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1 INTRODUCTION The Defense Logistics Agency (DLA) is responsible to the Secretary of Defense for providing services and supplies used in common by all the military services. The agency's mission is to provide logistics support in the areas of contracting, contract administration, materiel supply, and technical services such as disposal and cataloging at the - lowest feasible cost. Each year the DLA buys billions of dollars ($12.4 billion in FY-87) worth of items including food. medical supplies. fuel and aware Art. for military hardware. --a ~ ~ ~ en—-— ~ ~ ~ A ~ i- Or- ~ The agency uses a variety of information systems that were acquired and developed over decades to manage and track its operations. These systems do not communicate well- with each other or with systems operated by the military services. This problem prompted the agency to initiate the Logistics Systems Modernization Program (LSMP), a $2.8 billion effort to integrate, standardize, and modernize systems that support ordering, warehousing, and delivering and accounting for supplies. The LSMP's major goal is to increase internal and external data sharing. It is a multi-year, phased approach for transforming the DLA into an integrated logistics management agency through the application of modern information technologies. The focus of the LSMP encompasses the agency's basic logistics processes such as materiel management, logistics data management, contract administration, and the procedural and systemic deficiencies that limit productivity and level of sunnort to the ~ l; ,~ _ mi 1 i tarn Hi ~F~C The 1 ski cat; tic! m~r~~=m~r~1~ Elm m~ he cast ~~; ~ ~ ~~ ~ ~~—&~— =) ~ —~~— ~ ALAR =~1G ~~=VIll=~l~ data processing and telecommunications resources that support them, are integral and essential to the conduct of the agency's mission, which includes the delivery of a wide range of goods and services. The LSMP is the management vehicle to plan and coordinate resources and execute the various activities necessary to sustain the existing systems baseline; accommodate near-term systems modernization and work-load growth; and position the agency to develop, in the longer term, such new systems and associated functional capabilities as may be required. The LSMP is to provide the overall framework for the evolution of the DLA's logistics systems. It is to "ensure that the DLA logistics systems plans are consistent with the Department of Defense (DOD) long-term logistics plans and that new or changed systems meet increasing functional user requirements for new applications, interactive processing, and system interoperabilities" (Defense Logistics Agency, 1986) 11

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12 In November 1986, the DOD Major Automated Information Systems Review Council (MAISRC) approved Milestone O. the need for the LSMP, but withheld approval of the concepts developed, at that point. Concept development (or Milestone 1, as it is also called), entails the evaluation of alternative technical and functional approaches for the program and the selection of one. It is our understanding that the MAISRC disapproved Milestone 1 because the program as then defined was too hardware-oriented and needed additional longer-term planning based on cost-justified functional requirements. In response, the DLA set out to develop its conceptual functional requirements (CFR) for the LSMP based upon a systematic analysis of its business -- a process the DLA calls Business Area Analysis (BAA). The BAA is a process that decomposes and models current business functions and information~flows. Matrices were used to link the models to current systems so that more streamlined future models could be developed. Structured interviews of headquarters and field personnel were also used to allow further analysis. These analyses led to the development of the Business Area Requirements (BAR) that were in turn integrated into the CFRs. The DLA released its Conceptual Functional Requirements document in May 1988. This document highlights the significant functional modernization needs for the agency. The Committee on Review of Logistics Systems Modernization for the Defense Logistics Agency, author of this report, was established in April 1987. When we began our study we recognized almost immediately that the LSMP was an undeveloped concept -- a plan for a plan. In order to help the agency, we had to learn as much as we could about _. DLA's operations, systems, facilities, organization, and resources. This turned out to involve significant effort because of the various businesses and geographic spread of so vast an enterprise. We had to develop a feel for its culture as well as its tangible characteristics. It became abundantly clear very early on in the first year of our study that the major issues were management-related. This was not surprising since the program had been coarsely aimed at changing the way the agency did its business. Our major objectives were to get the agency to clearly identify what it wanted to accomplish; to segment the overall mission into tasks; to select the - ones it would do first; to put the right people in charge to do it; and to get on with it. Attaining these objectives is not a trivial matter in the case of so many diverse, dispersed, and autonomous operations. Such modernization goes against the culture and momentum of the past: its difficulties are easily underestimated and were. On the whole, however, we believe it is worthwhile, and we applaud the diligent efforts of those at the agency who have persisted in refusing to settle for less. It would be very easy for the agency to set its sights lower; in fact, many would judge this the more prudent course. Even within the agency, many would be content to continue as in the past. We have worked to keep this from happening, and urge the agency to continue in these efforts. The statement of task describing the work

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13 to be done by the committee is provided in Appendix B. We approached our task by first becoming familiar with the DLA's operations, processes, automation systems, and resources as they related to the LSMP. The study began with an initial two-day briefing by the DLA on May 5 & 6, 1987 in Washington, D.C. Since that time, ten follow-up meetings have been conducted. Four of these meetings were held at DLA field activities and provided an opportunity for us to tour a supply center, two depots, a contract administration region, the automated system design center, the logistics services center, and the disposal operation. Through briefings and interaction with members of the agency, we had ample opportunity for constructive exchanges of ideas. A listing of presentations to the committee is provided in Appendix C. The committee has met bimonthly. At the outset of Phase 1 of our review, we noted that the concepts for the LSMP were still being developed. The program was in its early formative stage and needed to be carefully guided to assure that its promise could be realized. Therefore, our initial focus was on the planning and management issues that required resolution before technical questions could come to the forefront. For the second phase of the study, we expected to review the detailed plans and requirements that were to be developed and if possible to concentrate on what we anticipated would emerge as the key technical areas of standards, technical architectures, and decision support. Early on in the second phase, we formed subcommittees for decision support, standards issues, data base issues, and supply optimization. However, as we noted in our midterm report, the management aspects of this modernization required further attention and review. The LSMP can allow the DLA to provide improved and expanded services along with increased productivity and higher operating efficiencies but, due to its tentative start and continual redirection, the program remains just an opportunity. Chapter 2 of this report addresses the management challenges that still confront the DLA in its modernization efforts. In Chapter 3, the major technical issues that need resolution at this stage of the program's development are identified, with advice given. Chapter 4 treats the topic of optimization as it applies to the supply operations of the DLA. Chapter 5 provides an assessment of the progress made to date, based on the observations of the committee over two years of its review and study of this program. Each chapter offers suggestions or recommendations that we believe will improve the program in the near- and long-term. REFERENCE Defense Logistics Agency. 1986. System Decision Paper, Milestone I, Concept Development Phase. Washington, D.C.

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