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Military pinstripes: all hoopla aside, the Armed Forces are getting serious about learning from business.

When Maj. Gen. Ross Thompson arrived at the Army's Tank-Auto-motive and Armaments Command in 2001, he didn't like what he found. The organization, responsible for procuring and maintaining most of the equipment that soldiers use on a daily basis, fit the stereotype of a bloated military bureaucracy, like something out of M*A*S*H or Catch-22. "They weren't pushing the envelope," says Thompson. "I'd ask, 'Why is that there?' and I'd get the answer, 'We don't know. It's been there awhile.'"

Instead of issuing orders and chewing out his subordinates, however, Thompson consulted business reviews and hired management experts from the corporate world. A young reservist on temporary duty at a depot in Red River, Ark., that overhauls vehicles happened to work as an industrial engineer in his civilian job; he recommended to Thompson some lean manufacturing techniques that might reduce waste and make the depot more efficient. Thompson was all for it. He hired lean-manufacturing consultants such as VSE and Simpler Consulting, and he encouraged his subordinates to enroll in Six Sigma management training, setting an example by undergoing the training himself. When he completes the "black belt" course later this year, Thompson will be the most senior military official ever to have eamed Six Sigma stripes.

For years, the military has paid lip service to corporate management theories, outsourcing small amounts of work to the private sector, trying to focus units on their "core competencies," sending officers to seminars at the stock exchanges or other money-making enterprises. But the prevailing wisdom has insisted it was business that needed to take a page from the military, not the other way around. Dozens of military manuals, promising the secrets to successful operation, have been reprinted for general consumption. Such 2004 titles as Leadership the Army Way and Operation Excellence: Succeeding in Business and Life the U.S. Military Way are just a few of the dozens of management theory books lining the business shelves of most bookstores (see box, facing page).


But the intellectual tide seems to be reversing: The U.S. military has begun streamlining its operations the corporate way. A few major units are implementing reforms that are breaking down hidebound bureaucracies for the first time in decades. In the Second Gulf War, the Air Force employed a "reachback" concept that allowed on-site commanders to tap into intelligence and logistics experts back in the U.S.--a kind of reverse offshoring that reduced the number of troops in the war zone requiring housing, food and protection. The Navy is experimenting with programs that would centralize certain specialties, such as weather and oceanography, at the fleet level, instead of having experts in those fields on every ship. And the Army says it is saving hundreds of millions of dollars by adopting modern industrial techniques. "A lot of people in the commercial sector are surprised we're into this," says Gen. Paul Kern, commander of Army Materiel Command, or AMC, which oversees the tank and armaments group, among others. "People really are looking for more efficient ways to get the work done."

Despite these similarities to the corporate world, the military remains a unique institution driven by motives other than profit, and therefore faces its own challenges. For one thing, money saved is sometimes simply stripped out of a unit's budget and allocated to another aspect of military spending (with no shareholders to weigh in). Leadership that turns over every two to three years can make it difficult to institutionalize corporate practices. And in combat units, where lives are on the line, redundancy is often preferable to efficiency. "It's hard to walk into a tactical organization in the Army and say, 'Let's talk about Six Sigma,'" says Kern, "especially when the whole Army is fighting."


Parts of the military, however, have found that today's rigorous national security demands leave them no choice but to do more with less. In the Army, for instance, more soldiers are currently deployed overseas--in Iraq, Afghanistan, the Balkans and elsewhere--than at any time since the cold war. Operational expenses are so high that the Army was forced to cancel procurement of the Comanche, a stealth helicopter that would have been far more immune to ground fire than the Apaches that got shot down last year in Iraq. And the equipment that all those deployed troops are using, much of it more than a decade old, is wearing out at record rates.


That means it is imperative for Army Materiel Command--whose $26 billion budget makes it the military equivalent of a Fortune 100 company--to turn around its equipment overhauls more quickly and return some money to the Army's coffers. To accomplish that, AMC has instituted dozens of reforms at all levels of the organization. Employees at a depot in Corpus Christi, Tex., where the Army overhauls helicopters, work alongside technicians from engine-maker General Electric; about three years ago they started going through GE's Six Sigma quality training, one of the nation's benchmark programs. AMC says its turnaround time for recapitalizing a Black Hawk helicopter has dropped from a full year to 150 days. At Red River, workers have doubled productivity, refurbishing eight truck engines per day, instead of four. And Kern, a devotee of Lean Thinking by James Womack and Daniel Jones, says cutting out waste has allowed him to reduce his headquarters staff from about 1,200 to 900--with better results. When Kern sends out "taskers," or questions for the staff, responses now almost always arrive in less than a week, compared with 60 days or longer in the past.

Putting several hundred staffers through Six Sigma and other kinds of training has cost the Army about $70 million, says Paul Chiodo, an Army quality expert who is a "master black belt," the highest Six Sigma qualification. He predicts the training will save about $2.2 billion over 140 different projects. Kern hopes to transfer about 60 percent of the savings back to the Army and invest the rest back into AMC. Since AMC's industrial operations are designed to break even, the savings can be used to build more track for tanks or reduce the time it takes to add armor to a Humvee, a current high-priority job given the security problems in Iraq.

