REVOLUTION IN MILITARY LOGISTICS

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• REVOLUTION IN MILITARY LOGISTICS
• A STUDY OF SUPPLY-CHAIN MANAGEMENT
• Jonathan Darr
• Steven Sattinger

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Outline

• Supply Chain Management
• Evolution
• Principles
• Imperatives
• Revolution in Military Logistics
• Strategy System Analysis
• Lessons Learned
• Advantages
• Disadvantages

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Just-In-Time

• Developed by Taiichi Ohno (Toyota)
• Reduce inventory and other non-value added
  operations
• Improve QC through small lot size
• Kanban System/Flexible Manufacturing

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The Kanban System
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From JIT to Supply-Chain Management

• Kanban system manufacturing
• What if
• Outsource parts production?
• Retail/Service Industry?

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Supply Chain Management

• The coordinated flow of materials and products
  across the enterprise and with ones trading
  partners

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Principles(1 of 2)

• Formulate a differentiated supply chain strategy
  by channel
• Organize business units around major processes or
  channels, not functions
• Work collaboratively with customers, suppliers,
  trading partners, and 3rd parties
• Invest or re-invest in information technologies

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Principles(2 of 2)

• Invest in supply chain knowledge, people, skills,
  and learning
• Operate or manage by product or channel
• Outsource elements of the chain for flexibility,
  higher performance
• Think globallybuild regionallyact locally

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Imperatives(1 of 2)

• Build in flexibility
• Plan and measure accurately
• Develop logistically separate operations
• Get lean (simplicity and speed)
• Optimize information
• Treat customers unequally segment and stratify

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Imperatives(2 of 2)

• Operate globally
• Practice virtuality and collaborative management
• Exploit e-commerce
• Leverage people
• Operationalize new product introductions
• Mass-customize and postpone

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Revolution in Military LogisticsJIT v. JIC

• Purpose produce savings so resources can be
  redirected into weapons systems and improving the
  readiness of the forces
• Efficient business practices and reduced
  overhead not only free up resources, they also
  contribute directly to the transformation of the
  departments support structure . . . The old
  philosophy was the big eat the small. Now, its
  the fast eat the slow. My goal is for the
  Defense Department to be fast and lean. We must
  be competitive.
• - William S. Cohen, Secretary of Defense

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Presidents Quality Award (PQA)

• Strategy and Action Plans
• Customer and market focus
• Organizational level
• System
• Leadership Triad
• Results Triad
• Information and Analysis
• Historical Information
• Predictive Models

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Strategy and Action Plans (1 of 5)

• Infrastructure Reductions
• Consolidation of distribution regions (11
  million)
• Defense Reutilization and Marketing Services and
  Offices (DRMS and DRMO) reductions (35 - 40
  million)
• Human Resources Operations Center (HROC) opened
  at Defense Supply Center Columbus

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Strategy and Action Plans (2 of 5)

• Inventory Reductions
• Wholesale retail inventory reduced 59
• Logistics response times reduced 90
• Distribution workload reduced 20-30
• Saved storage space 70 million cf
• Excess Property
• Eliminate excess where value does not surpass
  cost of ownership

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Strategy and Action Plans(3 of 5)

• Public/Private Competition-A-76
• Office of Management and Budget (OMB) Circular
  A-76 Performance of Commercial Activities
• Began public-private competition for operation of
  distribution depots
• Commercial Practices
• Prime Vendor Programs (21 million)

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Strategy and Action Plans(4 of 5)

• Commercial Practices (contd)
• Corporate Contracts
• Outsourcing
• Energy Management
• Unit Cost Management
• Management Reform Memorandum 10
• Paperfree Contracting
• Single Process Initiative (SPI) (.5 billion)
• Product Verification and Testing Programs (85
  million)
• Smart Cards (10 million)
• IMPAC

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Strategy and Action Plans(5 of 5)

• Wartime Readiness
• Medical Readiness
• Virtual Wartime Visibility
• Purchases information rather than supplies
• Convertible to supply mechanism if needed, as
  contractor supplements supply as needed
• Protecting Interests
• Dispute resolution shift from formal litigation
  to Alternative Dispute Resolution (ADR) and
  mediation.

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System(1 of 3)

• Areas of Focus (3 Rings)
• Information
• Total Product Visibility
• Reporting and tracking
• Logistics and Acquisition
• Dominant Battlespace Logistics
• Focus on systems, not people
• Transportation

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System(2 of 3)

• Leaders and managers must
• Commit to lead systems and people
• Commit to PQA for assessment
• Commit to process and system improvement
• Commit to objectives in the Strategic Plan

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System(3 of 3)

• Results
• Systems and subsystems are mutually supportive
• Customer supplier and stakeholder feedback to
  improve systems and products
• Assessment through competition for PQA

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Information and Analysis

• Links Strategy and System
• Sources of Information
• Historical data
• Previous Conflicts
• Training and Testing
• Training Centers and Product Development
• Predictive models
• Simulation
• Mathematics
• Consumption formulas

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Lessons Learned

• Desert Storm
• JIC logistics success
• Thoughts of the time
• Pre-positioning of resources critical
• Time-distance relationships require push of
  supplies
• Transportation assets are largely insufficient
• Revisionist Position
• Cumbersome and slow logistics (transportation)
  can be replaced with outsourcing
• Wasted resources by planning excessive
  contingencies

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Advantages

• Annual cost savings in operations
• Consolidation and size reduction
• Reduced inventory
• Finite budget
• Saving allows spending elsewhere
• Reduced waste
• Excess reutilization
• Short shelf-life items

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Foreseeable Disadvantages(1 of 2)

• Reliance on accurate data
• Advances in technology brings unknowns into
  equations and models
• Historical data becomes obsolete
• Simulation is not perfect
• Reliance on outsourcing
• Little control over employees
• Higher risk in wartime
• Host nation support is unreliable

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Foreseeable Disadvantages(2 of 2)

• Consequences of failures
• Lives v. money
• JIC no longer seems wasteful
• JIT appears risky
• Redundancy lacking
• Fog of War
• Anticipation imperfect
• Relies on highly accurate reports

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But is it good Supply-Chain Management?
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Summary

• Disadvantages have catastrophic consequences
• Future is uncertain and changing
• Lessons learned call for more infrastructure and
  pre-positioning
• Constraints of finite budget are real

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Conclusion

• Without supplies neither a general nor a soldier
  is good for anything.
• Clearchus of Sparta, 401 B.C.