LOGISTICS TRANSFORMED: THE MILITARY Enters a New Age.
Changes in the business environment in the 1980s and early 1990s created an increased recognition of the importance of logistics management. Companies began to view logistics as more than simply a source of cost savings. They recognized that it also could be used to enhance product or service offerings as part of the broader supply chain process.
Like the major business organizations, the Department of Defense (DOD) recognizes the central role of logistics in managing the supply chain. In fact, many logistics management concepts trace their roots back to methods used by the Department of Defense during times of war or crisis. The "Arsenal for Democracy" that supported both the European and Pacific Theaters of Operation during World War II, for example, provided the model for the integration of logistics efforts for military and civilian organizations throughout the world.
Historically, the U.S. Armed Forces have been without peer in integrating logistics functions in support of military operations. The ability to manage the supply chain from the industrial base to the soldier on the ground has been the hallmark of U.S. military operations. In recent times, logistics was instrumental in the success achieved during Operation Desert Shield/Desert Storm. Later operations in the Balkans demonstrated the ability of U.S. military logisticians to support the air war over Kosovo while simultaneously supporting the humanitarian relief effort in Albania. From the Red Ball Express, a fleet of 6,000 trucks and trailers that delivered supplies to Allied armies in World War II, to a 1995 water purification effort in Rwanda, logisticians have accomplished missions while operating under the most adverse circumstances.
No organization, however, remains the best in the world by resting on its past successes. Recognizing this reality, the Department of Defense is aggressively transforming its logistics operatives to take advantage of all that the information age has to offer. The underlying objective of this transformation is to manage the supply chain more effectively.
The Challenges of the Modern-Day Military
The U.S. Armed Forces are unique in their ability to rapidly project power--as manifested in warfighters and materials--anywhere in the world and sustain that power projection until the mission is accomplished. The ability to sustain that combat power is the responsibility of Defense Department logisticians. The success of a mission often depends on how effectively these logistics professionals build and maintain the supply chain from a commercial sustaining base in the continental United States to deployed forces around the world.
The environment in which the Department of Defense operates presents unique supply chain challenges. Chief among them is that the customers (soldiers, sailors, airmen, and marines) do not operate from fixed positions. To serve this highly mobile customer base, the logistics operations also need to be mobile. This mobility must extend to both the retail support operations and, to some degree, the wholesale support operations.
Military logistics is divided into these two levels of support: retail and wholesale. These two functions play roles similar to those taken by retailers and wholesalers in the commercial world. Retail support is the logistical military unit that has direct contact with the end user--as in a retail store. It handles the inventory and supplies that accompany the deployed forces. Wholesale support is represented by the warehouses or depots that hold this inventory and supply. These facilities usually are located in the continental United States; although for larger operations, depots may be established in the actual theater. The total logistics support, from the customer through the wholesale level, normally operates in an austere environment that prevents reliance on fixed communication and physical plant infrastructure.
Military logisticians must not only support highly mobile customers under tough conditions but also handle extremely diverse order requisitions. For example, they must be able to support a high volume of demand for commodities such as food for a ground force. At the same time, these logisticians must be able to support a lower volume of demand for very expensive items such as aircraft and avionics for an austere base or a ship. Although some items are used widely and can be procured locally, the majority are unique to a specific service and have limited sources of supply.
These challenges are not new to the Defense Department. However, major changes in Defense Department operations since the end of the Cold War have made a great impact on the supply chain. During the Cold War, the Defense Department deployed forces "forward" in areas where engagements were likely--for example, along the border dividing East and West Germany. The department was able to position stocks forward in facilities in support of relatively predictable levels of operation. Under these conditions, we could model supply and inventory requirements and then position that materiel where it was needed and in sufficient quantities to sustain operations.
When the Cold War ended, the Defense Department adopted a more expeditionary role, characterized by rapid power projection to global hot spots. Because the location, duration, and intensity of these conflicts cannot be predicted or modeled, there is no longer an opportunity to position stocks forward. Instead, these operations involve the deployment of small joint task forces operating in ways that were never envisioned during the Cold War.
A case in point was Operation Uphold Democracy in Haiti. This mission called for a new model enabling logistical units to support both the U.S. Army helicopters, which were operating off an aircraft carrier, and the ground operations, which were controlled from a sea-based command post on the USS Mt. Whitney. As the military situation on the ground stabilized, the requirements for logistics support increased to the point where the commander of the 1st Corps Support Command from Fort Bragg, N.C., was appointed as the joint theater logistics manager.
