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Revenue Types

Markets Forecast forecasts supplier sales in four categories – RDT&E, Production, Supplier Logistics Support (SLS), and Services.

Production Revenue

Production relates to the funds spent on manufacturing and delivering the equipment being forecasted. It has a high correlation with the US DoD Procurement account.

RDT&E Revenue

RDT&E relates to the funds spent on research, development, testing and evaluations of the equipment being forecasted. It corresponds closely with the US DoD RDT&E budget account.

Supplier Logistics Support (SLS) Revenue

SLS relates to the value of spares and sustainment support provided by the original supplier over the life of the equipment or system being forecasted. Because our SLS model includes both spares procured at system delivery as well as sustaining spares and life cycle support, our SLS Forecast is related to O&M funding, procurement accounts and sometimes even RDT&E in special cases.

SLS is an approximation of the aftermarket revenues that are available to the original supplier from providing spares and life cycle sustainment support for fielded equipment and systems. Our model includes revenues received from two categories: Spares and Life Cycle Sustainment Support.

Spares

Spares are divided into two types:

  1. Initial spares: spares associated with current year deliveries.
  2. Sustaining spares: spares required to replenish pipelines parts and components used during current year maintenance actions.

Life Cycle Sustainment Support

Includes life cycle support provided by the original supplier such as technical documentation, configuration control, engineering support, maintenance support, system support, etc.

How do Supplier Logistics Support (SLS) forecasts differ from Contractor Logistics Support (CLS) services forecasts?

SLS is a calculated (modeled) forecast. Markets Forecast uses a SLS algorithm to estimate spares and life cycle sustainment support where specific support contract activity is not identified or known. This calculation is based on the following factors:

  1. Initial Spares. New procurement costs normally include warranties or purchased spares. In the case of warranties, the original equipment manufacturer takes responsibility for the parts and service required to keep the system to pre-determined standards. The time frame and exact delineation of services may vary with each contract. Where there is no warranty, Markets Forecast calculates the percentage of the initial unit cost that will be used to purchase spares.
  2. SLS Rate. This calculation provides for the routine costs associated with sustaining a system in operational condition. It is expressed as a percentage of the total unit price.
  3. Support Life. Every system has an expected life cycle before it is either retired or provided life extension services. The Markets Forecast database forecasts include this service life factor in the SLS calculations.

Contractor Logistics Support (CLS) services forecasts are manual forecasts. Where specific support services contract activity has been identified, the contract is documented in a separate CLS services record and the value of the calculated SLS forecast is reduced as appropriate based upon the scope of the support contract. The original equipment manufacturer will generally retain some post-delivery revenue resulting from spares, configuration management and documentation, no matter which contractor provides maintenance support.

Services Revenue

Services relates to contracts for equipment maintenance and repair, (labor not spares), upgrades and modification services, provisioning and operational services, training and technical services. The services records are entered manually, and as separate records. They are based on contract awards. As such, they are stand-alone records and could be CLS (Contractor Logistics Support), or PBLs (Performance Based Logistics) type contracts. There are a couple categories: 1) after-market support revenue related to specific fielded equipment (other than spares and documentation); and 2) after-market revenue related to general services drawn from the Operations and Maintenance (O&M) infrastructure account. Since each of Markets Forecast sales forecast category represents a “color of sales/revenue” forecast, as opposed to a budget “color of money” forecast, each forecast relates directly to the individual equipment or service contract being forecasted, not the budget account involved.