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3 THE DEFENSE LOGISTICS E~IRO~NT This chapter deals with the Defense Logistics Agency's (DLA) organizational environment as a part of the Department of Defense (DOD). In reviewing the DLA's role and relationship with other components of the DOD, we found a number of doctrinal and policy issues that the agency cannot be expected to resolve on its-own. We believe that these issues need to be care-fully addressed because they affect both the DLA's ability to modernize and the design decisions that will need to be made. Figure 1 shows the relative position of the DLA in the DOD organization, its relationship with its customers, and its dependence on the Office of the Secretary of Defense (OSD) for policy guidance. The scope of the Logistics Systems Modernization Program (LSMP) involves more than replacing obsolete automation systems and manual methods. The Major Automated Information Systems Review Council (MAISRC) has recognized this by stating that "additional action is needed to refine the planning and focus of the longer term LSMP" (Memorandum from John R. Quetsch, November 4, 1986, on file). The agency has responded by undertaking a thorough analysis of its businesses and information needs in order to develop its long-term plans and view of its future. We believe that these efforts are commendable and necessary but that it is not sufficient to look only inward. The deficiencies and opportunities for enhancements should be incorporated into logistics systems modernization objectives and plans for all Services and DOD agencies. Doctrinal and policy issues, each of which influences the direction and scope of "root" decisions at service and agency levels, leave the logistics and information systems communities groping for leadership and direction in many basic areas. The following issues are sufficiently important to warrant additional policy guidance directives by the OSD. Such documents need to ensure that system modernization plans incorporate capacity and capability to permit implementation within specified time frames. Such documents should cover the following points: o Visibility of assets below the wholesale system. For use by national inventory managers for keeping track of designated type inventories at specified organizational levels. The document should also specify the authority of the inventory managers to consider excess assets in buy and redistribution decisions. Visibility of stocked items, including those under service control, are an important aspect of efficient and economic materiel management. 7

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8 SECRETARY . OF DEFENSE UNDERSECRETARY OF DEFENSE ACQUISITION JOINT CHIEFS OF STAB | ARMY _ NAW AIR fORCE ~ J , MARINE CORPS I ._ __ 1 _ _ ~ . ; -. . . ~ ~ . DEfENSE ~ ~ KRISTIN aa.~; A6ENCT _ ,_ FIGURE 1: The DLA in the DOD Organization SOURCE: Command Briefing given to committee on May 5, 1987

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9 o Development of budgets and buy decisions using weapon systems application, essentiality, and programmatic data.- Inherent in this guidance is the need for interchange of application, production, and deployment data across all DOD activities. This is needed to improve weapon system availability without increasing stock levels. O Ready access to assets declared excess by inventory managers and located in, or in transit to, the disposal system. This is needed to insure maximum use of existing assets and investments. 0 Revised credit and penalty policy for excess inventories held below the wholesale level. Currently, excess inventories may be held by the services because of insufficient motivation for their return. Revised policies might provide the motivation to return them and allow better use of those assets and investments. o Guidance on sizing new automatic data processing (ADP), telecommunications and warehouse capacity, and contractor capability sufficient to cope with a full mobilization scenario. This guidance is needed to properly plan such capacities and make appropriate acquisition and investment decisions. - 0 Inventory stocking~policy and practices for reducing defense-held inventories. Increased reliance on direct support from commercial sources and "just-in-time" concepts might reduce such inventories when acceptable for wholesale support in a peacetime and/or limited wartime environment. o The degree of customer access to asset and technical data held by the National Inventory Manager and central repositories. This would optimize decision making and improve readiness and efficiency. Such guidance is also needed to properly size ADP and telecommunications capacity. o Contract administration structure and system design essential to maintaining an aggregate profile of contractor capability and performance. These profiles would permit more timely decisions in the buying process. o Cost data elements, procurement history, and technical data that should be maintained and the degree to which such information should be accessible to buyers. This guidance would facilitate adequate system design and response to meet specified production and administrative lead-time goals. o A forced discipline for electronically interchanging data between buying and contract administration offices. This will increase the accuracy of data bases, and thus the accuracy and concurrence of data passed between buying and contract administration offices. o Identification of data elements to be maintained in contract administration or other appropriate data bases. Such guidance is critical to planning and assessment of industrial preparedness. o A framework for centralizing administration, accounting, and finance functions in an environment where ADP and telecommunications capability will make functional performance transparent to the physical location. 0 Functional productivity goals, to be treated as targeted performance criteria for developing architectural structure and system design plans. These are needed to correctly plan and specify functional and system requirements.

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10 a o Protocols, standards, and circumstances in which mandated data sharing and data interchange will reduce uneconomical duplication of data bases. This is needed for planning and specifying interoperable systems. o Initiatives for personnel such as accession standards, grade structure, career ladders, training, and retraining. These must be adequate to build and maintain proficiency in the design and use of technology for modern logistics systems. We believe that there are significant benefits associated with integrating logistics operations and coordinating the overall management of logistics and supporting information systems throughout the DOD. Modern ADP and telecommunications afford an excellent opportunity to move toward greater levels of integration when considering both technical feasibility and cost. However, we found that there is insufficient motivation toward an integrated approach to logistics. This deficiency became increasingly apparent during our review, which revealed a lack of data and policy on customer needs, capabilities, and interoperability issues. Voids in policy and direction are responsible for this understandable lack of motivation and we would expect improvement to depend on appropriate guidance from the OSD.