Logistics Enterprise Information Systems and Decision Support
This chapter examines possibilities for improving the quality and effectiveness of the management of Army logistics activities by enhancing the information and decision support systems on which these activities rely.
Logistics decisions are fed by data, and the Army has invested in improving the quality and quantity of data available and in providing the results of the analysis of these data to decision makers. The Army logistics enterprise information systems, as a whole, are an amalgam of systems designed to manage the Army’s material, maintenance, supply, acquisition, and financial activities. At the heart of this amalgam is the Army Enterprise Systems Integration Program (AESIP), which guides the Global Combat Support System-Army (GCSS-Army) and the Logistics Modernization Program (LMP). AESIP provides a hub that ties GCSS-Army and LMP to other logistics-related systems, including the General Fund Enterprise Business Systems and other enterprise systems (Figure 6-1).
Decision support for logistics focuses on helping decision makers at all levels of the Army make the best possible logistics decisions given available information. These decisions can be extremely complex and may rely on huge quantities of data. No matter the level at which a decision is made, it is difficult for the decision maker to make an informed decision without support from some sort of analysis. Approximately 75 percent of the Army’s budget is impacted by logistics decisions, so that the quality of the logistics decisions has a huge impact on the budget.
GCSS-Army and the LMP provide decision makers with unprecedented access to data. However, the most effective use of these data will require coupling them with decision support systems capable of digesting, analyzing, and then presenting understandable options to decision makers. Both the tools to do this, ranging from rather simple applications to elaborate modeling and simulation, and people who use them are needed to extract the desired content from the data so that the best decisions can be made.
LOGISTICS ENTERPRISE INFORMATION SYSTEM
Army Enterprise Systems Integration Program
The Army has invested heavily in two enterprise resource planning (ERP) systems: GCSS-Army and LMP. These systems are being developed using the SAP-ERP system. SAP is a German multinational software corporation and a leader in the enterprise applications market. ERP based on SAP software (SAP/ERP) had already been implemented in the military domain by the German Bundeswehr when the U.S. Army decided to adopt SAP software. For programmatic and development purposes, GCSS-Army and the LMP, together with an information brokering program (the AESIP Hub), are managed by AESIP under the Army Program Executive Office (PEO) Enterprise Information Systems.
GCSS-Army, LMP, and GFEBS have the potential to transform Army logistics. Theoretically, an SAP ERP integrates all enterprise functions. Everything that the enterprise does is compiled into a very
FIGURE 6-1 Army Logistics Enterprise Systems. GFEBS, General Fund Enterprise Business Systems.
SOURCE: Dan Parker, PM AESIP, “Logistics ERP Presentation,” presentation to the committee, January 16, 2014.
large federated database. In the commercial world, the database would include information on material requirements planning, supply chain management, customer relations management, personnel management, accounts payable, accounts receivable, budgeting, forecasting, and so on. All of these functions are also important to the Army. In the case of the Army logistics system, the database would also need to include every end item in the system: weapon systems, vehicles, rotatable spare parts, to name just a few. The list would be very extensive. The information would also need to include the location and readiness state of each unit and each item of equipment. The centralization of all data functions into GCSS-Army and LMP is helping the Army to eliminate many costly and outdated legacy data systems. The GCSS-Army and LMP systems will be the warehouse for all logistical data. This is good news, and it is bad news. From an operational standpoint, it is highly desirable to have all relevant data federated together so that better decisions can be made more quickly. This is because, when data are federated, all files are kept in sync when an update to a database is made. For logistics, it is vital that the supply, maintenance, distribution, in-transit visibility systems, etc., be synchronized. However, federating data also makes the overall system more vulnerable to cyberattacks.
It is a mistake to underestimate the effort involved in implementation of any ERP system. Fully implementing a GCSS-Army and LMP is a daunting task and will require constant attention from the Army leadership responsible for budgetary decisions. There are cases where companies implementing SAP developed systems have had to stop all production and operations because company management significantly underestimated the effort required by the company to successfully implement the SAP system. In the military, the Navy is implementing a SAP ERP and appears to be doing so successfully. The Marine Corps is implementing the Oracle ERP system. The Air Force has had difficulty with its Oracle implementation and has stopped implementation (Kanaracus, 2012). Despite the challenges, using GCSS-Army and LMP offers outstanding opportunities for modernizing Army logistics and achieving operational efficiencies not possible up to now (with commensurate reductions in the logistics tail).
