Best Practices in Supplier Relationship Management and Their Early Implementation in the Air Force Materiel Command
RAND PROJECT AIR FORCE SANTA MONICA CA
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As is the case with all military services, the U.S. Air Force USAF is under pressure to reduce the costs of its logistics operations while simultaneously improving their performance. In FY 2008, 43 of the total Air Force budget went to purchases of goods and services -- including all weapon system support costs, base operating support, military housing and construction -- from the private sector. Thus, any efforts to generate significant savings must target purchases from the private sector. Since 2002, as part of its Purchasing and Supply Chain Management PSCM initiative, the Air Force has had a program called Supplier Relationship Management SRM within the Air Force Materiel Command AFMC that has the goal of reducing the cost and improving the quality and performance of purchased goods and services by carefully managing relations with suppliers to the mutual advantage of each. Commercial firms have long had such programs and have garnered large savings from them. However, the scope and pace of the savings generated by the SRM program at AFMC have been less than anticipated by senior leaders. As a result, the Air Force asked PAF to identify steps the Air Force can take to improve the outcomes of its SRM program, particularly for contracts for sustainment spares, repairs, and other depot-level services. In performing this research, we first reviewed the academic, business, and defense literature on best SRM practices and interviewed representatives of commercial best-in-class firms that have successfully implemented SRM to identify the most effective practices. We then assessed how the Air Force had implemented SRM, to determine whether it was employing the best business practices in its SRM program and to uncover practices or policies that might be making the implementation of SRM less effective than it could be. This step included an analysis of annual spending with key SRM contractors as well as intensive interviews with Air Force personnel.
- Economics and Cost Analysis
- Personnel Management and Labor Relations
- Logistics, Military Facilities and Supplies