in the

Defense Acquisition Guidebook (DAG) in Chapter 4:
Systems Engineering and Chapter 5: Life Cycle Logistics:
• Section 4.3.18.8: Diminishing Manufacturing Sources
and Material Shortages
• Section 4.3.18.21: Standardization
(Parts Management)
DAG
• Section 5.3.1: Standardization (Parts
Management)
 WHEN SHOULD
PARTS MANAGEMENT BE
IMPLEMENTED?

Technology Maturity and Risk Reduction Phase

(Milestone A). All requirements as stated in MIL-STD-
3018 should be specified in the request for proposal
statement of work for the Engineering and Manufacturing
Development Phase.

Engineering and Manufacturing Development Phase

(Milestone B). Requirements as stated in MIL-STD-3018
should be implemented under an approved parts
management plan.
 WHEN SHOULD
PARTS MANAGEMENT BE
IMPLEMENTED?
(Cont’d)

Production and Deployment Phase (Milestone C).

Required for changes or modification to the baseline
design or parts obsolescence issues.
 HOW ARE
PARTS MANAGEMENT
REQUIREMENTS
IMPLEMENTED?

Parts management requirements should be

documented in the

• Statement of work (SOW)

• Statement of objectives (SOO)
• Performance work statements (PWSs)

(Collectively known as the SOW)

 HOW ARE
PARTS MANAGEMENT
REQUIREMENTS
IMPLEMENTED? (Cont’d)
SOW Example:

The contractor shall establish and maintain a parts

management program in accordance with MIL-STD-
3018 for all new designs or modified equipment. The
contractor shall describe how the parts management
process is validated, how process improvements are
incorporated, and how process variation is controlled.

The contractor shall document the plan in accordance

with DID DI-SDMP-81748 and deliver the plan in
accordance with the CDRL (DD Form 1423).
 MIL-STD-3018
“PARTS MANAGEMENT”

• Department of Defense Standard Practice

• Provides requirements for the implementation of an

effective Parts Management Program
• Supports acquisition strategies and systems engineering
practices

• Provides performance-based parts management

processes and practices which are intended to be
adopted to individual program needs
 MIL-STD-3018
“PARTS MANAGEMENT”

• Creates consistency across DoD parts management

requirements in contracts

• Requires a parts management plan

• When used in conjunction with SD-19, “Parts

Management Guide,” it outlines parts management
needs in contracts, parts management processes for
prime contractors and subcontractors
 WHAT IS A
PARTS MANAGEMENT
PLAN?

“A parts management plan is a contract-

specific application of a contractor’s corporate
parts management procedures which meets
the objectives of the equipment system’s
mission profile, support strategy, expected
service life, and the DoD parts management
goals and objectives of reducing the logistics
footprint and total life-cycle cost, and
increasing operational and logistics
readiness.”
 WHAT IS A
PARTS MANAGEMENT
PLAN?
(Cont’d)
A parts management plan communicates how the
contractor’s in-house parts management process is
conducted under the contract requirements.
The plan is prepared by the contractor.
The contractor must meet plan requirements or
recommend changes based on:
• Changes in part type technical or environmental
issues.
• Changes in the parts procurement business
environment.
 ELEMENTS OF A
MIL-STD-3018
PARTS MANAGEMENT
PLAN
• Part selection baseline
• Part selection and authorization process
• Obsolescence management
• Parts list
Plan
• Subcontractor management
• Part and supplier quality
• Part level documentation procedures
• Substitute and alternative part procedures
• Customer-contractor teaming
• Counterfeit parts
• Lead-Free electronic parts
• Additional elements (e.g. as identified by contract)
 MIL-STD-3018
PART SELECTION ORDER
OF PREFERENCE

• The contractor shall select parts suitable to the design

application. Parts standardization shall be considered a key
objective in parts selection in order to minimize the proliferation of
parts and the logistics spare parts sustainment cost for DOD.
Unless otherwise specified in the contract the DoD order of
preference for parts selection is shown, in descending order:

– Parts required to meet Government regulatory requirements

– Parts that readily available within the DoD system, have

projected continued usage within DoD and have a
documented technical description available to the DoD and
industry
 MIL-STD-3018
PART SELECTION ORDER
OF PREFERENCE
(Cont’d)

– Industry standard parts from DoD adopted non-Government

standards.

– Military and other Government standard parts.

– Industry standard parts from other non-Government

standards

– Commonly available manufacturers’ part numbers from

catalogs and/or Vendor Item Drawings.

