Defense Supply Chain Transformation — 50% to 97% OTD, DCMA Auditors Cleared
A mid-size defense manufacturer had 3 DCMA government quality representatives living in the facility due to chronic late deliveries. A corrupt buyer was steering POs to 4 favored suppliers. We rebuilt the entire supply chain — OTD went from under 50% to 97%, backlog went to zero, and the DCMA auditors left.
The Challenge
The company manufactured armor across 2 fabrication facilities (30,000 SF each), a 75,000 SF paint facility, and a 200,000 SF kitting/packaging facility. Three DCMA government supplier quality representatives were permanently stationed in the facility because of chronic late deliveries. A buyer was receiving financial incentives from 4 favored machining suppliers to steer purchase orders their way — and those 4 suppliers were capacity-constrained and batch-producing 300-400 of the same parts when the BOM called for 16.
OTD was below 50% to the customer. The company manufactured armor using 6 machining suppliers, where 4 received the bulk of POs — all friends of the owner. A buyer was receiving trips and financial incentives to steer work to these 4 suppliers.
The favored suppliers were capacity-constrained and batching production — making 300-400 of the same parts when the BOM called for 16. This created constant component shortages for actual builds.
3 DCMA government quality representatives were living in the facility because of the delivery failures — an extraordinary level of government oversight indicating the severity of the compliance and delivery crisis.
The tool room was spending $65.8K per month on indirect materials — rogue spending with no min/max levels, no kanban, no cycle counts. Supervisors or operators would simply request materials with no oversight.
No formalized processes existed for purchasing, strategic sourcing, planning, shipping/receiving. No scorecard metrics for OTD, cycle count, supplier performance, or inventory turns across the 4 sites. 20 personnel across 4 sites needed direction.
Our Approach
We terminated the corrupt buyer, expanded the supply chain from 6 to 12 suppliers, mandated BOM-kit deliveries, implemented kanban across all operations, and established formalized procurement processes with scorecard metrics across all 4 sites.
Phase 1: Root Cause & Personnel Action (Month 1)
Identified that a buyer was receiving financial incentives to steer POs to 4 favored suppliers. After a difficult discussion with the company owner, the buyer was terminated for cause. This single action unlocked the ability to broaden the supply base and break the bottleneck.
Phase 2: Supply Chain Expansion & Restructuring (Months 2-6)
Expanded the machining supply chain from 6 to 12 suppliers and redistributed work based on capability and capacity. Mandated kit deliveries according to BOM requirements — no more individual parts batched in quantities of 300-400. Purchase orders were restructured with delivery requirements in kits. Established pull systems for raw material, components, and indirect materials.
Phase 3: Indirect Material & Kanban Control (Months 4-8)
The tool room spending of $65.8K/month was attacked with kanban implementation, min/max levels, cycle counts, and a weekly spend review meeting with the buyer. Spending dropped to $21.7K/month — a 67% reduction ($44K/month savings). Established SWIP methods for raw materials, components, and indirect across all operations.
Phase 4: Metrics, Scorecards & Process Formalization (Months 6-18)
Developed formalized processes for purchasing, strategic sourcing, planning, shipping/receiving across all 4 sites. Built scorecard metrics for OTD, cycle count accuracy, supplier performance, and inventory turns. Led multi-facility ERP integration improvements. Managed production planning, trade compliance, warehouse operations, carrier sourcing, and fleet management.
Results & Impact
OTD went from under 50% to 97%. The backlog was reduced to zero — 97 units delivered. All 3 DCMA government representatives walked into the office, asked what had changed, and left the facility. They did not return.
From government oversight-triggering delivery failures to near-perfect performance
Tool room spending from $65.8K to $21.7K per month through kanban and weekly spend reviews
Through strategic sourcing initiatives across $28M in annual spend
97 units delivered, bringing the entire customer backlog to zero
Additional Outcomes
“We had three government auditors living in our plant — that is how bad it was. He terminated a corrupt buyer, rebuilt our supply chain from scratch, and delivered 97 units that cleared our entire backlog. The DCMA representatives walked in one day, asked what happened, and left. They never came back.”
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