Finding 6-1. The Global Combat Support System-Army and the Logistics Modernization Program form a viable approach to address the issues of in-transit visibility and efficient logistics operations, and to form the basis for the development of robust decision aids.
In examining the ERP approach undertaken by the Army—and most of the Department of Defense (DoD)—it is evident to the committee that Army acquisition leadership thinks of this as similar to a hardware acquisition. The systems are considered to have a traditional investment profile and to reach an end state at some time. In fact, like most complex software systems, the ERP system will never achieve an end state, except one dictated by lack of funding. Like most commercial software, the ERP should be thought of as a continuously evolving product that provides ever-increasing levels of capability. Consider software like Google as an example. There was an initial capability that provided only a text search function from 1998 to 2001. Then Google added the ability to search nontext content, an e-mail service, a calendar, social functions, and the like in a continuously evolving process. The investment level increased from that for the initial capability to that needed today because people desired new functionality. It is unlikely that Google had all this planned at the beginning. More likely it was opportunistic in developing what customers desired as they saw what was possible.
The implementation of GCSS-Army and LMP has been ongoing for over 10 years, and the systems will continue to evolve. SAP/ERP is a highly complex system that requires real understanding for an organization to be successful in implementing it. While the Army has a training program in place for GCSS-Army and LMP, it will be important for the education process to provide sufficient capacity and be comprehensive enough for successful implementation in the near term. It was clear from briefings and conversations with GCSS-Army and LMP executives that they are making progress, and they should be congratulated.
Finding 6-2. The Army has expended considerable resources on implementing what may be the largest enterprise resource planning (ERP) system ever. There is a mixed record of success among the other Services implementing ERPs.
Recommendation 6-1. The Army should make full use of the experience and lessons learned by other Services in implementing its enterprise resource planning systems so as to maximize its chances of success.
Recommendation 6-2. The Army should realize that the enterprise resource planning system will be a continuously evolving product with ever-increasing functionality. The programming and budgeting process should recognize this by providing a continuous funding stream for evolution and upgrades as well as the expected growth in functionality. Army leadership should provide ongoing resource and organizational support for the Global Combat Support System-Army and the Logistics Modernization Program even after full implementation of the system in order to reap the maximum benefits from its investment.
Having a single federated ERP data and/or execution system magnifies the Army’s vulnerability to cyberattack. A successful cyberattack could shut down the entire GCSS-Army and LMP systems, which could easily bring the Army’s logistics system to a halt. The military is the target of a tremendous number of cyberattacks on a daily basis. Because SAP has thousands of ERP implementations all over the world, it is possible that a potential enemy may have already determined how to breach the GCSS-Army
and LMP systems. A sizeable international hacking enterprise already exists in the commercial SAP-ERP world (Nieto, 2013; Vazquez, 2013).1
Part of SAP’s vulnerability to hacking rests in its complexity. The granting of authorizations is complex, and maintaining that system is complex. There are many possibilities for inadvertently creating security vulnerabilities. The SAP debugger can allow a hacker to relatively easily change system functionality. There are numerous examples of remote users hacking the civilian SAP/ERP systems. While the GCSS-Army personnel indicated to the committee that they believed the SAP password system was sufficient, it would appear, in light of the discussion above, that the SAP security system could be vulnerable. This is an area of considerable risk to DoD, and anything less than an effort comparable to the one made to protect the U.S. financial system would be inadvisable. The financial systems of the United States are protected with multiple data backups in case of a catastrophic event, and the Army needs nothing less. When it is at war, the Army’s security requirements are as important as those of Wall Street. Once the Army fully implements GCSS-Army and LMP and depends on it operationally, the entire Army logistics system will incur the attendant risks of a federated ERP database, including catastrophic failure of the system due to enemy activity.
Finding 6-3. There is the need for a redundant computational capability/infrastructure and data backup for the Global Combat Support System-Army and the Logistics Modernization Program.
Finding 6-4. The Global Combat Support System-Army (GCSS-Army) and the Logistics Modernization Program (LMP) use the SAP enterprise resource planning password system, which may not be sufficient for their security needs.
Recommendation 6-3. Army Enterprise Systems Integration Program leadership should implement further redundancy, data backup, and security measures for the Global Combat Support System-Army and the Logistics Modernization Program.
