Successful Allowancing is a Team Effort

Somewhere in the Persian Gulf, USS Duarte suffers a weapons system casualty.  The on-duty Logistics Specialist goes to the storeroom, breaks out the parts required to repair the casualty, and turns them over to the weapons division. 

 Casualty corrected, mission resumed. 

 Having the right parts in that storeroom is not an accident, but a shared responsibility between the Fleet, maintenance activities and the commands preparing the allowance products.  Enabled by Navy Enterprise Resource Planning (ERP), the Naval Supply Systems Command (NAVSUP) works closely with the Fleet on a number of allowancing initiatives, and remains committed to developing a comprehensive path to improving parts availability and Fleet readiness.


 The goal of Navy allowancing is to provide optimal range and depth of material required to support warfighter mission readiness in a cost-wise manner.  The allowancing process starts when repair parts listed on installed equipment Allowance Parts Lists (APLs), that are within the maintenance capability of the ship, are passed through a computation process consisting of one or more Office of the Chief of Naval Operations (OPNAV) approved allowance models. 

 These models are mathematical techniques for determining stocking quantities specifically tailored to an activity for support of the maintenance and or supply mission of that activity.  Originally, allowancing models were designed to use manufacturer replacement factors and Fleet experienced demand.  This concept has since expanded to include targeted allowance technique to better identify candidates to receive enhanced allowance products.

 Allowance Models

 Today there are several types of allowance models developed for computing Naval activity allowance lists …

 The Fixed Protection Level Model computes allowances based on a single factor demand.  This technique provides the same level of protection to all items having the same demand rate.  Some allowance products’ range and depth computations are based on specific effectiveness goals.

 The Variable Protection Level Model computes allowances on the basis of several factors; e.g., demand, item price and item essentiality.  This technique provides higher protection levels for essential items with low unit prices while providing lower protection levels for less essential, higher priced items.  This technique is constrained by the availability of variable essentiality data.

 The Optimal Sparing Methodology Model computes allowances to achieve a given level of performance at least cost; or conversely, to achieve a maximum level of performance at a given cost.  These allowances will be developed to meet Chief of Naval Operations (CNO) mandated readiness objective (Ao) goals.  An optimal sparing methodology is implemented using Readiness Based Sparing (RBS).

 RBS is a process to determine range, depth, and location of spare parts to support required readiness objectives at least cost given the reliability and maintainability characteristics of a system or equipment.  RBS is designed to achieve CNO designated full mission capable readiness objectives set for each type, model and series of aircraft and Ao set for each weapon system.  RBS techniques will be applied to all new non-nuclear and non-Fleet Ballistic Missile major systems (acquisition category I, II, III).  Projected response times from the provider; i.e., NAVSUP Weapon Systems Support (WSS); Defense Logistics Agency (DLA); and performance based logistics (PBL) contracts or forward deployed site, should be used for each item. 

  Final allowancing products are more than outputs from a particular model or combination of models.  They are built to include:

•           Demand based items (DBI),

•           Non-demand based items (non-DBI), and

•           Items or other parts deemed necessary for a particular reason such as planned maintenance, crew safety or to support nuclear propulsion.

  DBIs are items that have a relatively high issue rate, normally an item that experiences a demand frequency of two or more in a period of six months and continues to have at least one demand every six months afterwards.  For limited demand items, stocking is based on financial or military essentiality considerations.  Averaging or calculation of demands for similar equipment or organizations to establish stocking criteria does not qualify for identification as a DBI.  However, demand forecasts may be a factor of program data.

 A non-DBI is one that has no previously recorded demands, but qualifies for stocking based on other criteria.  The two types of non-DBIs are insurance items and program based.  Typically, the decision to stock is based on program related data or weapon system essential data rather than previously recorded demands. Inventory levels for non-DBIs are usually developed and monitored by NAVSUP WSS and are reflected in allowance or stock lists.

 Additional items to support planned maintenance, safety, or U.S. Navy type command (TYCOM) requirements may also be added.

Figure 1: This figure reflects the three areas brought together to create a Coordinated Shipboard Allowance List (COSAL).

  Aviation/Maritime Support

 In the Aviation environment, the RBS modeling process was modified to ensure maintainers have ready access to repair parts and repairable assemblies, which result in mean logistic delay time reductions.  Previously, Navy computed aviation allowances using a single-indenture methodology which required cost trade-offs without consideration of the impact of sub-replaceable assemblies and piece parts on the repair cycle time of the weapons repairable assemblies. 

 Multi-indenture RBS eliminates this shortcoming by considering both wholesale and retail levels of the supply system, optimizing stocking levels and reducing time awaiting parts for sub-replaceable assemblies and piece parts.  This, in turn, reduces the number of costly weapon repairable assemblies required to achieve operational availability.  Multi-Echelon sparing also mitigates costs by leveraging material already available in the wholesale system.  If wholesale re-supply can respond in time to fill a requisition, the retail inventory can then be reduced. 

 By implementing Phase II Single National Inventory (SNI) and creating a new planning position, Optimal Supply Planning Analyst (OPSA), Navy ERP provides the ability to centrally manage setting and replenishment of demand based levels for shore activities.  These analysts are located in Philadelphia and at large Naval Air Stations (NASs).  Site planning representatives at NASs, repair facilities, and intermediate maintenance facilities provide business and operational intelligence to NAVSUP WSS who will then update levels and replenishment decisions.  This SNI concept provides an optimal single supply solution that will result in more effective and efficient inventory management.