Similar situations have arisen in Africa (Operation Provide Hope in Rwanda), in Northern Iraq, and in Albania in support of refugees during the Allied Force operation. Each of these operations required that the logistical support units deploy the precise amount of personnel, supplies, and equipment with no tolerance for either shortages or excess. Notably, all of this had to be accomplished while operating in an austere environment--a classic challenge for any supply chain manager.
The Defense Department's traditional structure makes supporting joint task forces even more challenging because even though troop deployments are normally joint (meaning all services are involved), each service is responsible for its own logistics. In cases where the Army is deploying armored divisions, the Marines are operating as an expeditionary unit, the Navy in carrier battle groups, and the Air Force in squadrons, this arrangement makes perfect sense. The services are organized and equipped to support such major operations. But when the services must organize to support small-scale contingencies, there is no single logistical unit capable of supporting the joint task force. Furthermore, each service has its own logistical automation systems that batch process requests from the using unit to retail support to wholesale support and then on to the national sustaining base. All of these automated systems operate in service-specific stovepipes and do not communicate automatically with each other. Thus, when a joint task force is formed, the Army, Navy, Air Force, and Marines must deploy with unique logistical support units and automation systems that cannot be linked.
This structure creates a fragmented logistics system that is incapable of providing real-time situational awareness information to the joint task force commander. This lack of integration often results in redundancy of stocks, increased logistical personnel, and additional materiel-handling requirements. In some cases, one service will pass requisitions to the continental U.S. sustaining base for items that another branch of the service in the same area of operations may have on hand. This occurs because the items are not visible to all supply chain managers across all services.
Moving Toward Integration
Recognizing this void, the logistics community within the Defense Department is aggressively developing the Global Combat Support System (GCSS). The primary objective of this initiative is to provide the joint warfighter with an integrated real-time picture of the battlespace across combat support and combat service support functional areas. Combat support covers fire and operational support provided by units such as engineers and military police; combat service support involves all the support necessary to sustain all elements of an operating force and includes mechanics, warehouses, and logistics. Providing a real-time perspective of both these functions will enable more timely and informed decisions.
The aim of the GCSS is to satisfy the operational information requirements of the joint task force warfighter, to fuse together relevant information from all of the services, and to facilitate information system data integration. GCSS also will provide data access and sharing among the services and Defense Agencies. This far-reaching initiative will allow the military to move from yesterday's environment of stove-piped, function-specific information systems to tomorrow's environment of a fully integrated family of systems using an open architecture and providing universal access to timely, accurate, and actionable logistics information.
The enhanced efficiencies and effectiveness of the GCSS cannot be realized without a major transformation of the department's current logistics system. This includes processes, performance measures, and the methods of moving logistics information. The strategy to bring about the needed logistics transformation within the DoD has been a collaborative effort. The director for logistics for the Joint Staff has directed the transformation strategy, in conjunction with the deputy undersecretary of defense for logistics and materiel readiness, the four military services, and appropriate Defense Department agencies. The strategy requires that the logistics community:
* Review and optimize our logistics processes at all levels.
* Adopt commercial solutions that reflect best industry practices where appropriate.
* Arrive at a cohesive, Web-based, integrated logistics information environment.
The goal is to leverage technology to optimize logistics processes while minimizing disruptions in order to provide the warfighter with real-time logistics situational awareness. This effort to develop the GCSS through transforming the Defense Department's logistics system is outlined in Defense Reform Initiative Directive (DRID) #54, "Logistics Transformation Plans," released on March 23, 2000. That directive outlines the four pillars that will support the transformation effort as shown in Exhibit 1. These pillars address the critical issues of metrics (for both customer wait time and for time-definite delivery), automation, and Web-based systems.
[Exhibit 1 ILLUSTRATION OMITTED]
The first two pillars of the logistics transformation initiative involve the metrics associated with managing the supply chain. The first is associated with customer wait time and the second with time-definite delivery. To fully build customer confidence in our logistics system, the department must measure the entire supply chain. Doing this will help us identify and fix the most persistent problems that are causing a weapon system to fail or malfunction. Establishing metrics also helps to assure the warfighter that an asset, such as a tank engine part, will be delivered in accordance with a time-definite standard.
To support the goal of real-time situational awareness, the metrics must track, in real time, the movement of requisitions through the supply chain. For this reason, the department is moving away from using averages to measure supply chain performance and toward using the variance-based metric of customer wait time (CWT). CWT measures the total elapsed time between when a customer's documented requirement is established and when that same customer acknowledges receipt of the materiel requested. It lays a yardstick along the pipeline to measure the logistics system from end to end--from the time the end user (the customer) identifies a requirement until that requirement is satisfied.
