Logistics Transformation: Next Steps to Agile Supply Chain Integration

Research Study

Numerous studies have recommended that the Department of Defense apply best commercial practices to logistics operations as a long-term solution to its inventory management weaknesses. However, there is no consensus in the private sector as to what commercial practices are best for supply chain management of very large, multi-company collaborative enterprises. In fact, many of the new supply chain systems that were built, failed due to the usual culprits of speculative requirements, immature technologies, seriously inadequate budgets and project scopes, and the sheer brute force required for most legacy integrations.

Commercial suppliers can perform useful roles in the Department of Defense and Army transformation efforts: as a source of materiel and third-party logistics suppliers for extending the supply chain beyond the organic base, as a current and future knowledge source for at least some best practices and lessons learned, and as a source of off-theshelf software solutions for supply chain transformation.

The Department of Defense’s and, more specifically, the Army’s enterprise resource planning implementation may still face unresolved issues in private sector supply chain management. It faces numerous risks: company risk, global market risk, and learning curve risk. To manage company risk, the Supply Chain Operations Reference Model is used for supply chain performance measurement of early-maturity organizations. More mature supply chain management practices include demand-driven supply networks, global sources, vendor-managed inventory, and more integrated contract management. Global market risks include no budget, no return on investment, no trust, no reliability and no security. Learning curve risk involves not applying lessons learned. The Army’s transformational initiatives are far more demanding than most commercial supply chain improvement efforts.

The initial draft of this report was written by Christine Brim.

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