Logistics transformation: does industry have the answer?

Air Force Journal of Logistics, Spring, 2004 by Keith D. Frede

Introduction

One of the favorite buzz words for the last several years has been the idea of transformation. The term has found its way into every major Department of Defense (DoD) planning document and continues to receive more than its share of air time in virtually every periodical that is even remotely associated with the military.

   Transformation is a process by which the military achieves and
   maintains advantage through changes in operational concepts,
   organizational structure, and/or technologies that significantly
   improve its warfighting capabilities or ability to meet the demands
   of a changing security environment. (1)

This definition gives the reader a basic understanding of the concept. It explains that transformation has a purpose, to achieve advantage. It has a method, change. And it is intended to result in improved warfighting capability. This is the proverbial big picture leaders are often looking for. To put it another way:

   Transformation refers to fundamental change in the way an
   organization achieves its purpose. It means changing the way we
   work, interact, participate, and even think about how we get things
   done. It means bringing new methods and technology to bear, as
   well as changing our processes. (2)

The DoD is seeking new and innovative ways to achieve real transformation to include the possibility of adopting commercial industry best practices.

As one can imagine, the term transformation can have many different meanings, depending on the individual point of view and area of expertise. The logistics transformation initiative, as described in the Focused Logistics Campaign Plan, provides real-time logistics situational awareness; instills warfighter confidence by optimizing logistics business processes, transitioning to a logistics system open architecture that provides interoperable and actionable logistics information; and finally, enhances logistics response to the joint warfighter. (3) In general, defense logistics is a complex combination of support elements designed to provide maximum support to the warfighter. Logistics transformation challenges each logistician to provide new and innovative ways to improve logistics support and transform the current logistics infrastructure into the most efficient support system possible. Commercial industry best practices in the areas of supply support and acquisition may be the key to achieving real and lasting logistics transformation.

Supply Support

Background

For the last several years, commercial industry has sought to improve profitability through effective management of the supply chain.

   There are many reasons for the popularity of the concept. Specific
   drivers may be traced to trends in global sourcing, an emphasis on
   time and quality-based competition, and their respective

   contributions to greater environmental uncertainty. Corporations
   have turned to global sources for their supplies. This globalization
   of supply has forced companies to look for more effective ways to
   coordinate the flow of materials into and out of the company. Key
   to such coordination is an orientation toward closer relationships
   with suppliers. Further, companies, in particular, and supply
   chains, in general, compete more today on the basis of time and
   quality. Getting a defect-free product to the customer faster, more
   reliably than the competition no longer is seen as a competitive
   advantage but simply a requirement to be in the market. Customers
   are demanding products be delivered consistently faster, exactly on
   time, and with no damage. Each of these necessitates closer
   coordination with suppliers and distributors. This global
   orientation and increased performance-based competition, combined
   with rapidly changing technology and economic conditions, all
   contribute to marketplace uncertainty. This uncertainty requires
   greater flexibility on the part of individual companies and supply
   chains, which, in turn, demands more flexibility in supply chain
   relationships. (4)

Additionally:

   ... in an effort to reduce costs associated with managing and
   maintaining large inventories, many companies are seeking to
   improve their stock replenishment turn times. Simply put, large
   inventories tie up company capital/assets, and firms are seeking
   to free up those dollars for other investment opportunities. This
   is especially true in today's competitive market. (5)

Before we can understand the concept of managing the supply chain, known throughout industry as Supply Chain Management (SCM), a quick review of the elements that make up a supply chain is in order (Figure 1).

[FIGURE 1 OMITTED]

   A supply chain is made up of all the manufacturers and suppliers
   who provide the parts that make up a particular product. It includes
   production, storage, and distribution activities that procure
   materials, transform the materials into intermediate and finished
   products, and distribute the finished products to the customer. (6)

   Within the DoD, this definition is further expanded to include the
   return of failed components after use by the customer for rework,
   repair, or remanufacture. The DoD supply system is largely
   depended on its in-house repair process to keep needed parts
   available to the customer. Improving return and repair times of
   these components can positively affect the entire supply chain. (7)