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EXECUTIVE STY
The Defense Logistics Agency (DLA) initiated a Logistics Systems
Modernization Program (LSMP) as a multi-year, phased approach for
transforming itself into an integrated logistics management agency
through the application of modern information technologies.
The LSMP is in the concept development stage under the Department of
Defense's (DOD) formal Major Automated Information System Review
Council (MAISRC) process. The MAISRC approved the mission need for
this program in November 1986.
The president's Management Report for Fiscal Year 1989 lists the
LSMP as a "presidential priority system.'' These major system efforts
are notable for their size, cost, technology leadership, or impact on
government operations.
In order to assure that its goals are sound and its plans
executable, the DLA arranged with the National Research Council's (NRC)
Board on Telecommunications and Computer Applications to conduct an
independent and objective review of the modernization strategy and
management approaches being employed for the LSMP. The resultant NRC
Committee on Review of Logistics Modernization undertook a two-year
study that was conducted in two one-year phases.
A midterm report summarizing the findings and recommendations after
the first phase of the review, entitled, "Planning for Defense
Logistics Modernization " was released in July 1988 (National Research
made in our midterm resort
_ ~~
~ ~;1 1DQQ)
_ _ ,
__.___, _,,. The major recommendations
were for:
Strong central management
Clear, concise LSMP objectives
Top-down and bottom-up design
Phased approach to implementation
External policy guidance from the Office of the Secretary of
Defense (OSD)
In this final report we identify and highlight the major issues
affecting the LSMP and offer suggestions that may help the DLA address
the most pressing problems that jeopardize the progress it seeks to
make.
1
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MAJOR FINDINGS AND RECOMMENDATIONS
In our midterm report we said that the LSMP could be the DLA's
blueprint for excellence by providing the driving force for deploying
and executing its modernization plans. We continue to believe in that
possibility. However, even though we found commendable accomplishments
in determining requirements, the overall slow rate of progress warrants
attention. The DLA has not aggressively pursued the LSMP. Therefore,
due to uncertain commitment, we elected to focus this final report on
the program as a worthwhile. but yet unseized. opportunity for
logistics excellence.
We continue to support and agree with the DLA's decision to
modernize to the extent proposed by the LSMP. Modernization is sorely
needed and long overdue. The agency's systems tend to be
paper-intensive, manual, fragmented, and outdated. Its automation
systems, for the most part, are based on obsolete technology of the
1960s and 1970s. They do not share information or provide information
to support decision-making. As a result, information is often
duplicated, out-of-date, in unusable form, or nonexistent. The DLA is
greatly dependent on automation to perform its-mission and the trend is
toward increasing use of information technology. Appendix A identifies
the major information systems in use at the DLA and the operations they
serve.
As with any large program, risks accompany opportunity. Throughout
this report we offer comment, suggestions, and advice that will, in our
judgment, help the agency manage those risks. Below we state five
recommendations we consider to be crucial to successfully establishing
and executing the program, and summarize the rationale supporting
them.
Adopt Information Resources Management
Because the information relevant to each aspect of the
operations of the Defense Logistics Agency has significant
bearing upon the information relevant to every other aspect, the
agency needs to expand its view of information systems beyond
traditional automatic data processing and telecommunications
functions by considering information as a resource and creating
the organizational structures that will manage this resource.
In our review of the DLA, we found this distinction between
automatic data processing (ADP) and Information Resources Management
(IRM) lacking. Therefore, we strongly urge the agency to expand the
purview of its Office of Telecommunications and Information Systems
(OTIS) beyond its purely ADP and telecommunications (ADP/T)
acquisition, development, management, and maintenance functions. The
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DLA needs an IRM organization that focuses on the agency's information
requirements and understands the needs of its users as well as the
technological tools that can be applied. The OTIS can and should -
develop into the DLA's IRM organization, and the agency should;
recognize that this implies more than just ADP/T responsibility. It
requires a blending of applications knowledge and technology choices
from an information perspective. Adopting IRM will require
considerable organizational sophistication and evolutionary change at
the DLA.
An Umbrella Plan Is Needed
Because the mayor benefits of modernization arise out of
improvements in process, the agency's modernization should be
guided by a unified concept rather than a collection of
individual and uncoordinated fix-it projects, performed on an
"as needed" basis, that retain the old processes.