– Other (e.g., parts documented on source control drawings,

selected item drawings, altered item drawings).
 PARTS MANAGEMENT
BENEFITS SUMMARY

• Reduces proliferation of parts

• Provides economy of scale through larger volume
buys
• Reduces part and supplier qualifications
• Reduces part obsolescence occurrences
• Lowers documentation costs
• Reduces acquisition lead time
• Reduces inventory costs
• Improves producibility
• Simplifies supply chain management
 PARTS MANAGEMENT
BENEFITS SUMMARY
(Cont’d)

• Improves product quality and reliability

• Enhances system supportability
(part availability & maintainability)
• Commonality
• Enhances interchangeability
• Reduces total ownership cost
 WHO DOES
PARTS MANAGEMENT?

Both the acquisition activity and the contractor have

responsibilities concerning the implementation of parts
management requirements.

The acquisition activity is responsible for determining

and/or tailoring all initial parts management
requirements, coordinating and negotiating those
requirements with the contractor, and evaluating and
approving the required contractor submitted plans or
processes.
 WHO DOES
PARTS MANAGEMENT?
(Cont’d)

The contractor is responsible for teaming with the

acquisition activity to implement Parts Management
Program contract requirements.

Part selection and application is the responsibility of

the contractor whose primary requirement is to meet
the performance objectives of the system or
equipment.
 WHAT ARE
THE COSTS OF
PARTS MANAGEMENT?

Costs reflected in the contract include the tasking to

implement and maintain a parts management process for
the life of the contract.
Costs are determined by the individual weapon system
or equipment acquisition contract life cycle phase; with
the highest cost found in the Engineering and
Manufacturing Development Phase.
Costs are reduced during the subsequent life cycle
phase depending upon the reduction of design effort
concerning changes and modifications to the weapon
system or equipment.
 WHAT TOOLS SUPPORT
PARTS MANAGEMENT?

• ASSIST
(See http://quicksearch.dla.mil/)

• Weapon System Impact Tool (WSIT)

(See https://assist.dla.mil/)

• DMSMS/Obsolescence Tools
(See https://acc.dau.mil/dmsms)

• DLA Land and Maritime – Document Standardization

Division Website
(http://www.dla.mil/LandandMaritime/Offers/Services/TechnicalSu
pport/DocStandDiv.aspx)
 WHAT TOOLS SUPPORT
PARTS MANAGEMENT?
(Cont’d)

• Common Parts Catalog

(See http://www.dtic.mil/dtic/tr/fulltext/u2/a570564.pdf)
• Government-Industry Data Exchange Program (GIDEP)
(See http://www.gidep.org/)

• Defense Parts Management Portal (DPMP)

(See https://dpmp.lmi.org/)
• Pin Point
(See https://pinpoint.xsb.com/)
 SE THROUGHOUT
LIFE-CYCLE
MANAGEMENT

A life-cycle approach to system planning, development,

and sustainment is fundamental to systems engineering.
The program manager (PM) shall be the single point of
accountability for accomplishing program objectives for
total life cycle systems management, including
sustainment.
 SE THROUGHOUT LIFE-
CYCLE MANAGEMENT
(Cont’d)

PMs shall consider supportability, life cycle costs,

performance, and schedule comparable in making
program decisions. Planning for Operations and Support
and the estimation of total ownership costs shall begin
as early as possible. Supportability, a key component of
performance, shall be considered throughout the system
life cycle.
 SE THROUGHOUT LIFE-
CYCLE MANAGEMENT
(Cont’d)

Parts Management along with standardization are SE

design considerations. Selecting the right part is
fundamental to achieving many SE and manufacturing
objectives.
– From a PM perspective, these design considerations ensure the
system is made up of proven parts with existing suppliers

– From a systems engineering perspective, these design

considerations enable a reliable, maintainable, affordable system
that performs well
 TECHNICAL REVIEWS &
LOGISTICS ASSESSMENTS
THROUGHOUT THE LIFE
CYCLE
A B C IOC FOC
Materiel Technology
Technology Engineering & Production & Operations &
Solution Development
Maturation Manufacturing Deployment Support
Analysis & Risk Development
Reduction FRP

