PTC has won what is likely to be one of this year's major PLM and service management related deals. PTC announced today that the U.S. Air Force (USAF) is expanding its use of PTC's Servigistics Service Parts Management SaaS solution. This is part of the Air Force modernization program for supply chain management, ESCAPE (Enterprise Supply Chain Analysis, Planning and Execution).

The Servigistics software is not in itself new for USAF; instead, today's announcement is about the expansion of an existing agreement that will ultimately bring in a large amount of revenue. The expansion includes a five-year final contract, with a base period of one year and four one-year options, worth a total of up to $95 million if all options are exercised.

With this software solution, which is certified at the FedRAMP security level, the U.S. Air Force will have new opportunities to further sharpen their capacity and optimize flows in what is already one of the world's largest and most complex service supply chains.

What are the problems the USAF faces? In today’s article I look closely at the challenges that lie behind USAF’s decision to invest in Servigistics, and discussed these issues with PTC’s CEO Jim Heppelmann, among others.

“The U.S. Air Force operates a fleet of thousands of aircraft that need regular maintenance and spare parts availability to maintain the high level of operational readiness that is crucial to national security. Through the ESCAPE program, USAF is now changing the way it achieves operational readiness to achieve maximum availability for aircraft with minimal investment in spare parts and other related service requirements. What Servigistics does is use sophisticated algorithms to predict optimal levels of service components needed in different locations,” Heppelmann said to engineering.com.

A pilot in the U.S. Air Force’s 911th Flight Maintenance Squadron performs a pre-flight inspection on a C-17 Globemaster III at Pittsburgh International Airport Air Reserve Station. Pre-flight inspections are performed before each flight to ensure assignments and operational readiness. (U.S. Air Force photo: Joshua J. Seybert.)

The background to today's PTC order can be found in the ESCAPE program.

This program centers around the USAF’s commitment to modernize the management of its supply chain, where a significant point is that they wanted to use so-called Commercial-Off-The-Shelf (COTS) software. In this case, PTC's Servigistics solution.

The ESCAPE program will have direct interfaces to several platforms, and will give depot managers and those who handle objects the flexibility to plan and manage their assigned weapon systems.

Moreover, ESCAPE replaces a solution called D200A, and it is believed that ESCAPE brings along great opportunities and the potential to transform the management of the supply chain, as well as streamline the way forward for aircraft maintenance operations.

"The U.S. Air Force already has one of the world's most sophisticated and complex service chain supply chains," said Leslie Paulson, GM of PTC's Servigistics Business Unit. “Planning and logistics with its OEM network will strengthen the digital thread.”

As I mentioned initially, USAF already uses PTC's Servigistics software—so, what is produced more concretely by these extra features?

“This contract entails both an extension and an expansion of a previous agreement. USAF incorporates additional new functionality from Servigistics, at the same time as the duration of the contract is extended by another five years,” Jim Heppelmann summed up.

One of the U.S. Air Force logistics challenges is that it includes almost 118 distinct weapon systems ranging from over 60 years old to only a couple of years old.

What Is the Problem?

What is the problem with logistics in these contexts?

Major Lee R. Russel of the USAF has described the challenges in a scientific research paper titled "A feasibility analysis on the Air Force employment of Escape Supply Chain management program."

The task of managing the logistics in this context is anything but easy. Millions of dollars are spent annually on buying, repairing and allocating spare parts for all aircraft fleets. How can you streamline what you get for every dollar?

One way to reduce costs is to improve the accuracy of forecasts for spare parts needs, Russel writes. “The challenge resides in supply chain software that is integrated and able to produce forecasts. Additionally, the software should inform item managers and depot parts managers about what parts are needed to adequately meet aircraft readiness.”

We are talking about the classic need to ensure that the right parts are in the right quantity to satisfy the flight requirements in both war and peacetime.

“The consequences of not meeting these operational requirements include short-notice cannibalization actions, hasty contract development for spare part solutions, increased transportation requirements through lateral and depot support, and enlarged inventory carrying cost and obsolescence of excess spare parts,” Russel wrote.

