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Integrating the Department of Defense Supply Chain

Integrating the Department of Defense Supply Chain

Eric Peltz
Marc Robbins
With Geoffrey McGovern
Copyright Date: 2012
Published by: RAND Corporation
Pages: 140
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  • Book Info
    Integrating the Department of Defense Supply Chain
    Book Description:

    The authors provide a framework for an integrated Department of Defense (DoD) supply chain, associated policy recommendations, and a companion framework for management practices that will drive people to take actions aligned with this integrated supply chain approach. Building on the framework and policy recommendations, they identify opportunities to improve DoD supply chain efficiency and highlight several already being pursued by DoD.

    eISBN: 978-0-8330-7739-4
    Subjects: Technology, History, Management & Organizational Behavior

Table of Contents

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  1. Front Matter
    (pp. i-ii)
  2. Preface
    (pp. iii-iv)
  3. Table of Contents
    (pp. v-vi)
  4. Figures
    (pp. vii-viii)
  5. Tables
    (pp. ix-x)
  6. Summary
    (pp. xi-xviii)
  7. Acknowledgments
    (pp. xix-xxii)
  8. Abbreviations
    (pp. xxiii-xxvi)
  9. CHAPTER ONE Introduction
    (pp. 1-4)

    In the mid-1990s, spurred by major shortfalls in logistics processes in Desert Shield and Desert Storm and in the private-sector lean revolution, the Department of Defense (DoD) began a sustained supply chain operations process improvement journey with a substantial emphasis on lean thinking and Six Sigma–oriented programs through initiatives such as the Air Force’s Lean Logistics, the Army’s Velocity Management, the Defense Logistics Agency’s (DLA) and U.S. Transportation Command’s (USTRANSCOM) Strategic Distribution Management Initiative (SDMI), and Lean Six Sigma–oriented initiatives in maintenance depot operations.¹ DoD’s tackling of new issues that emerged at Operation Iraqi Freedom’s (OIF) start and...

  10. CHAPTER TWO Case Studies That Illustrate the Need for Supply Chain Integration and Systems Thinking
    (pp. 5-20)

    Two related case studies illustrate shortfalls and the need for improvement in DoD supply chain integration. The first case study starts with an example of a supply chain design without an integrated view, but it does culminate in an integrated supply chain solution aligned with the framework for the design of an integrated DoD supply chain laid out later in this report. However, in describing the journey to get to this positive outcome, the case study illuminates gaps in policy, enabling management mechanisms, and the knowledge of the DoD supply chain workforce with regard to supply chain process dependencies and...

  11. CHAPTER THREE Policy Review
    (pp. 21-26)

    In DoD, policy sets the overall tone by providing goals and guidance that set the bounds within which to operate. A review of policy and regulations that were in effect when this study was conducted and when the case studies occurred suggests that gaps in DoD supply chain integration have been rooted in DoD supply chain policy. As of the writing of this report,DoD Supply Chain Materiel Management Procedures(Assistant Secretary of Defense for Logistics and Materiel Readiness, DoD Manual 4140.01, Volumes 1 through 11, draft as of March 2012), which was informed by this study, was in the...

  12. CHAPTER FOUR High-Level Policy Recommendations
    (pp. 27-46)

    This chapter provides recommendations for the development and revisions of DoD supply chain materiel management policy with respect to the overall objective, guiding principles and the integrating structure. To a large degree, they have been incorporated into the draftDoD Supply Chain Materiel Management Policy, DoD Instruction 4140.01 (draft as of March 2012), and the supporting manual of procedures that were in coordination at the time this report was written.

    In the private sector, the objective for the companies in a supply chain is to maximize profit, with the various organizations both competing for shares of this profit and collaborating...

  13. CHAPTER FIVE Enabling Mechanisms
    (pp. 47-54)

    Enabling mechanisms are management and other approaches that engender execution in accordance with policy and planning intent. They include incentives to act in a way that is best for the total supply chain, metrics to understand individual process and functional effects on the total supply chain and other processes and functions, budget accounts and lines that enable and encourage people to take the best actions for the total supply chain, decision rights that create spans of control or influence that support integrated action, tools that enable people to understand the total system effects of their decisions, information systems that ensure...