Some corporate executives see the Armed Forces as a prime target for such streamlining. "The military has some real structural advantages," says Dayton Ogden, chairman of Spencer Stuart & Associates, a Stamford, Conn., executive search firm. The military is global by nature, he notes, which gives its personnel worldwide exposure. Officers take on leadership responsibilities at a younger age than they would in Corporate America. Tours of duty that last just one to two years provide a wide breadth of experience in a short span of time. "If you combine some of those natural advantages with the best corporate practices, I would think there'd be real chance for improvement," says Ogden, who served three years in the Navy in the 1960s, including a tour in Vietnam.

Battling Decades of Bureaucracy

But like many companies, the Army hasn't completely figured out how to quantify the savings. "We don't have a great way to show the results I would like," admits Kern. He has even asked the Army's inspector general--usually as welcome as an IRS agent--to audit his command's financial performance. In Iraq, attacks on contractors hired by the military to provide security have raised new questions about the degree to which outsourcing is appropriate. And some corporate executives who deal with the Army say that from the outside, efficiency gains seem marginal. "They're trying to do better, but the bureaucracy is slow to react compared to the corporate world," says John G. Meyer, a retired two-star general and CEO of Allied Defense, a $170 million firm in Vicnna, Va., that provides ammunition, battlefield simulators and other equipment to the Defense Department. "There are too many layers of decision makers."

One solution the Army is planning is to hire the survey firm J.D. Power and Associates to measure soldiers' satisfaction with various pieces of equipment and identify areas that need the most work. The idea is to get soldiers' input back into the system in a quantifiable way that the Army can act upon. "Because of the way our tactics have shifted," suggests Chiodo, "maybe our product line should be more varied."

In addition to modeling itself after corporate trendsetters like GE, Lockheed Martin and 3M, the Army also has looked around its own neighborhood and borrowed business lessons already adopted by the Air Force. In 2000, the logistics center at Robins Air Force Base in Georgia began implementing kaizen techniques, named after the "continuous improvement" philosophy of Japanese carmaker Toyota. By taking simple steps such as consolidating related tasks on a single assembly line, instead of forcing workers to leave their stations to get a part or a tool, the center reduced overtime on the C-5 cargo jet program by 45 percent.

The Air Force quickly expanded those manufacturing principles to other programs. The Air Force Material Command at Wright Patterson Air Force Base in Dayton, Ohio, began studying more efficient ways to stockpile spare parts for cargo and fighter aircraft. That challenged longstanding practices designed to prevent critical shortages in wartime. "The services never want to go to the cupboard and find it empty," says Donald Pilling, a retired four-star admiral and president and CEO of the Logistics Management Institute, a $100 million nonprofit consultancy in McLean, Va., that helps improve management at public-sector enterprises.

The Air Force is assessing new software programs that help analyze the usage rates of engines and other components and predict when they will need to be repaired or replaced. The risk of a surprise failure, without parts on hand, is slightly higher, but the streamlining would allow the Air Force to slash inventory of costly spares and rely on just-in-time delivery. "It's as close to commercial practice as possible," says Pilling.

The Air Force also has taken advantage of improvements in bandwidth and other communications capabilities to distribute its operations more efficiently. In 2003, when the Air Force deployed troops to the Persian Gulf for the war in Iraq, several hundred intelligence specialists and other staffers who ordinarily would have shipped out instead logged into the war from their home bases, via satellite. It takes about 60 troops to operate and maintain each unmanned Predator reconnaissance plane, for instance. But about two dozen of those crew members don't need to be near the plane, so they were able to stay put in the U.S.

The process worked this way: Once a ground crew launched a Predator, it was typically "flown" remotely by a pilot back in the U.S. Then intelligence experts, also back home, scoured Predator video and other imagery for targets; they would phone or email their findings to the air operations in Saudi Arabia.

In the business world, spreading operations around allows corporations to take advantage of low-cost labor and establish a presence in markets where they plan to do business. In the military, the payoffs are different. In addition to reducing the U.S. "footprint" in the war zone--especially critical in regions sensitive to having American troops on their soil--it allows the military to go a little easier on troops who are routinely yanked away from their families. "At the end of the duty day." says Col. Charlie Lyon, who commanded the unit responsible for the Predators during the war, "you walk out of the deployment and back into the rest of life in America."

Other troops, no doubt, wish going to war were that easy. But not all the services have been streamlining as aggressively. Last year, during the war in Iraq, the Air Force deployed just one weather officer to the theater, with many others on call back in the States. The Navy deployed 45--one per ship, plus several more at the staff level. The Navy is now trying to follow the Air Force model, but a few of its weather experts have complained that a leaner organization would leave fewer opportunities for promotion--precisely the kind of bureaucratic resistance reformers complain about. Clearly, there is a great deal left to be done.
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Title Annotation:The Business of War
Author:Newman, Rick
Publication:Chief Executive (U.S.)
Geographic Code:1USA
Date:Jun 1, 2004
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