CREATING A MILITARY SUPPLY CHAIN MANAGEMENT MODEL

Military logistics and commercial logistics are parts of the same industry. Both are
concerned with focused logistics, precision and velocity, coordinated delivery schedules, fast and flexible distribution, and good infrastructure and equipment at distribution centers. In realizing the Department of Defense's D!D's" #oint $ision %&'&, (ey distribution measures may be needed that extend beyond what the military services, or the entire public sector, can achieve. )he military supply chain management system should loo( at the experience and expertise of the private sector. *hen the Deputy +nder ,ecretary of Defense for -ogistics, .oger /alloc(, was interviewed by the 0ournal Transportation and Distribution in '111, he stated that his vision was to deliver any cargo, anytime and anywhere, in 2 days or less. 3e stressed three (ey requirements for achieving this goal4 information5driven logistics, a fully integrated system, and customer5focused logistics. )hese also are of utmost importance to logisticians in industry. By %&&2, the Department of Defense has a goal of '&& percent asset visibility, which means the military will need fully integrated cargo trac(ing and information systems. Integrating the military's logistics experience with private5sector logistics expertise can help meet the challenges set forth for %&&2. )he #oint $ision for military logistics calls for a military supply chain management model, in which readiness means realizing optimal procurement, supply, maintenance, and distribution times. 6ilitary supply chain management integrates the business practices used in the commercial sector with the strengths of military readiness and global visibility.
Military and Commercial Parallels

6ilitary and commercial readiness can be defined as the optimization of available resources to operate in a possible unforeseen event. In this sense, readiness can be viewed as situational management of an event. )ime, cost, and quality are still crucial to measuring situational logistics management. 7 thorough assessment of supplies, resources, and manpower would need to be matched with the needs of the unforeseen event under surge circumstances. 8ustomer wait time measures the time needed to deliver an item to the customer's door, including the time a component may spend in maintenance. Door5to5door delivery times can be measured for other situational logistics scenarios. )a(e, for instance, the hypothetical release of a biological weapon such as 7nthrax in the subways of 9ew :or( 8ity, or the crash of a busload of tourists on a congested -os

7ngeles freeway that results in critical in0uries. )hese scenarios are not very different from a wartime surge scenario requiring logistics management. *hether it is for a military or commercial surge scenario, carefully planned situational logistics and effective supply chain management can get the supplies to the people in need in an emergency. Both of these hypothetical scenarios involve fundamental logistics processes, such as quic(ly exchanging information, identifying available supply resources, and delivering supplies. ,uch scenarios call for an integrated plan involving military, governmental, and commercial services.
Military S !!ly C"ain Mana#ement Model

!perations Desert ,hield and #oint ;ndeavor allowed the military to show the 9ation a new logistics challenge for conducting surge operations. *hether for deployment or other emergency situations such as natural disasters, the 9ation has to be equipped with the best readiness resources. )o do so requires the achievement of the following common national goals. Standardization of commercial and military logistics metrics and equipment. ;stablishing standardized procedures and data that are either adaptable or resistant to further technological change is a necessary step for military supply chain management. *hen military cargo is to be handled by commercial and military logistics providers, common data and equipment for trac(ing intransit cargo visibility become necessary for pac(ing, identifying, shipping, and trac(ing shipments to the customer's door. Real-time stockage information. It is important to have the most current supply status. ,tatus information is needed to improve the military's maintenance readiness and to integrate information about procurement actions and required repair parts, so there is no need to rely on equipment carcasses for spare parts. Minimal customer wait time. 7chieving optimal procurement, supply, maintenance, and distribution times is fundamental to creating an efficient supply chain management system. #ust5in5time deliveries and lean manufacturing strategies have become popular with private industry because components can be costly and the value of finished products can drop overnight. 3igh5tech manufacturers have made it possible for companies to operate with little or no inventory. Internet auction portal sites have offered help in trac(ing down required parts. 3owever, the long5term success of these portals is uncertain because they cater mainly to larger companies. In industry, the safety stoc( level commonly is set at twice the standard deviation of the demand, given a certain lead time. *ith million5dollar component parts and lac( of carcasses to replenish the inventory, stoc(ing the inventory at twice the standard