The move to a variance-based metric is a significant change from the old measures of order ship time (OST) and logistics response time (LRT). OST and LRT served the DoD well in the past. However, these measurements are based on averages, and they only measure a portion of the supply chain. The use of averages to measure performance leads to a skewed view of reality and fails to pinpoint the real problems within the process because it hides or masks the "outliers" (those items or areas of the processes that lie outside the average). Say a warfighter needs four to five items to get a weapon system ready, and there is a major delay in supplying one of the items. Overall, the average OST and LRT might look good, but the weapon system is still non-functional. It is also important to understand that the old OST and LRT measurements do not include those assets issued from a service's retail supply system. This is because items in retail are considered readily available and do not need to be shipped.
As opposed to the old metrics that focused on averages, customer wait time lets logistical units track individual requisitions in real time through the logistics pipeline--from the documentation of the materiel requirement within a maintenance or supply system to receipt of the asset by the soldier in the field. CWT must be applied to every function in the supply chain. As a variance-based metric, it focuses on each step of the process within the requisitioning, distribution, and acquisition stages in meeting user requirements.
In addition, the department now has the ability to drill down and look at what the CWT is at the 50th, 75th, and 95th percentiles--thereby enhancing the precision of our analysis. We can then focus on reengineering our processes to optimize our support to the warfighter and ultimately reduce customer wait time. CWT is a Fiscal Year 2001 initiative and will allow us to review and analyze the effectiveness of the business processes and information systems used along the logistics pipeline.
As the second key metric, the department established a Time-Definite Delivery (TDD) standard to measure our level of success in supporting the warfighter. TDD states that 95 percent of all requirements will be delivered in the number of days (expressed as CWT) established for the customer's priority grouping and geographical location.
Simply put, TDD builds customer confidence. The higher the percentage of on-time delivery, the greater the warfighters' confidence that the logistics system can and will respond to their needs. TDD has significant implications for inventory levels, distribution networks, and support infrastructure. To illustrate, if customers are confident that 95 percent of the time they will receive an asset (such as an engine) from the continental United States within four days, they will be less likely to bring extra assets when deployed. As a result, the logistical footprint within the theater of operations could be reduced. Having this level of assurance also will allow customers to make more informed decisions, such as whether to order new materiel or to cannibalize from existing equipment. Ultimately, it can even affect the commander's tactical and operational decisions on the employment of forces and tempo of operations.
The CWT and TDD metrics will allow the Defense Department to create a universal simplified priority system. This system will consist of three priorities for those assets that are not immediately available within a service's retail system. These priority groupings are urgent (four-day CWT worldwide), immediate (seven-day CWT), and routine (30-day CWT). Here's how the system would work: If a customer ordered a repair part using the priority of urgent and the spare were available at the wholesale depot, the customer would be guaranteed that the spare would be delivered within four days 95 percent of the time. This time-definite delivery to the 95 percent level will significantly enhance customer confidence.
The goal is to implement CWT and this simplified priority system throughout the Defense Department by the end of FY 2002. The concept is illustrated in Exhibits 2 to 4. These exhibits show the stretch goals for CWT for the U.S. Central Command's area of responsibility, which encompasses 25 nations from the Horn of Africa through the Arabian Gulf and into Central Asia. Exhibit 2 shows the simplified priority system used by the Central Command Theater. The force activity designator (FAD) shown in the exhibit is a numerical system (with I being the highest and V being the lowest) used to designate whose order has a higher priority. A fighter squadron, for example, would receive a FAD of II. The urgency of need designator (UND) signifies how urgently an item is needed, with "A" being most urgent and "C" being routine. These two designators are combined to determine a request's priority grouping of urgent, immediate, or routine. For example, an FAD II and a UND A would grant a priority of 2, placing the request in the urgent category--or priority group I.
EXHIBIT 2 Priority Groupings for Central Command Theater Urgency of Need Designator (UND) Force Activity Designator (FAD) A B C I 1(a) 4(b) 11(c) II 2(a) 5(b) 12(c) III 3(a) 6(b) 13(c) IV 7(b) 9(c) 14(c) V 8(b) 10(c) 15(c) (a) Urgent = Priority Group (PG) I (b) Immediate = Priority Group (PG) II (c) Routing = Priority Group (PG) III EXHIBIT 3 Customer Wait Time (in Days) for Central Command Demonstration Retail End- End- Entire Priority Retail Retail Pass to-End to-End End-to- Group Issues - B/O B/O Only - B/O B/O Only End Urgent 1 4 8 5 10 7 Immediate 1 7 14 8 16 12 Routine 2 30 60 31 62 45 B/O = Backorder * Maximum allowed time to meet TDD standard. Must achieve TDD standard 95 percent of the time. (Note: Metrics are for demonstration only.)