  14. CHAPTER SIX Supplier and Inventory Management Integration
    (pp. 55-74)

    This and the next four chapters explore opportunities for improved DoD supply chain efficiency through improved integration. They involve integrating across functions based upon interactions or dependencies as well as taking more of an integrated systems view in performing a process, and they build upon the supply chain design and enabling mechanism guiding principles. The first focuses on the impact of supplier performance and management on inventory efficiency. The second revolves around the interactions between shipment consolidation in DCs and the impact on transportation efficiency, along with the power of taking a systems view across delivering materiel to all customers....

  15. CHAPTER SEVEN Scheduled Trucks—Apply a Systems View for Shipment Consolidation
    (pp. 75-82)

    In the mid-1990s, in collaboration with the Army as part of its Velocity Management initiative, DLA instituted scheduled trucks from its SDPs to major Army installations. These allowed full-truck-load-like rates with express-delivery-like service. Prior to scheduled trucks, shipments from an SDP to an installation were shipped by different modes, depending on the priority. By consolidating shipments for an installation across all priorities on a periodic basis, a lower shipping rate could be achieved for all shipments, even low-priority shipments.¹ Additionally, within an installation, a truck can stop at supply activities in a standard order at scheduled times, enabling improved receipting...

  16. CHAPTER EIGHT Integrating Supplier and Transportation Management
    (pp. 83-86)

    Currently, for classes II, IV, and IX for items stocked in DLA DCs, for FDT or inbound freight, the transportation cost is included in the acquisition prices of the items. In conjunction, almost all such freight is contracted for as freight-on-board (FOB) destination, which means the supplier arranges and pays for the shipping to get the item to the DLA DC. As a result, there is no coordination across suppliers to consolidate shipments, even when the production sites are geographically proximate or along the same route to a DC. Inbound freight is not being managed from a total system integration...

  17. CHAPTER NINE Positioning Materiel Based on Total Costs
    (pp. 87-90)

    DLA employs a hub-and-spoke distribution network. In this network, the SDPs, which are intended to serve as CONUS regional hubs, are generally the destinations of inbound freight from suppliers or what are termed buyback locations. The SDPs directly support operational forces, such as tactical units, and replenish the spokes in most cases—FDPs in support of industrial activities and FDDs that provide the bigger, heavier, higher-demand items overseas. The major exception is when the FDP is the only major user of an item in a region. In this case, the FDP becomes a buyback location.

    DLA moves materiel among DCs...

  18. CHAPTER TEN Integrating Financial Policy with Network Design and Inventory Planning
    (pp. 91-94)

    All DoD field, retail, and tactical organizations generate serviceable returns through one of two general categories. The first is that sometimes end users order materiel they determine later that they do not need, which they return to their supporting tactical or retail supply activity (or sometimes they cancel the order too late, after it has been shipped from the wholesale provider). This could have been from a maintenance misdiagnosis, ordering some things in anticipation of a need that does not develop, mistakes, and the like. The second general category is inventory requirement changes at the tactical or retail level due...

  19. CHAPTER ELEVEN Conclusions and Overall Recommendations
    (pp. 95-98)

    Fundamental to achieving supply chain integration and pursuing actions consistent with total supply chain optimization as opposed to process or functional optimization is always thinking about doing so, whether in management of the supply chain or its personnel, policy development, process design, and everyday decisionmaking. This starts with ensuring that workforce members understand how they affect the rest of the supply chain, receive feedback on their effects on other processes and their effects on the total supply chain, and have the tools to make integrated supply chain decisions. The framework laid out in this report in Chapter Four is intended...

  20. APPENDIX A. Legal and Regulatory Environment for FDT Alternatives
    (pp. 99-108)
  21. APPENDIX B. Inventory Performance Analysis
    (pp. 109-110)
  22. References
    (pp. 111-114)