deviation may not be a realistic goal for the military. <or repair and maintenance operations, it is not realistic to rely solely on maintenance operations overseas. )here are not enough carcasses to replace component parts in warehouses outside the continental +nited ,tates !8!9+,". )he price of military components is so high that forward stoc(ing all the possible parts needed would not be realistic either. *hat may benefit the military is the use of technology to signal when supplies from authorized stoc(age lists reach a low point so that flights can deliver the parts reliably to forward support activities. ,urge channels must be set up to ta(e advantage of factories at 8!9+, locations or intermediate staging bases. In transportation and distribution, private industry operates on scheduled deliveries, because having shipments arriving according to a schedule permits maintenance of lower inventories. <or surface deliveries, giving truc(ing companies more lead time by forwarding the shipping schedules from the suppliers eases their wor( load. <or air cargo deliveries, the military may consider forward stoc(ing heavy, voluminous cargo during the months of #anuary and <ebruary and pre5positioning them in warehouses to cut annual transportation costs for sustainable operations= this is because #anuary and <ebruary are months of low air cargo volume, and small pac(age carriers frequently can offer lower rates during those % months. )he 7utomated 6anifest ,ystem can help speed the last leg of delivery to the customer's door. )hat final leg of the supply chain system has been the most difficult bottlenec( to resolve because customers do not operate on a definite time system for receiving cargo. .eliability>a guaranteed level of service>is still (ey for customers in the logistics industry.
Com$inin# Military and Commercial Stren#t"s

7s the national infrastructure networ(s and ports become stressed by capacity constraints, logistics companies are relying more on intelligent distribution methods such as the Internet. $irtual service providers allow large corporations to exchange supply information among globally situated retail locations. ,ince economy of scale is the driving force in commercial industries, the larger the conglomerate, the better the business. *hen businesses are located all over the globe and information acts as another mode of transportation in logistics, technology becomes increasingly important for daily operations. ,ome logistics providers have become information management firms. *ith the adoption of the Internet for electronic commerce, customers have come to expect ready access to real5time inventory procurement, ordering, and trac(ing. )he Information .evolution is leading the changes in supply

chain distribution and fulfillment patterns. ;5commerce, e5procurement, e5retailing, and virtual warehousing concepts are changing the relationships between suppliers and distributors, altering the implications for freight movement patterns, and>since the Internet offers accessibility from any location>redefining the relative location of the wor(place. .eal5time access to business data on potential customers and suppliers provides managers with dynamic inventory control and immediate vehicle dispatching capabilities for freight delivery systems. ;ach military installation can be conceived of as a decentralized retail center that can be connected to a centralized hub or a ma0or distribution center that can distribute supplies. If end items are in need of repair parts, the technology is available to signal low stoc(age at a 8!9+, or !8!9+, location for that particular repair part so it can be reordered instead of waiting for carcasses. )ransportation delivery systems are fairly reliable and are not the ma0or bottlenec(s to getting the necessary parts to the soldier in the field. <inding the manufacturer who can ma(e component parts to order and connecting that manufacturer with the direct support operations may be the next logical step in military logistics. In private sector logistics, direct coordination of retailers, suppliers, and transporters using technology such as the Internet has enabled retailers to fill empty shelves more quic(ly because such a system helps the respective parties predict each other's needs. <or the military, an Internet5based system connecting installations would require that all of the installations share information with military procurement, supply, and transportation offices. )he usefulness of technology such as the Internet during wartime is debated among military logisticians. 3owever, technology such as the Internet was created with wartime scenarios in mind, and, according to Bill -ucas of the 6ilitary )raffic 6anagement 8ommand, the Internet5based ?lobal )ransportation 9etwor( had @,&&& hits per day during the /osovo air war. -ac( of spare parts is not necessarily the ma0or hindrance to efficient military logistics. 3aving the spare part where it is needed is the (ey area for logistics improvement. During !peration Desert ,torm, A%.B billion worth of spare parts went unused, according to a '11% ?eneral 7ccounting !ffice report. It is estimated that, if the 7rmy had had an effective cargo5trac(ing method during the ?ulf *ar, D!D could have saved about A% billion. 7s a result of the ?ulf *ar experience, automatic identification technology and intransit visibility systems have been established by D!D as mechanisms that will save the military money in the long term. <or military surface distribution, the idea of having coordinated, scheduled truc(

