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Defense Acquisition University
Reforming Defense Logistics
Written by: Dee Reardon
August 28, 2018
Reforming the Department’s logistics functions is a Herculean effort. Roughly larger than the combined operating expenses of Walmart and UPS, defense logistics represents a quarter of the Department’s budget, while sustaining nearly $1 trillion in materiel assets at 50,000 customer locations around the world. With a military and civilian workforce almost a million strong, logistics is both a frontline war-fighting function and a back office business function, comprising such diverse activities as airdropping rations to frontline troops, mathematical modeling to set inventory levels, overhauling tank engines, and transporting Service members’ household goods.
To meet the Secretary of Defense’s top priority of rebuilding military readiness to ensure a more lethal Joint Force, the Deputy Secretary appointed leaders in nine functional areas to reform the Department’s business practices for greater performance and affordability. The Supply Chain and Logistics Reform Team is one of these teams and the one most directly aligned to improved warfighting readiness via sustainment of weapon systems. Since weapon system readiness and sustainment spending are positively correlated, increasing the former and decreasing the latter might appear to be mutually exclusive. Rather than turning off support to its customers to deliver immediate savings, the Logistics Reform Team (or LRT) is focused on functional process updates that will improve readiness, enhance sustainment, and maximize buying power. Further, the team advocates for reinvesting any savings into sustainment and additional reforms in order to “compound” the readiness gains.
The LRT has consistently taken a transparent, collaborative approach by engaging the senior logistics commanders and staffs, placing Service liaisons on the LRT, and holding executive meetings on a monthly basis. The team developed a portfolio of initiatives around four key themes: standardizing processes and reducing duplication, establishing single process owners and governance structures, leveraging data and data interoperability, and adopting well-aligned and authoritative performance measures. Each initiative was then prioritized by assessing it against projected impact on readiness, projected return on investment, and ease of implementation, in order to deliver on the desire to make improvements rapidly.
Knowing that enterprise-wide metrics enable better resource decision making and allow leaders to drive improved readiness, the LRT made this its top priority. In concert with the Assistant Secretary of Defense for Logistics and Materiel Readiness, the team is developing materiel availability, cost per day of availability, and other outcome, diagnostic/prognostic, and performance/productivity measures in order to achieve required operational plan materiel availability at the lowest cost.
With 72% of a system’s life cycle cost occurring in the sustainment phase, acquisition decisions made today will make or break the Department’s future solvency. With this in mind, the LRT is pursuing several initiatives to define sustainment outcomes and “bake them in” to acquisition processes. Examples are including sustainment key performance parameters in contracts and ensuring organic sustainment sources are considered prior to contracting logistics support for the life of a weapon system.
Process improvements drive increased productivity and thereby readiness. Maintenance work packages and bills of material serve as the “shopping list” for the supply community. Improving the currency and accuracy of these processes will generate improvements across the enterprise, such as reduced stockouts/backorders, reduced excess inventory, and reduced transportation expense. Likewise, recognizing that some repair parts are “unforecastable” due to sporadic and/or highly variable demand patterns, the LRT is exploring alternative methods to set inventory levels for these parts to ensure they are available when needed. Finally, to optimize the Department’s inventory investments, the LRT is seeking to improve mechanisms to identify true readiness drivers of repair parts and recommend approaches to shift investments from non-readiness drivers to readiness drivers.
In addition, several initiatives serve as enablers to make work easier. The munitions readiness initiative will deliver enterprise visibility of munitions stocks, provide real time data-driven health and readiness metrics, and measure decision impacts and the subsequent cascading order of effects on readiness. This will improve DoD’s ability to meet operational plan requirements and evaluate alternatives, substitutions, trade-offs, costs, replenishment timelines and storage requirements, all with an eye toward improved lethality, the Secretary of Defense’s number one of three priorities.
After demonstrating the benefits of each initiative through ongoing proofs of concept, the LRT will seek to institutionalize them across the enterprise and establish enduring governance and oversight, as well as performance and productivity metrics to ensure the improved processes remain in tolerance.
Although wars are not won solely by logistics, many have been lost by a lack thereof. It is incumbent upon the Department’s logisticians to stretch taxpayer dollars to maximize weapon system sustainment and thereby warfighting capability at the lowest possible cost. Through unwavering commitment and collaboration, the LRT is focused on maintaining the best warfighting machine on the face of the Earth.
Ms. Dee Reardon is the Deputy Assistant Secretary of Defense for Logistics and the Department of Defense Reform Leader for Supply Chain and Logistics.