Warehouse cuts costs for unmanned aircraft

By KARI HAWKINS Assistant editor

There’s a warehouse near the airport where saving government funds and building new efficiencies has led to changes in the roles of an Army organization and its contractors.

Since late 2012, the product management office of Small Unmanned Aircraft Systems, Program Executive Office for Aviation, has moved into the areas of inventory control, system reconstitution, testing, shipping and receiving, and training as a way to get better control of costs associated with providing Soldiers with Raven and Puma unmanned aircraft systems.

Both of these two systems, which are used by hundreds of Soldier units for operational awareness on the battlefield because of their compact and lightweight size, and easy-to-operate features, often fall victim to damage due to high operational usage rates.

Raven, with a wingspan of 4.5 feet and a weight of 4.8 pounds, provides aerial observation in both day and night conditions at line-of-sight ranges up to 10 kilometers. It delivers real-time color or infrared imagery to the ground control and remote viewing station. Puma, with a wingspan of 9.2 feet, also provides aerial observation at line-of-sight ranges up to 10 kilometers and can be used in tight areas using vertical descent capabilities. Both are assembled by Soldiers in the field, and then hand-launched into operation.

“These systems can really take a beating, and many parts can get damaged. We are working at cutting costs related to damage while at the same time increasing our responsiveness to the Soldier in the field,” said Jody Brenner, logistics chief and fleet manager for Small Unmanned Aircraft Systems.

AeroVironment builds both the Raven and Puma for the Army. Until October 2012, the company also controlled all life cycle support for the unmanned aircraft – including supply, repair and shipping activities – from their operations in Simi Valley, Calif.

But a need to shorten delivery times, reduce costs and have more control over sustainment caused the Small Unmanned Aircraft Systems product office to rethink how it wanted to manage the full range of support needed to sustain Raven and Puma.

Add to that the lack of a local warehousing site, and the Small Unmanned Aircraft Systems product office saw a need to develop a new inventory system that would be as flexible, adaptable, visible and cost effective as the Raven and Puma systems.

The October 2012 end day for the Puma warehouse support contract provided an opportunity for the Army to try something different by managing its own warehousing facility. In January 2012, employees for Small Unmanned Aircraft Systems completed stock surveys to determine the size of the required inventory space. They obtained approval to go forward with the plan in July 2012 and by October 2012 they had obtained 45,000 square feet of warehousing space at the old Dunlap facility now managed by contractor SES near the Huntsville International Airport.

“Because the Puma warehouse support contact ended in October 2012 and the Raven warehouse support contract ended in February 2013, we turned our attention first to the Puma,” said Tim Sharp, manager of the inventory control point for Raven and Puma.

“We basically set up a plan to move our parts without any kind of break in the service to the Soldier.”

Those parts are now managed locally. Eight employees work daily at the local site to ensure that parts are in stock and ready to replace damaged parts. In addition, the program’s system integrators are cross-trained to work in the warehouse when they are not supporting Soldiers with system operations.

The employees reconstitute damaged small unmanned aircraft systems, meaning they remove and replace the damaged parts used to build the system in the field. If parts need to be repaired, they are sent to local contractor enRgies.

“As the systems come back from the field, we rebuild them to the standard of a new system by replacing damaged parts,” Sharp said. “We work on about 20 systems a month.

“As part of that, we take the time to go through all the parts, we do function tests, and we see what makes sense to repair and what makes sense to take out of the inventory. We drive what we think should be repaired and what doesn’t make sense to repair.”

With 6,000 Raven aircraft and 675 Puma aircraft in the field, the warehouse also stays busy providing parts to the forward repair activity in Afghanistan.

“The government assumed the risk of having this inventory. We stock, store and issue parts from this local facility. We assumed the risk knowing that by doing so we’d have a cost savings for our program,” Brenner said.

The result was nearly immediate. With control of the inventory, the Small Unmanned Aircraft Systems product management office had the ability to quickly respond to Soldier needs, to manage the inventory in a way that would save the Army money and better understand how to respond to the needs of Soldiers using Raven and Puma in theater.

“Up until we started the warehouse, the visibility of our parts was limited. We felt that the Army needed to have more involvement in how things were being run,” Sharp said.

The time to reconstitute a system was reduced from an average of two weeks to four days. Parts previously identified as scrap by the original equipment manufacturer were recovered and put back into service with an estimated cost avoidance of $3.4 million. Overall shelf storage capacity was increased by 30 percent through the disposal of obsolete or unnecessary equipment, and existing work areas were organized and arranged to simplify access to needed parts and tools to reduce maintenance man-hours.

In addition, the warehouse employees implemented Lean/Six Sigma as a quality management method, and conducted a study that shows reconstituting a Puma payload costs only 13 percent of what a new payload costs. They also identified five major cost drivers in reconstitution that can be targeted for improvement. Future warehouse improvements include the integration of automated inventory control systems, applying Lean/Six Sigma visual workplace techniques and mistake proofing. The team hopes to reduce system sustainment costs by 30 percent over the next year and 10 percent every year after.

Both unmanned aircraft are now being managed with different types of contracts. The Indefinite Delivery Indefinite Quantity contracts for products and services will provide the mechanism to manage all materiel requirements, training, repair and engineering development for the program. The Products contract offers the advantage of competition among five vendors to drive quality and value in procurement.

“AV is still part of the Products contract and so are four other contractors. Any five of those contractors can bid on the parts we need, which allows us to create competition within the contract,” Sharp said.

The services contract, which includes engineering services, warehousing, repairs and training, will be awarded in August. Until then, enRgies is handling parts repairs as directed by the Army.

“As part of that service contract, the contractor can provide us a facility – a facility that we prefer to be within 25 miles of Redstone Arsenal – and propose a solution which is potentially better than what we are doing now,” Sharp said. “We can use their warehouse space or continue with ours.

“But regardless, it will still be our employees doing the day-to-day work of filling requisitions, managing and reordering parts, shipping and receiving and system reconstitution. It is more of the a-la-carte contract where we will pay only for the services we want them to provide.”