deliveries at installations is not very different from the type of coordination that occurs between the retailers and the supply chain management system. During the ?ulf *ar, there also was a lac( of equipment needed for deployment, and the ports of embar(ation and debar(ation were overcrowded with supplies that had to be processed and moved to direct support locations. 7lthough military manpower has been reduced since then, capital investments in technology have helped expedite deployment operations as seen in increases in the speed of loading cargo onto vessels at 8!9+, ports". )he paybac( for the investments made may be realized when a faster and more accurate defense transportation system is in operation.
% t re Directions

)here are four areas of growth in commercial logistics that also may be relevant to military logistics in the future. Inventory reduction. ,toc(s in warehouses will be (ept at a minimum through continuous resource reduction, supplies (ept Con wheels,C inventories managed directly by vendors, component parts made to order, and distribution based on one5 touch, Internet5type information exchange. Increased reliance on technology. )he paperless cargo manifest is a good example of how technology can speed cargo delivery for an interrelated supply chain. 8argo can be transported only as quic(ly as the accompanying bill of lading and other necessary paperwor(. In that sense, electronic data interchange ;DI" offers electronic customs clearance, real5time information exchange, and more lead time for scheduled pic(ups of cargo. 7n automated system lin(ing retailers to manufacturers can flag replenishment needs so reorders can be shipped directly from the manufacturers' distribution centers. Strategic outsourcing& !utsourcing some services to specialized service providers may wor( well when there is a change in manpower, when logistics providers merge, when operations are consolidated, or when it is desirable to tailor services to the individual needs of customers. If the military is to outsource some of its supply chain management operations, total visibility from order placement to distribution destinations will be essential. )he first step in determining what part of military logistics operations to outsource may be determined by customer demands. 8ustomer needs should be the number one variable for creating the military supply chain management system and ma(ing asset investment decisions. 7fter all, without the customers who create demands, there is no need for a supply chain management system. !ver time, accounting for the changing

needs of customers and devising a mechanism for the <ederal agencies that also are logistics users to share that information will lead to the best expenditure of appropriated funds. Joint use of pu lic assets. 7s trade and transportation become more global and seamless, 0oint use of infrastructure and equipment>whether they belong to the military or other branches of the ?overnment>may serve as cost5cutting measures. ,ome of the 9ation's highways already are designated as corridors of national significance by 8ongress to serve national security purposes as well as everyday mobility needs. 6ore conversions of military airbases to all5cargo airports and of naval bases to commercial use may be warranted since there is commercial demand for using the airbases and seaports. !se of commercial rates for frequently traveled routes. 8argo deliveries that use frequently traveled routes cost less and can have shorter delivery times. 7n example of frequently traveled routes for the military are the routes between 8!9+, and ;urope or 7sia. ,tates that consume the most imported products serve as natural gateways for trade. 7s long as a particular state is a ma0or consumer of imported cargo, that state will always retain business at the port of entry. )he logistics industry is investing in southeastern states such as <lorida, 7labama, and ?eorgia to prepare for a forecasted increase in manufactured items imported from -atin 7merica. )hese are some ideas from commercial sector logistics that are relevant to the needs of the military supply chain management system. )o achieve the goals of #oint $ision %&'&, the military must loo( beyond the conventional practices to manage innovation and change. Kristine Lee Leiphart, Ph.D., works on logistics, transportation, and land use issues at the RAND Corporation in Santa onica, Cali!ornia. She is certi!ied in transportation logistics "anage"ent and holds the pro!essional designation o! #lobal Logistics Specialist.