He further states that what makes USAF logistics so challenging is that it includes almost 118 distinct weapon systems that vary in age from over 60 years to only a couple of years old.

“For instance, the latest iteration of the B-52 was produced in 1962. Further complicating the matter is the life extension of older aircraft, such as the B-52, that has exceeded engineering design service certifications. The new certification for the B-52H airframe is now into the 2040s. The suppliers to produce parts for those legacy aircraft are becoming extremely difficult to find. The original parts makers have either gone out of business or are no longer producing parts that require 1960’s era technology.”

There are a number of significant factors that complicate the handling of spare parts. For example, the lifespan of older aircraft such as the B-52 (pictured), which has exceeded the engineering design certifications. The new certification for the B-52H aircraft is now into the 2040s. Suppliers to manufacture parts for these legacy aircraft are becoming increasingly difficult to find and maintain.

Given problems such as those described above, it is easy to see the need for a really strong COTS solution. The new ESCAPE is therefore based on PTC's Servigistics platform, which will now help to transform the U.S. Air Force's management of the supply chain.

Handling USAF’s $76 Billion Service Supply Chain Business

The USAF Sustainment Center's 448th Supply Chain Management Wing is the name of the organization responsible for the ESCAPE modernization program. In total, around 3,000 employees are involved in this critical support scheme for the U.S. Air Force's global preparedness.

It is a feather in PTC’s cap that the USAF will leverage Servigistics as the sole-source provider to plan and optimize its $76 billion service parts supply chain tuned to asset availability.

PTC writes in the press material that the current expanded agreement "builds on the success of previous years' Servigistics rollouts and enables USAF to adopt additional functionality, phase out older systems, consolidate IT costs and further improve preparedness."

“Our principal objective is to maximize readiness of assets and equipment,” comments Abigail Strobell, program manager for Air Force Materiel Command at the Department of Defense. “It is an immense and complex challenge. PTC's Servigistics solution gives us confidence from a proven track record of success and powerful capabilities that will enable us to optimize our service parts supply chain."

Ensures Modernization and Restructuring, Says Heppelmann

This statement also confirms the discussion I had with PTC’s Jim Heppelmann, centered around yesterday’s announcement. He says that Servigistics supports ESCAPE's efforts to modernize planning and forecasting, increase aircraft availability and improve mission support functions, while investing taxpayers' financing in optimally functioning spare parts inventories. The ESCAPE initiative supports the restructuring of business processes and systems aimed at within USAF.

He went on to explain that, "The U.S. Air Force operates a fleet of thousands of aircraft that need regular maintenance and spare parts availability to maintain the high level of operational readiness that is critical to national security."

"The U.S. Air Force operates a fleet of thousands of aircraft that need regular maintenance and spare parts availability to maintain the high level of operational readiness that is critical to national security," PTC’s CEO Jim Heppelmann said to engineering.com.

So, what “can” the software do? A lot, Heppelmann states. Basically, it is about the right part in the right place, at the right time and at the lowest cost. Within the framework of PTC's solutions, efficient service part management achieves these goals by:

Analyzing the connections between several storage locations.
Retrieve data from business systems, maintenance systems and other sources to predict the demand for service parts.
Develop inventory plans based on service level goals, budget constraints and forecasts.

“While the nature of the USAF’s operations may differ from other manufacturing companies, many of our customers share a common desire to achieve the best operational service level agreement (SLA) of their products with the minimum level of investment in the service supply chain,” Heppelmann claimed.

Sophisticated Algorithms

He also pointed at Servigistics’ strength related to USAF.

How is Servigistics connected to PLM and PTC's own Windchill suite?

“USAF operates many different types of aircraft that come from different suppliers and represent many different vintages. While some of these providers use PTC's PLM suite, Windchill, others do not. Servigistics integrates data from many different systems to handle the parts' optimization requirements for all aircraft, regardless of type, age or PLM system used to develop the aircraft,” Heppelmann concluded.

It can be added that for federal, space and defense organizations, Servigistics meets the most stringent standards and rigorous review processes and is available within the USAF, the Coast Guard and at OEMs such as Boeing, Lockheed Martin, Northrop Grumman and others.