Logical Logistics

THINKING AHEAD

Logical Logistics

Logistics is the business of getting the right tools to the right people at the right time. Jacques S. Gansler, undersecretary of Defense for acquisition, technology and logistics, testified in March before a Senate Armed Services Committee panel on the Defense Department's efforts to improve its logistics operations.

On private-sector logistics models:
U.S. industry moved to a customer-focused logistics model during the late 1980s and early 1990s. This move enabled world-class firms to reduce logistics costs by 40 percent while improving customer service, and thus exploit logistics services as a competitive advantage. Those world-class firms achieved those dramatic results by concentrating on three strategic elements: First, segmentation of their logistics infrastructure and processes to focus on the specific requirements of customer market segments. Second, integration of their logistics chains through contemporary information systems so that all suppliers, partners and distributors could optimize performance to customer requirements. Third, strategic partnerships based on comparative advantage so that all participants in the logistics chain contributed based upon what they were really good at.

On improvements in DoD logistics:
Since 1997, we have reduced average logistics response time by 50 percent, reduced secondary item inventory by $12 billion, and increased in-storage asset visibility to 94 percent. We made these improvements while supporting one of the highest operational tempos for the department since World War II.

On continuing logistics problems:
Today, we can pick, pack and ship from our distribution depots within four hours of receiving a requisition. Unfortunately, the item may then be handed off to our transportation system, where it may sit waiting for a full load, regardless of priority. This delay is driven by "operational efficiencies" within our transportation system (why fly a half-full plane?) vs. the use of pre-scheduled routes (such as FedEx). Because our maintenance depots are driven by direct-labor hour efficiency, we defer induction of a particular item until we have enough of them to justify a production run. This apparent efficiency totally ignores whether the item is desperately needed by our warfighters, whether the item is redlining a major weapons system, or whether the item is going back to a supply depot. Likewise, our contracts for maintenance support often include only a generalized specification for delivery of repaired items, e.g., 90 or 120 days.

On the primary objectives of logistics improvements:
We developed a logistics strategic plan that, for the first time, was developed by the department's senior logisticians and focused on departmentwide performance. This year's plan is concise and focused on six strategic objectives. They are: optimize support to the warfighter, meet mobilization/deployment requirements of the national defense strategy, implement customer wait time as the logistics metric, achieve comprehensive joint total asset visibility, modernize logistics information systems and processes, and reduce logistics costs.

On becoming customer focused:
We are adopting a simplified priority ordering system that reflects true customer requirements. Today, across our supply and transportation systems we have up to 15 different priority codes that, quite simply, confound the delivery process and create unnecessary work and delays. This effort will include movement to a time-definite delivery standard and accurate asset visibility across the entire pipeline. We are committed to completing this transition by the end of [fiscal 2004].

On why improving logistics is important:
Our efforts to move to a more responsive, customer-focused system are driven by operational needs and supported by rigorous and prudent analyses. This transformation will be enabled by timely modernization of our logistics information systems to provide secure, seamless information and management consistent with warfighter needs.