Supply chain management: analyzing industry and air force metrics

Air Force Journal of Logistics, Fall, 2007 by Ross E. Marshall

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Introduction

Change, then, is part and parcel of today's logistics environment. But those who passively accept change instead of managing it often become its victim, losing control and influence over their environment or even losing their jobs, say the experts. Instead, logistics managers should become change leaders who motivate their organizations to seize the opportunities for improvements that change offers. (1)

--Toby B. Gooley

While current Air Force logistics processes have served us well, and provided unparalleled support since the end of the Cold War, the need to significantly reduce costs while improving weapons system availability is essential. Senior Air Force officials have stated that we've reached a point where our current way of doing the supply chain management (SCM) business, and the systems that support the current process, are limited in their ability to significantly improve readiness beyond the current levels. (2) The logistics doctrines, processes, and systems were developed when there was one large known enemy. Our policies, processes, and training were all optimized to support a major global war, not small-scale contingencies across the globe under widely different constraints. (3) Significant change in sustainment support to the warfighter is a key component in the overall transformation efforts and initiatives being pursued by the Air Force. It is estimated that the overhaul of the SCM system will take 7 years to fully implement. (4) Initially, the overarching goals of the Air Force transformation effort were to improve aircraft systems availability by 20 percent with 0 percent real growth in operating and supporting costs. (5) The goal was later modified, maintaining a 20 percent improvement in weapons system availability with a decrease of 10 percent in operating and supporting costs. (6)

There are several purposes of this article. The first, is to examine SCM processes used within the Air Force and private industry. This is important because a key purpose of the supply chain transformation initiative is for Department of Defense (DoD) logisticians to adopt commercial business practices in an effort to maintain their competitive edge in the rapidly changing global security arena. (7) A brief discussion of Air Force SCM processes will be presented, as well as industry methodologies for managing the supply chain in the private sector. The second purpose is to analyze and assess the usefulness of the metrics and measurements being used, again both within the private sector and the Air Force. These metrics will then be compared to see whether there is a correlation between the two methodologies, and recommendations made as to whether or not the right metrics are being looked at to assess SCM success within the Air Force. It is important for the DoD to have effective SCM because of its impact on military readiness and operations, and the substantial investment in inventory. While the DoD maintains military forces with unparalleled capabilities, timely supply support is critical to sustain them. Since 1990, the DoD's SCM processes have been on the Government Accountability Office's (GAO) list of high-risk areas needing urgent attention and fundamental transformation. (8)

The research methodology will be primarily a review of the existing writings by experts in the field of logistics and SCM, both in government and industry. Also, input from existing Air Force supply chain managers will be used. While it is recognized that each of the Services has slightly different approaches to SCM, the scope of this project (principally the government methodologies and recommendations) will be limited primarily to the Air Force.

Regarding performance measures, there have been several long standing discussions within the Air Force regarding how to measure the effectiveness of SCM. This article will discuss some of those methods. Recommendations will be made suggesting the use of specific metrics which will enhance the supply chain manager's ability to meet Air Force goals and more effectively manage the supply chain business.

Supply Chain Management

Whether push or pull, our current logistics are reactive. At best, unless we embrace a new paradigm, we will still be depending on the warfighters to tell the logisticians what they need, then trying to supply it as fast as they can. This amounts to an industrial age vendor struggling to satisfy an information age customer. Reactive logistics--the old logistics--will never be able to keep up with warfare as we know it. (9)

--The Honorable Michael Wynne,

Secretary of the Air Force

SCM transformation is among the top initiatives for government and the private sector alike. The ultimate objective is an integrated supply chain which perfectly synchronizes supply and demand, so that the rate of supply matches the rate of demand along the entire supply chain. (10) While the principle sounds simple, actual implementation is very difficult. In fact, few businesses feel they really have control over their supply chains and the challenges to optimize such are substantial. (11)