In the past, the DLA upgraded its systems on an ''as needed" basis
and in a piecemeal fashion. In other cases, beneficial upgrades were
not made because of budgetary constraints or the absence of urgency.
As a result, over time the agency's systems have become fragmented and
outdated. We urge the agency to avoid returning to this mode of
operation by maintaining its emphasis on modernization as a long-term
plan that can and will be executed in doable steps. We are not opposed
to grand designs per se. However, we do recognize the risks associated
with grand implementations and warn against across-the-board
modernization. In so doing, we hope to see the agency evolve toward
moving more information and less materiel.
We have observed a conspicuous lack of technology content in the
planning of the LSMP. This may have been the result of an overreaction
by the agency to the MAISRC 1 disapproval in which the proposed concept
was found to be too hardware-oriented. In any case, technology
elements took a back seat when the DLA undertook a major effort~to
analyze and model its business. We supported the business analysis
effort in our midterm report, and we still believe in the value of such
a process as long as its results are put to use. The LSMP began as a
technology-based program, and it remains one. We urge the agency to
see that the technology elements of the program are properly included
in its plans by setting forth the technical architecture and
agency-wide standards that will translate business planning into useful
implementation. -
Move Forward to Approval Milestone 1
In order to avoid jeopardizing the program and reemphasize
commitment to it, the agency needs to move forward with the
Major Automated Information Systems Review Council for the
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Logistics Systems Modernization Program (LSMP) by scheduling and
holding to a date for review and approval of Milestone 1,
concept development for the first project under the LSMP
unbrella plan.
The MAISRC approved Milestone O for the LSMP in November 1986 but
withheld approval of Milestone 1 at that time. The DLA initially
expected to return to the MAISRC in March 1988 but slipped that and
several subsequently scheduled review dates. As of our most recent
briefing in February 1989, the DLA does not yet have a firm date set
for MAISRC 1 review. We believe that the agency should move forward
with the MAISRC process and also get the program onto the DOD's formal
Program Objective Management (POM) process for multi-year
acquisitions. In presenting projects for MAISRC approval, the DLA
should not try to present plans and details it cannot know at this
stage. We suggest that the DLA maintain an umbrella plan and seek
approval of subprograms to accomplish specific pieces of its conceptual
functional requirements in an evolutionary manner. The subprograms,
subject to MAISRC review, will furnish the detailed information
necessary to accomplish a major technology implementation. In this
way, the MAISRC will still have cognizance of the details of the
program implementations and confidence that the approved projects are
part of an umbrella plan even though specific details for such future
planned implementations are not yet known.
We urge the DLA to maintain its focus on the umbrella plan, estimate
the costs for each subprogram and present the subprograms for MAISRC
approval of Milestone 1. Concurrently, it must generate the basis for
funds needed to support both the early development work and the
time-phased implementation of the discrete elements of the program.
This level of budgeting and planning is necessary to assure that the
MAISRC can give this program serious consideration based on its merits
as well as the likely~consequences of failure to act on it. The
present level of LSMP funding for the next few years will do little
more than allow for continued study and planning -- a strategy that
will consume precious time, yield minimal results, and might even
jeopardize the DLA's business and information planning investment.
Focus on Integrated Materiel Management
Because it is the largest part of the agency's mission and
because its systems are most in need of modernization, we
recommend that the materiel management and supply functions have
priority.
The DLA should concentrate its modernization investment where it is
most needed and where it will produce the greatest benefits. The
materiel management functions are currently supported by the Standard
Automated Materiel Management System (SAMMS). This system supports the
inventory management functions at the agency's supply centers. SAMMS
functions include distribution, requirements, supply control, financial
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management, accounting and billing, procurement and production, and
technical cataloging. A modernized SAMMS that uses large-scale
optimization and item visibility would reduce procurement, inventory,
and transportation costs while increasing availability of supplied
items. SAMMS modernization, ~therefore, is one of the first major
subprograms that should come forward under the LSMP umbrella plan. In
this regard, the agency must make sure that its projects are achievable
in the "real world." SAMMS, like other applications, can and should be
developed and operated on an agency-wide standard data base and
technical facility design. We suggest, therefore, that data base
design and technical facility acquisition be conducted concurrently
with application development. We strongly recommend that the DLA
design, develop, and acquire a common technical facility for use
throughout the agency and a data base architecture that will support
its internal and external information needs. The data base design, and
the agency's transition to it, is by far the most significant
undertaking because it relates directly to how the agency plans to
conduct business in the future.
