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Planning for Defense Logistics Modern ization A Report Prepared by the Committee on.Review of Logistics Systems Modernization for the Defense Logistics Agency Board on Telecommunications and Computer Applications Commission on Engineering and Technical Systems National Research Council NATIONAL ACADEMY PRESS Washington, D.C. 1988 !. ' .

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NOTICE: The project that is the subject of this report was approved by the Governing Board of the National Research Council, whose members are drawn from the councils of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The members of the committee responsible for the report were chosen for their special competences and with regard for appropriate balance. This report has been reviewed by a group' other than the authors according to procedures approved by a Report Review Committee consisting of members of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The National Academy-of Sciences is a private, nonprofit, self-perpetuating society of distinguished scholars engaged in scientific and engineering research, dedicated to the furtherance of science and technology and to their use for the general welfare. Upon the authority of the charter granted to it by the Congress in 1863, the Academy has a mandate that requires it to advise the federal government on scientific and technical matters Dr. Frank Press is president of the National Academy of Sciences. The National Academy of Engineering was established in 1964', under the charter of the National Academy of Sciences, as a parallel organization of outstanding engineers. It is autonomous in its administration and in the selection of its members, sharing with the National Academy of Sciences the responsibility for advising the federal government. The National Academy of Engineering also sponsors engineering programs aimed at meeting national needs, encourages education and research, and recognizes the superior achieve- ments of engineers. Dr. Robert M. White is president of the National Academy of Engineering. The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure the services of eminent members of appropriate professions in the examination of policy matters pertaining to the health of the public The Institute acts under the responsibility given to the National Academy of Sciences by' its congressional charter to be an adviser to the federal government and, upon its own initiative, to identify issues of medical care, research, and education. Dr. Samuel O. Thier is president of the Institute of Medicine. The National Research Council was organized by the National Academy of Sciences in 1916 to associate the broad community of science and technology with the Academy's purposes of furthering knowledge and of advising the federal government. Functioning in accordance with general policies determined by the Academy, the Council has become the principal operating agency of both the National Academy of Sciences and the National Academy of Engineering in providing services to the government, the public, and the scientific and engineering communities. The Council is administered jointly by both Academies and the Institute of Medicine. Dr. Frank Press and Dr. Robert M. White are chairman and vice chairman, respectively, of the National Research Council. The project is supported by contract No. DLAH00-87-C-0002 between the Defense Logistics Agency and the National Academy of Sciences. Available from: Board on Telecommunications and Computer Applications Commission on Engineering and Technical Systems National Research Council 2101 Constitution Avenue, N.W. Washington, D.C. 20418 Printed in the United States of America 1 '

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COMMITTEE REVI-EW OF LOGISTICS SYSTEMS MODERNIZATION FOR THE DEFENSE LOGISTICS AGENCY ROBERT P. CLAGETT (Chairman) * ~ Dean, College of Business Administration . . . . The University of Rhode Island JOHN D. B LAN C HARD Vice President, Materiel Operations . ~ Martin Marietta Corporation DAVID K. DOYLE Consultant DONALD L. EVANS President and Chief Executive Officer Tartan Laboratories, Inc. JACK L. HANCOCK Vice President, Information Systems Pacific Bell RONALD B. OHLANDER Director for the Intelligent System Division and Director of the Computation Center Information Sciences Institute University of Southern California . . . STAFF Richard B. Mars ten, Director *** John M. Richardson, Director **** Anthony M. Forte, Study Director IVAN SELIN (Chairman) ** Chairman of the Board American Management Systems, Inc. ARTHUR F. VEINOTT,-JR. Professor of Operations Research Department of Operations Research Stanford University ERNST VOLGENAU President Systems Research and Applications Corp. JOHN A. WHITE Regents' Professor School of Industrial and Systems Engineering Georgia Institute of Technology EUGENE A. GRINSTEAD (Observer) Vice-Admiral (Retired) and Director, Defense Logistics Agency (Retired) * Chairman, Committee on the Defense Logistics Agency as of January 1988 ** Chairman, Committee on the Defense Logistics Agency until December 1987 *** Director, BOTCAP until January 1988 **** Director, BOTCAP from January 1988 . . .

