Supply Chain Digest editorial staff

The News: The DoD releases its 2006 Quadrennial Defense Review, including a short but interesting section on “Supply Chain Logistics.”

The Impact: Focus on visibility, RFID may lead many private sector efforts, while the DoD appears ready to look to non-military best practice to improve its logistics performance.

The Story: The Department of Defense (DoD) has recently released its Quadrennial Defense Review (QDR), a long document prepared every four years that provides a high level assessment of current military capabilities and guiding principles about where the DoD intends to take the various military branches.

The 2006 QDR contains one section on “Supply Chain Logistics.” (See full text of this section below).The very fact that the term “supply chain” is used with “logistics” is by itself probably indicative of some changing paradigms within the Department. Themes that emerge from the 2006 QDR include improved visibility, better linkage of costs to actual results, looking outside the DoD for private sector best practice, and the role of RFID.

The QDR briefly but clearly articulates a strategy to improve the cost-result curve of military logistics operations.

While the QDR states that the DoD “has made significant strides in migrating to a capabilities-based logistics approach,” it also says that “the strategy for achieving these objectives starts by linking resources to supply chain logistics activities in order to understand the costs they entail.”

This will be achieved in part by a focus “on improving visibility into supply chain logistics costs and performance and on building a foundation for continuous improvements in performance.”

The report says that to meet its supply chain logistics goals, the DoD may need to look more to private sector best practice to augment its own expertise.

“The Department must also assess commercial supply chain metrics as potential performance targets to bring down the costs and to speed the delivery of needed items,” the report says. In other words, what are private sector supply chain performance levels, and how can the DoD reach best-in-class results across a variety of key performance indicators?

There is a full paragraph devoted to RFID. That may not seem like much in a 92-page report, but according to the DoD’s Alan Estevez, the primary point person on the DoD’s RFID initiatives, it’s actually quite a big deal.

“If you understand how the QDR is put together, the fact that it contains a paragraph at all on RFID actually makes quite a statement,” Estevez said last week at the opening of Alien Technology’s RFID Solutions Center in Dayton, OH.

“The use of active and passive Radio Frequency Identification (RFID) technologies will play a key role in achieving the Department’s vision for implementing knowledge-enabled logistics support to the warfighter through automated asset visibility and management,” [art of that paragraph says. “RFID is designed to enable the sharing, integration and synchronizing of data from the strategic to the tactical level, informing every node in the supply chain network. This information should provide greater insight into the cause-and-effect relationship between resources and readiness.”

The full Supply Chain Logistics section of the 2006 QDR is reproduced below.

Managing Supply Chain Logistics

In response to the 2001 QDR, the Department undertook a number of initiatives to improve the effectiveness and efficiency with which the Department moves and sustains military forces. These initiatives included efforts to improve the deployment process and reduce the logistics footprint and its associated costs. The Department also worked to provide standing joint force headquarters with an integrated logistics picture and accelerated the creation and use of logistics decision-support tools. In the past four years, the Department has markedly

increased the integration of field exercises and experimentation with the processes for determining logistics systems, doctrine and force structure requirements. In addition, as noted earlier, the Department is changing its logistics processes and procedures as dictated by the needs of current operations.

As a result of these initiatives, the Department has made significant strides in migrating to a capabilities-based logistics approach. In this QDR, the Department focused on improving visibility into supply chain logistics costs and performance and on building a foundation for continuous improvements in performance. The strategy for achieving these objectives starts by linking resources to supply chain logistics activities in order to understand the costs they entail. The Department must also assess commercial supply chain metrics as potential performance targets to bring down the costs and to speed the delivery of needed items. Promising ongoing initiatives, such as the single deployment process owner, must be continually improved and accelerated. Lastly, there is a need to develop realistic and defendable strategic performance targets for focused logistics capabilities to guide both capital investment and process improvement.

The Department is implementing a number of specific initiatives aimed at meeting supply chain objectives. For example, the use of active and passive Radio Frequency Identification (RFID) technologies will play a key role in achieving the Department’s vision for implementing knowledge-enabled logistics support to the warfighter through automated asset visibility and management. RFID is designed to enable the sharing, integration and synchronizing of data from the strategic to the tactical level, informing every node in the supply chain network. This information should provide greater insight into the cause-and-effect relationship between resources and readiness. Such fact-based insights, coupled with the implementation of continuous process improvement tools like Lean, Six Sigma and Performance Based Logistics, will help optimize the productive output of the overall Department of Defense supply chain.

What are your thoughts on the 2006 QDR? How do you see military logistics changing? Let us know your thoughts.

Article key words: RFID, DoD, Visibility