Establish Accountability for Systems Modernization
In order to ensure successful modernization, it will be
appropriate and desirable to consolidate authority over the
central design activities and those programs that have received
approval of mission need from the Major Automated Information
Systems Review Council, and to establish reporting channels for
them to that authority.
A principal concern of ours has been the perceived lack of clarity
and focus for such management basics as the identification of
responsibility, authority and accountability for the various actions,
phases and steps associated with systems modernization. The scale and
complexity of the LSMP requires strong management and organizational
cooperation. We have consistently believed that the LSMP requires the
full attention of a management group whose primary responsibility is
the successful achievement of modern, interoperable information
systems. Furthermore, in order to accomplish such internal
integration, this management group must have the responsibility and
authority to enforce the accomplishment of program objectives
throughout the DLA. In addition, the interest and attention of top
management to the key initiatives of the program must permeate the
entire organization.
Responsibility, authority and accountability for program managers
and their organizational alignment should be decided and put into
effect quickly to avoid loss of momentum. At a minimum, the
organizational elements responsible for modernization should have
sign-off responsibility on system upgrades, developments, and
enhancements where these involve choice of languages, data base
management systems, and protocols that will assure inter-operability.
With such precise accountability established for program results, users
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and planners should confine their efforts to concepts, capabilities,
directions, and requirements. Functional managers and users must
participate and have a vote in the design deployment, testing, and
development process. Functional managers must maintain the appropriate
staff capability to define requirements, track progress, participate in
test demonstrations, and critique the flaws in the process. The
application of independent and objective test demonstrations are
critical to this process. A "test bed" environment could be useful for
users to conduct "what if" experiments.
PROGRESS
In our midterm report, we said that because of the dynamic nature of
the LSMP, our assessment of progress would very likely be outdated by
the time that report would be published. In this report we would like
to say the same, but unfortunately we cannot. We must report that
there has been little progress in putting the LSMP in place within the
DLA in the year since our last report. Furthermore, except for the
bottom-up effort of a few organizational elements that were dedicated
to the LSMP, we found that the DLA has made very little progress toward
overall modernization planning and implementation in the two years of
our study. This viewpoint must be tempered, however, by observing that
during this period, several units within the DLA have initiated
projects that will implement upgraded; newly designed systems to
modernize existing functions.
The new director of the agency exhibited his dedication to
modernization goals by getting all top managers together shortly after
his appointment to critique progress and make recommendations. If
organizational changes are made to centralize responsibility for
information management and design, the agency will have created an
improved internal environment for moving forward with a modernized
longer-term view of information systems and technology.
External Policy
External policy guidance is still needed from the Office of the
Secretary of Defense (OSD) in areas that the DLA can not resolve on its
own. Chapter 3 of our midterm report, the Defense Logistics
Environment, dealt with this issue in detail. At this time, the major
issues are still materiel visibility, excess inventories, and stocking
policies across all the military services and the DLA. Visibility of
assets is needed by the inventory managers for keeping track of
designated inventories at specified levels. Admittedly, these are ~
difficult and complex issues, but, to the best of our knowledge, they
have not yet been addressed by the OSD. -
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Decision Support
In our midterm report we found that the DLA did not have the
capability to easily locate, access, format, or display information
that its decision makers routinely needed, or that its management
needed to make timely, substantiated, and objective assessments of
agency performance. We recommended that the DLA move to enhance its .
information systems by incorporating decision support requirements in
its plans for the LSMP. We also recommended that a pilot project be
initiated to develop a prototype Decision Support System (DSS) for use
by the director and his staff. We found.that the former director's .
frustration at not having adequate DSS tools was echoed throughout the
DLA staff. Yet in spite of the directive.issued by him, early in.his
tour with the DLA, to develop a DSS and in spite of the agency-wide
recognition of the imperative need for a DSS, not one individual nor
staff element assumed responsibility for the project. Therefore, DLA
is no closer today than it was two years ago to developing the process
and system required for responsive, interactive, decision support.