 In the maritime environment, shipboard inventory levels are tailored to meet established weapon system Ao goals to the maximum extent possible based on funding, space constraints, and special projects designed to leverage ashore inventory and repair capabilities.  Working with the Fleet, NAVSUP has taken the process one-step further by conducting a second review for items that traditionally would not meet stocking threshold.  The second review is used to determine if end-items or piece parts should be allowanced within an Operational Support Inventory Stockage List (OSISL) or in a Coordinated Shore Based Allowance List (COSBOL) and placed at a forward position.  The Fleet has a voice in this process to ensure critical items are identified and properly located for timely repair or re-supply.  NAVSUP works with the resource sponsor to provide additional Other Procurement, Navy (OPN) funding to support this readiness initiative.

 Having an effective allowance document is not the work of one individual or one command but many working as one team to ensure Fleet readiness.

 There are several systems and applications integral to the collection of information and preparation of the COSAL and Automated Shore Interface (ASI) used to update allowances.  These include; the Naval Sea Systems Command (NAVSEA) Configuration Data Managers Database – Open Architecture (CDMD-OA), NAVSUP Readiness Suite and Reengineered Maritime Allowance Development (ReMAD), and Navy ERP Office. 

 Navy ERP 1.1 implementation resulted in configuration issues, which prevented reliable allowance calculations.  ASI production resumed in February 2011 but configuration issues remained.  At this point, the decision was made to update the configuration and re-baseline the Fleet.  The first re-baselined ASI went out in August 2011, the second in November 2011, and the final and largest went to the Fleet customers in July 2012.  Additionally, as part of the last re-baselined product in 2012, the improved Best Replacement Factors (BRFs) that had not been updated since 2010, were included.  The results were initially higher total cost but more accurate allowance product and the capability to produce a more accurate demand forecast.  NAVSUP is working closely with all commands to keep future ASIs on a 60-day cycle ensuring improved Allowance effectiveness and Fleet readiness.

 Our information applications/systems cannot run and produce efficient allowance products without help from the Fleet.  Afloat information required to maintain the COSAL is a joint responsibility of maintenance and supply personnel.  The “hands on” maintenance technician is most aware of what is happening to equipment and is the primary reporting source.  The technician must be able to detect and report maintenance support problems or equipment updates.  Stores division personnel must process these COSAL and configuration maintenance reports promptly.  The Supply Officer must also ensure the change reported is “validated” for accuracy. 

 Reporting configuration changes and inconsistencies between the COSAL and COSAL-related logistics support systems may be accomplished by completing and submitting the Configuration Control Form (OPNAV 4790/CK) or Automated Technical Feedback Report (TFBR).  Currently, the COSAL Use and Maintenance Manual is under revision; the update will provide updated information in a format easier to read.

 Additionally, because of dynamic Fleet operating environments, interim revisions to allowances are sometimes required at other than scheduled allowance list publication dates in order for shipboard systems to be properly supported.  The Fleet must submit Allowance Change Requests (ACRs) to assist the supply system in providing correct allowances.

 Finally, the Fleet can support the allowancing process by promptly running all ASI products, conducting levels processing and storeroom replenishment monthly as recommended in NAVUSP P485, and providing accurate Force Inventory Management Analysis Reporting System (FIMARS) data as required. 

 As we move into the future, NAVSUP’s allowance team continues to work with our 1) OPNAV sponsors to secure funding to improve the allowancing process and fill allowancing requirements; 2) our application/system maintainers to ensure required aviation and maritime functionality is built into the Readiness Suite and ReMAD design; and 3) the Fleet to ensure their needs are heard and met. 

 There are several significant events that will occur.  First, Targeted Allowancing Reconciliation Tool (T-ART) processing will resume in Fiscal Year (FY) 2014.  This tool will be used to provide selected units with COSALs that incorporate C3/C4 CASREPS (one hit for C3/4 CASREP in a ship class/group over a two-year period valued at less than $10k) and Maintenance and Material Management (3-M) add backs.  Due to funding constraints, this effort has been suppressed since calendar year 2009 but $69.4M was requested for years FY14-18.  Second, the Space and Naval Warfare Systems Command (SPAWAR) is working on a new Single Supply Baseline (SSB) which will replace a number of existing afloat supply applications and move allowancing from a “pull” process by the ships to a “push” process where allowances are sent ashore followed by initial allowance material being pushed to the ship.  Finally, with the implementation of ERP 1.1, NAVSUP can now work towards combining the current aviation and maritime allowance processes into a single streamlined allowance process.


Our strategic focus remains aligned with the CNO’s “wholeness” concept and the three tenets of the CNO’s Navigation Plan (Warfighting First, Operate Forward, and Be Ready).  We will continue to listen and respond to our customers’ needs and NAVSUP is focused to aggressively pursue and implement immediate and long-term actions that will improve the allowance process and spare parts availability. 


 By Robert Scott Lingo and Vicki Barnhart

Headquarters, Naval Supply Systems Command