Technical
Reviews

ASR SRR SFR PDR CDR PRR

Logistical
Assessments

LA LA LA LA

ASR: Alternative Systems Review PDR: Preliminary Design Review

SRR: System Requirements Review CDR: Critical Design Review
SFR: System Functional Review PRR: Production Readiness Review
 NATURE OF THE
TECHNICAL REVIEW
CHECKLISTS
Systems Engineering
Logistics Assessments
Parts Management Requirements

Technical Reviews
SRR SFR PDR CDR PRR MS B, MS C, FRP POST IOC
Per MIL STD 3018

Checklists to be used by parts management practitioner prior to the

actual technical review to identify risks that need to be put on the agenda
 PARTS MANAGEMENT
STATUS AT SRR

• MIL-STD-3018 on contract
• Requirement for BOM on contract
• Substitute parts usage procedures established as configuration
management requirement
• Customer-contractor teaming arrangements defined
• Anti-counterfeit requirements established
• Lead-free control requirements established
 PARTS MANAGEMENT
STATUS AT SFR

• Preliminary parts management plan developed

• Corporate baseline parts selection list in place
• Parts selection order of preference established
• Obsolescence management risk assessment ongoing
• Substitute parts usage procedures established
• Customer-contractor teaming ongoing
• Preliminary anti-counterfeit plan developed
• Preliminary lead-free control plan developed
 PARTS MANAGEMENT
STATUS AT PDR

• Parts management plan implemented

• Corporate baseline parts selection list maintained
• Parts selection process in place
• Obsolescence management risk assessment ongoing
• Parts management requirements being flowed down to
subcontractors
• Part and supplier quality established
• Substitute parts usage procedures followed
• Customer-contractor teaming ongoing
• Anti-counterfeit plan implemented
• Lead-free control plan implemented
 PARTS MANAGEMENT
STATUS AT CDR

• Parts management plan approved

• Corporate baseline parts selection list maintained
• Parts selection process in place
• Obsolescence management risk assessment ongoing
• BOMs have been submitted
• Parts management requirements being flowed down to
subcontractors
• Part and supplier quality established
• Substitute parts usage procedures followed
• Customer-contractor teaming ongoing
• Anti-counterfeit plan being followed
• Lead-free control plan being followed
 PARTS MANAGEMENT
STATUS AT PRR

• Parts management plan approved

• Corporate baseline parts selection list maintained
• Parts selection process in place; all parts have been approved
• Obsolescence management risk assessment ongoing
• BOMs have been accepted
• Parts management requirements being flowed down to subs
• Part and supplier quality established
• Part documentation documents meet requirements
• Substitute parts usage procedures followed
• Customer-contractor teaming ongoing
• Anti-counterfeit plan being followed
• Lead-free control plan being followed
 WHO IS RESPONSIBLE FOR
DoD PARTS MANAGEMENT?

Currently, DoD weapon systems and equipment

programs are experiencing increased risk due to problem
part issues.

The Defense Standardization Program Office (DSPO) is

responsible for the DoD Parts Management Program.
In November 2006, the DSPO chartered the Parts
Standardization and Management Committee (PSMC) to
advise in the development of policy, procedures, and
guidance related to parts management.
 WHO IS RESPONSIBLE FOR
DoD PARTS MANAGEMENT?
(Cont’d)

The DSPO’s goal is to establish parts management best

practices across DoD to increase weapon system
operational availability and reduce life cycle costs. The
PSMC offers a standing forum for DoD and industry
communication and collaboration to promote and enable
effective parts management in support of the warfighter.
 CONCLUSION

One cannot overstate the importance of systems

engineering—and the specialty engineering disciplines
associated with it—to successful, cost-effective acquisition.
Parts management contributes to the overall SE mission in
the risk identification and management and the life-cycle
focus areas.

Today’s parts management program is becoming more

flexible, more user friendly for contractors, and more
comprehensive due to a major reengineering effort that is
still underway.
 CONCLUSION
(Cont’d)

The PSMC will continue to address SE parts management

initiatives with help from the SE and parts management
communities. To be involved in this effort, please contact
the DSPO Project Leader: 703-767-6874.
 Seawolf Class Virginia Class

Seawolf Problem - Virginia Solution -

Parts Proliferation Instituted parts stdz at
BEGINNING of design phase
• Many duplicate part numbers • Upfront standardization program
created by two design yards, one prevented parts proliferation
construction shipyard • 27,014 bill of material parts
• Existing design standards seldom • $789M cost avoidance over
used program life
• No standard criteria established
• 67,834 bill of material parts

Source: Virginia Class Submarine Case Study available in Library at www.dsp.dla.mil