[Exhibit 4 ILLUSTRATION OMITTED]
Exhibit 3 further breaks down the time-definite delivery standards set by Central Command for each of the three priority groups. (Note that the metrics listed are for the Central Command demonstration only and do not reflect actual DoD standards.) The color of each column in the chart in Exhibit 3 corresponds to the same color line in the diagram in Exhibit 4. These lines represent the different possible paths an order could take. So, for example, an urgent order for an item in the service's own local retail support system (green) will be filled within one day 95 percent of the time. A requisition (not including back orders) that is passed on to the wholesale depot (purple) will take, at the most, four days to get from the wholesaler in the United Sates to the retailer 95 percent of the time. An urgent request that the wholesaler has on back order (red) will take eight days to get to the retailer 95 percent of the time. End-to-end, non-back-order goods (blue) will take five days to get from the wholesaler to the warfighter 95 percent of the time. End-to-end for back-ordered goods (gray) will take 10 days, 95 percent of the time. All orders, including back orders (orange) will take seven days to get the good to the warfighter 95 percent of the time. The same process can be followed for immediate and routine orders as shown in the exhibits.
The combined effort of establishing the new metrics and the time-definite standards will enable the department to transition from a demand-based system to a distribution-based system. In the commercial sector, this often is referred to as moving from a "push" to a "pull" system.
The third pillar of the logistics transformation process is the integration and fielding of automatic identification technology (AIT) and automated information systems (AIS). This integration will be accomplished throughout the supply chain in support of a shared data environment that will provide total asset visibility. The objective is to have a worldwide automated information capability. This capability will be linked to service and Defense Agency Web-based/enabled systems to provide the real-time and complete information required by the joint warfighter.
The fourth pillar will enable the department to achieve a real-time, actionable, Web-based logistics information environment by the end of FY 2004 for early-deploying forces and by close of FY 2006 for the remainder of the force. This ability, coupled with our process reengineering efforts, will not only link our service logistics information systems but also ensure our linkage to industry as we continue to optimize our logistics processes. The bottom line: The linkage of military and industry logistics information will provide the warfighter with real-time situational awareness of the battlespace.
Transformation in Action: Central Command Demonstration
To jump start the process of realizing the goals set in the logistics transformation initiative, the DoD has partnered with the U.S. Central Command (CENTCOM) on a demonstration called the Joint Logistics Warfighting Initiative. CENTCOM is a unified (joint) command responsible for U.S. security in the Central Command Theater. The headquarters staff at MacDill Air Force Base in Tampa, Fla., consists of more than 900 personnel from each of the four military services. Each of the services also provides U.S. CENTCOM with component commands, which make up the command's primary warfighting and engagement organizations. Central Command has a limited U.S. permanent presence and infrastructure, and there is little opportunity to stockpile supplies in the central theater itself in support of day-to-day operations. Furthermore, all services maintain a rotating presence in the area of operations.
The Joint Logistics Warfighting Initiative (JLWI) will demonstrate the benefit to the warfighter of moving to a real-time, shared data environment. The program's objective is to create an environment in which we can experiment with both joint and service component logistics in order to reengineer processes, eliminate redundancies, optimize technological advances, and adopt best business practices. Success of the joint initiative will be measured on how effectively we can reduce the logistics footprint in the area of operation while increasing weapon system readiness.
The demonstration focuses on the requisition and distribution processes for repair parts for major weapons systems for each of the services. The first component involves installing the instruments to provide real-time asset visibility as repair parts move through the various nodes of the supply chain. The demonstration team determined the major distribution nodes in the CENTCOM area of responsibility that are involved in supplying forces operating in the region. The team then installed automatic identification technology at each of the nodes. The AIT tracks shipments from the source to the ultimate consumer ("factory to foxhole"). It not only tracks containers and pallets but also provides line-item detail for the items in the container.
This level of detail allows commanders to make informed decisions on redirecting shipments to higher-priority missions. It also enables maintenance managers to schedule shop operations more effectively and helps distribution managers predict when and where to position transportation and materiel-handling assets more accurately. Most importantly, this total asset visibility ensures that commanders know when critical weapons systems will return to operational status. They then can incorporate that information into operational plans and orders.