OPTIMIZATION OF MATERIEL MANAGEMENT
The DLA's Standard Automated Materiel Management System (SAMMS) was
designed and implemented mainly in the early 1970s. It makes very
little attempt to achieve the integrated optimization of procurement
and distribution decisions that is.currently envisioned by the DLA.
The current model has many limitations (refer to Chapter 4~.
Research at universities during the last three decades has made
major advances in developing models and optimization techniques for
large-scale inventory systems. Some of this research.has been applied
in recent years to achieve integrated optimization of materiel
management at several large firms that simultaneously reduced
investment in inventories and improved customer service.
We believe that it is now possible and timely to develop and
implement a much more efficient materiel management system than DLA now
has in which large-scale optimization is used to effectively integrate
supply decisions. Experience in industry suggests that such a system
is likely to increase system availability and permit significant .
reduction in inventories and procurement costs, particularly if.
visibility of military service inventories is provided to the DLA.
The DLA does not appear to have significant in-house expertise in
large-scale optimization and senior management should clearly
understand the role that methods of mathematical optimization might
play in helping the DLA optimize it use of resources. We believe that
the DLA should acquire some in-house capability in large-scale
optimization, both personnel and software, and recommend the use of
consultants and other advisory services. Furthermore, we suggest that
the DLA review the level and location of its operation research
resources to ensure that the benefits of this discipline are fully
exploited in managing and planning operations.
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DATA BASE ISSUES
We believe that the data base identification and implementation
problems are so key to the LSMP, and are so demanding, that the DLA
should focus on undertaking this element of the project as quickly as
possible. The LSMP must center upon identification of the major data
bases that will make up the foundation of the DLA's functions, and the
technology that will be used to implement them. Among the issues that
have to be addressed are the makeup of the data bases; the extent of
coverage of data bases; the technology to be employed to implement
them; the establishment of data management centers; the'implementation
of a transition plan; and standardization of such things as data base
management systems, data definitions, data dictionaries, and query
languages. A sound transition plan and the establishment of data
management centers will be crucial to ensuring the feasibility of the
LSMP itself. The DLA 'needs to identify its major data bases, establish
its data management centers, and select the technology and standards
that are to be imposed. As part of the implementation process,
decisions must be made as to whether old data bases can or should be
modernized or whether new ones must be built.
STANDARDS
The use of standards promotes interoperability among the various
data bases and systems within an organization that need to exchange and
share information. There are two kinds of standards that DLA needs to
include in its modernization plans. The formal standards are those
established by 'the various standards organizations that exist on
national and international levels. There are also informal standards
that are selected and levied across project activities to ensure
conformance and uniformity. Formal and informal information technology
standards should be applied to networks, software, operating systems,
computer languages, and data bases. The use of standards is also
intended to help in dealing with the following developmental
challenges:
.
.
.
Comnlex and diverse ~uh.~v~t~m.~ : The LSMP is intended to
eventually replace a variety of aging, incompatible, automated
and manual systems.
Long life cycle: The LSMP is expected to continue beyond the
year 2000. This may even be extended further because of the
vagaries in the approval process and funding limitations.
Technological change: Rapid and significant changes in
information technologies will continue during the implementation
of the LSMP. Change may be manifested in ways such as:
Networking involving a diverse aggregation of hardware and
software from a variety of manufacturers and countries.
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Merging of all types of communications, computer, telephone
facsimile, and video technologies.
Mobility of applications from one computer to another and to
newer models that enter the market.
Improvements in the software development process.
Increasing use of automation as reflected in new policies
such as Computer-Aided Acquisition and Logistics Support
(CALS).
Although we urge the use of standards, we also point out that they
should be used carefully and selectively. Standards can be misapplied
because they are obsolete, are too limiting, impose immature
technology, or are extended beyond their original purpose. Therefore
each requirement needs to be carefully analyzed in order to achieve a
delicate balance between anarchy and inflexible mandates.
REFERENCE
National Research Council. 1988. Planning for Defense Logistics
Modernization. Washington, D.C.: National Academy Press.
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Representative terms from entire chapter:
midterm report