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BOARD ON TELECOMMUNICATIONS AND COMPUTER APPLICATIONS CHARLES W. STEPHENS (Chairman) Vice President and General Manager TRW Electronics &.Defens.e Sector (Retired) DANIEL BELL Henry Ford II Professor of Social- Sciences .. Harvard University HERBERT D. BENINGTON Director of Planning UNISYS Defense Systems CARL J. CONTI Vice President and Group Executive: Information Systems and.S.torage Group IBM Corporation DAVID J. FARBER Professor of Computer and Information Science and Electrical Engineering University of Pennsylvania . JAMES L. FLANAGAN Director, Information and Principles Research Laboratory AT&T Bell Laboratories DONALD M. KUYPER Group Vice President, Business Services GTE Telephone Operating Group JOHN C. McDONALD Executive Vice President Technology Continental Telecommunications, Inc. STAFF John M. Richardson, Director * Richard B. Marsten, Executive Director ** Anthony M. Forte, Senior Staff Officer Karen Laughlin, Administrative Coordinator Lois A. Leak, Administrative Assistant Linda Joyner, Administrative Secretary * From January 1988 ** Until January 1988 1V WILLIAM F. MILLER President and Chief Executive Officer SRI International ALAN J. PERLIS Eugene Higgins Professor of Computer Science Yale University HENRY M. RIVERA Partner Dow, Lohnes and Albertson ERIC E. SUMNER Vice President, Operations Planning AT&T Bell Laboratories GEORGE L. TURIN Professor of Electrical Engineering University of California, Berkeley KEITH W. UNCAPHER Vice President of The.CQrporation for National Research Initiatives Associate Dean of Information Sciences University of Southern California ANDREW J. VITERBI . Chief Technical Officer Qualcom, Inc. . Professor of Electrical Engineering University of California-San Diego

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PREFACE The Defense Logistics Agency (DLA) has undertaken a modernization program referred to as the Logistics Systems Modernization Program (LSMP). This is the midterm report of the National Research Council's (NRC) two-year study of the LSMP. The committee performing this study was established in April 1987 at the request of the deputy director of the DLA to review the modernization strategy and management approaches being used in the LSMP. The deputy director noted that the focus of the DLA's modernization program encompasses its basic logistics processes such as materiel management, logistics data management, contract administration, and the procedural and systemic deficiencies that limit productivity and level of support to the military services. To correct deficiencies and provide needed additional capability, the DLA embarked on an agency-wide program to modernize its logistics systems and the supporting automatic data processing and telecommunications resources. In order to ensure that the program's goals are sound and the plans executable, the NRC was asked to conduct an independent review and assessment that addresses technical and management issues, functional processes, and the supporting strategies being considered. At the outset of our review, we noted that the concepts for the LSMP were still being developed. The agency had just undertaken a formal program to conduct a structured analysis of its businesses based on its requirements. Therefore, the initial focus of our study has been on the management and planning issues that confront the DLA during this formative stage of its modernization program. In this report, we identify what we believe are the major factors that can adversely affect the success of the program. In the second term of our study we expect to review the detailed plans and requirements that are developed from the DLA's business planning process and program approval efforts. A study such as this one requires the gathering and assimilation of a great deal of information during the course of the review. It was clear to us that if the analysis and advice were to be useful, it had to be based on a thorough understanding of the purposes and procedures of the DLA, as well as on some knowledge of the capabilities and resources available to the agency. In this regard we relied upon and received excellent support and cooperation from the DLA, and we wish to acknowledge the encouragement and receptiveness of Lieutenant General Vincent M. Russo, director, DLA. We also wish to acknowledge the contributions of the DLA staff who briefed us and responded to our many questions. We especially appreciate the thoughtful contributions of Mr. Roger C. Roy, assistant director (Policy and Plans), DLA, and the support of those in the program management office. My personal thanks go, as well, to the members of the NRC committee. They have given a substantial amount of their time, gratis, over the past year on this review. They have traveled to many DLA locations for on-site reviews, as well as spending a full week to develop this report. All of us on the committee are also grateful to the very competent NRC staff. In particular, Anthony M. Forte, senior staff officer, has done an outstanding job throughout the life of the committee in all ways that give unity and aid progress, from interface with DLA to preparation of minutes. John Richardson, director of the Board on Telecommunications and Computer Applications, of the NRC has given valuable advice to the committee proceedings. The committee looks forward to continuing the second phase of the study. Robert P. Clagett, Chairman Committee on Review of Defense Logistics Modernization v

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CONTENTS 1 EXECUTIVE SUMMARY. Major Findings and Recommendations / 1 Goals and Objectives for the Defense Logistics Agency / 3 Looking Ahead _ O ~ / 4 2 INTRODUCTION. Reference / 6 3 THE DEFENSE LOGISTICS ENVIRONMENT................................. 4 THE LOGISTICS SYSTEMS MODERNIZATION PROGRAM: AN OPPORTUNITY FOR EXCELLENCE _ Building the Foundation / 11 Management and Organization / 13 Integrated Materiel Management Contract Administration / 19 Technology Issues References / 25 / 21 / 16 5 ASSES SMENT OF PROGRESS , 27 Program Approval and Critical Enhancements / 27 Management of the Logistics Systems Modernization Program / 29 APPENDIXES A B C D E Statement of Task / 33 . List of Presentations to the Committee on Review of Logistics Systems Modernization for the Defense Logistics Agency /35 List of Critical Baseline Enhancements / 39 Glossary of Acronyms / 41 Operations and Existing Automation Systems / 43 V11

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