The next step in the process is to integrate AIT with AIS at all levels and nodes in both the supply and distribution chain. To accomplish this, AIT media, such as portable data carriers, must interface with the AIS to ensure that the warfighter does, in fact, have real-time situational awareness. Whether AIT and AIS can interface in a shared data environment depends upon whether we can manage and control data tables across the DoD. In other words, the department needs to control and manage the types of code used so that all systems are accessible by all other systems. To achieve this, the DoD is aggressively pursuing a data management program to identify authoritative sources (or records) for acceptable data codes. The department also is establishing configuration control measures that will make sure all configurations are compatible and can work together.
The second component of the Joint Logistics Warfighting Initiative is the establishment of a Web-based requisitioning system that immediately places supply requirements in an integrated data environment. This integrated data environment will show inventory across all services in the CENTCOM Theater. As Exhibit 5 on the following page shows, the demonstration involves Web-enabling service legacy systems to permit customers to submit requisitions (or "off-site orders") via the Web. The demonstration uses the existing service legacy systems to generate the requisition but immediately places the requirement in a theaterwide shared data environment. Once the requirement is in that shared environment, it can be fulfilled automatically from either an intra-service location (within the same branch of the military) or an inter-service location (by another branch of the military). If the requisition cannot be filled from within the theater, it is passed in real time to the wholesale items manager, who is based in the continental United States. Web-enabling the requisition system also allows all pertinent logistics information concerning the request (such as tracking information from global transportation network or AIT feeds) to be appended to the original request. The commander-in-chief (CINC) staff also can gain access to the inventory information as it creates its operational plans.
[Exhibit 5 ILLUSTRATION OMITTED]
Eliminating the "Sneaker Net"
By using the power of the Web, the DoD is eliminating the current "sneaker net" system, which requires disks to be physically passed (or "walked") from one link in the supply chain to another. The Web-based integrated data environment will allow all parties capable of sourcing an item to see an order or requirement for that item instantly. The services will jointly develop business rules governing how assets within the theater should be redistributed from one service to another. These business rules will then be used to automate the sourcing selection process.
The integrated data environment will fuse together supply and distribution management in real time. When the requisition is generated, the warfighter will receive instantaneous status feedback in the form of a delivery date. This is the truly revolutionary aspect of the transformation of the DoD logistics system. Although eliminating the sneaker net and batch processing will benefit many organizations, the gains for the warfighter are exponential. For the warfighter, using the sneaker net means taking a disk in a secured convoy up to 20 km from the owning unit to the unit supporting supply activity. In addition to the inherent dangers of operating a sneaker net in times of war, the time delay from when a maintenance failure is detected to getting the need recognized in an automated system can be upwards of 24 hours. This translates into weapon systems downtime and potential impact on operational plans.
The second major benefit of the Web environment is the elimination of bandwidth-consuming batch processes. When the requisition is brought via the sneaker net to the automated system, the requisitions are queued and batched. Units engaged in combat operations therefore have to compete with operational and intelligence requirements for bandwidth on tactical communications. The movement to a Web-based system allows data to be shared and linked as opposed to batched. This gives the warfighter the dual benefit of making requirements known immediately to the provider and linking data sources via queries as opposed to pushing huge chunks of data from one layer to another.
Furthermore, when the warfighter is confident that what is needed will be available in the correct quantities and locations, the logistical footprint in the theater will be significantly reduced. The Web-based integrated data environment will eliminate the need to maintain stockpiles of supplies for each service tucked up close to the combatant commanders. In some instances, this would allow operations to be sustained from the continental United States or from an intermediate staging base. Finally, integrated data will allow the joint task force commander to fuse logistical information with operational plans. As plans are developed, logisticians can position supplies, forces, and equipment when and where they can best support the joint operation--truly transforming the operation to a distribution based system.
As the CENTCOM demonstration shows, the DoD has begun to use information age technology to ensure that the right product is in the right place at the right time. This technology also will allow us to build in the flexibility needed to support the uncertainty of combat operations in today's post-Cold War era. To ensure that this technology is successfully implemented, we are changing not only our information technology but also our metrics, our processes, and methods. The soldiers, sailors, marines, and airmen of the United States have always received the world's best support. Through the logistics transformation initiative, the Department of Defense is committed to ensuring that this support continues to be the best in the world.
Lt. Gen. John M. McDuffie, U.S. Army, is the director for logistics, Joint Staff, Pentagon, Washington, D.C. Col. ScottWest is the chief of the Sustainment, Mobilization and Plans Division, Joint Staff, the Pentagon. Col. John Welsh and Lt. Col. H. Brent Baker are both logistics staff officers on the Joint Staff, the Pentagon.
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|Author:||McDuffie, John M.; West, Scott; Welsh, John; Baker, H. Brent|
|Publication:||Supply Chain Management Review|
|Date:||May 1, 2001|
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