Supply Chain Integration: Opportunities for the US Department of Defense

Operation Enduring Freedom

Here is an immutable Law of Nature: All beings, forces and things in the universe are interconnected.

It follows, then, that all actions, processes, and activities that take place within and around a business entity effect each other through a vast web of inter-connectivity.

Whether we accept that principle or not, or whether we choose to ignore it or not, it is always in place. That same Truth applies to private sector commercial activities, the administration of public sector entities, not-for-profit organizations, health and wellness industries, ecological webs, and indeed any natural activity that one can imagine. It is “cause-and-effect.” It is “karma.”

For decades, Supply Chain Professionals have promoted the value of maintaining a holistic perspective of business processes. Toiling within the supply chain, practitioners have a unique and advantageous perspective on commercial activity. If we are open-minded (and SCM professionals cannot afford not to be open-minded) we can easily see how one activity impacts many others.

Indeed, that is why we call ourselves “supply chain” practitioners and “logistics” professionals. Our very titles imply the relationships inherent in the chain, and the logical progression of cause-and-effect.

We seek to knock down functional “silos.” We teach concepts such as Sales and Operations Planning (S&OP) to find equilibrium between demand and supply activities. We cross-train employees to increase their appreciation for other jobs and responsibilities. We embrace the notion of Total Quality.

Integrating the US Department of Defense Supply Chain:

An excellent study that illustrates the importance of integrating the supply chain has been prepared by The Rand Corporation, called Integrating the Department of Defense Supply Chain. At 140 pages, it is rigorous, and challenges its readers to devote some energy to its consumption. Nevertheless, I highly recommend it to any manager or executive who seeks to enhance their understanding of the concept.

Fortunately, there is an abstract (see below), and summaries of key findings and recommendations, that will help the casual reader get the flavor of the effort. The e-book (PDF) is free and easy to download. A print copy is available to order for a small charge.

I am especially drawn to two case studies that are presented: one examines centralization of theater inventory, focusing first on optimizing the trade-offs among inventory, transportation and materials handling to minimize total supply chain costs, and second by focusing on minimizing each of these costs independently. The second case study examines what happens through the entire supply chain when a well-meaning decision is made independently to change transportation modes in order to reduce costs.

From the abstract:

The Department of Defense (DoD) sustainment supply chain community has increased performance and harvested significant efficiencies through process improvement activities and the rationalization of common activities. However, the majority of strides have been made within functions and processes. The authors build a case that opportunities remain for improvement through end-to-end supply chain integration — spanning all DoD organizations and its suppliers — of processes jointly affecting total supply chain costs and performance. They define supply chain integration, provide illustrative evidence of DoD supply chain integration shortfalls, and describe why such shortfalls exist. They then provide a framework for an integrated DoD supply chain, associated recommendations for DoD supply chain policy, and a framework for developing management practices that drive people to take actions that lead to supply chain integration. In the course of the project, the Office of the Secretary of Defense adopted many of the policy recommendations put forth in this volume; these changes are described in this report. Building on all of this, the authors turn to potential opportunities to further improve DoD supply chain efficiency and performance, several of which DoD supply chain organizations have already begun pursuing as mentioned in the report. These opportunities also provide further indication that there is room to improve supply chain integration.

(Read more here…)

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