Data integrity is now, and will continue to be, a significant challenge for the GCSS-Army and the LMP. Accurate logistical data are an absolute requirement. Without accurate data, the logistics system may not perform at the required level, and decision support systems that rely on that data may deliver erroneous analysis results. The reliability of GCSS-Army and LMP, and the level of data integrity, will directly impact trust in the system. Every supply sergeant in the Army is extremely adept at squirreling away extra items that the logistics system historically may have done a poor job of delivering. This behavior is highly ingrained in the Army’s logistics culture, and it is not likely that this culture can be completely changed. Trust in the GCSS-Army and the LMP will improve as the systems prove their worth and reliability to the soldiers who depend on them.
While automated data entry will become the norm over time, much of the data entered into GCSS-Army and LMP will be entered by hand. There will be numerous opportunities for mistakes to be made. To ensure data integrity, automated auditing of the system may be a necessity. This could be achieved with relatively straightforward applications of artificial intelligence, and following SAP standards (Experian QAS, 2008).2
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1 Xpandion, “How to Hack SAP®,” http://www.xpandion.com/Security-Authorizations/how-to-hack-sap.html, accessed November 13, 2014.
2 SAP, Help Center, “Data Integrity Manager,” http://help.sap.com/saphelp_crm70/helpdata/en/49/2a5a1d6c7f3895e10000000a421937/content.htm, accessed November 13, 2014.
Finding 6-5. Data integrity is absolutely vital to the success of the Global Combat Support System-Army and the Logistics Modernization Program and for the development of future decision aids. It was not clear from information provided to the committee if the system developers have paid sufficient attention to data integrity.
Joint and Coalition Considerations
Because of the complexity of ERP implementation and the specific needs of the Services, DoD did not require procurement of a single ERP system for all U.S. military. While the Navy and the Army are employing SAP software, the Air Force and Marine Corps chose to employ Oracle systems for their ERPs. As a result, linkages between service systems are still under consideration, although, in a demonstration, GCSS-Army and GCSS- Marine Corps were able to link selected elements of their systems.
From a coalition perspective, a large percentage of our allies are also implementing, or have implemented, their own ERP systems. It appears that virtually all are using either SAP ERPs or Oracle ERPs. With the expectation that coalition operations will be the norm in the future, it is possible that it will be necessary to link with allied systems in future military operations. Such linkages would increase the efficiency of future coalition operations by allowing for mutual support across many or all of the coalition participants, but they could also introduce new security concerns.
Finding 6-6. In a Joint environment, the necessity for interoperability among service enterprise resource planning (ERP) systems will become more pressing. It also may be necessary to similarly connect U.S. ERP systems with allied military ERP systems for coalition operations, although this may raise new security issues.
Recommendation 6-4. The Army should continue its efforts to have Global Combat Support System-Army interact with sister Service enterprise resource planning systems. This capability should also include the Logistics Modernization Program. The Army should work on achieving similar, secure interoperability with allied enterprise resource planning systems via federation for coalition operations.
In-Transit Visibility and Supply Chain Management
In the current Standard Army Retail Supply System-based system, individual orders from within units stop at the supporting Supply Support Activity (SSA). If they cannot be filled, an SSA order (with unique SSA document number) is generated to the source of supply, with the unit order held as a “due out.” When the SSA order is filled, it then is married up to the unit due out and the unit’s order is filled. It was set up this way to reduce excess inventory. If every unit order was unique and perpetuated to wholesale, if the order is canceled or filled through some other means, when the original order is filled from wholesale (cancellations almost never catch up in time), it has nowhere to go but excess inventory. Another advantage of this system is that any given order for an item with a national stock number that is stocked will be filled just as soon as stock is on hand, and any stocked item for which there is no stock on hand will already have “due ins” coming to fill up to the requisitioning objective. In this way, orders for stocked items will almost always get filled faster if the unit’s original order is not perpetuated to wholesale. GCSS-Army will work the same way.
In discussions with Army supply personnel, the committee was informed that Authorized Stockage Lists (ASL) have become very responsive, owing to an effort put into place that involves Army Materiel Command (AMC) designing the ASLs, rather than units doing it themselves. Orders for readiness drivers are likely to be on the ASL of the supporting SSA. Over 75 percent of orders for readiness drivers are stocked at the local supporting SSA.
The use of in-transit visibility lets units see when their due outs will be filled. There have even been applications written that mimic the Standard Army Retail Supply System logic. These applications can match up unit orders with the corresponding SSA order that went to wholesale, so tracking orders right to the SSA’s doorstep is routine. Just like the commercial marketplace, the Army uses advanced shipping notices and provides units automated estimated shipping dates for their unfilled orders that go right into their unit document register.3
With the above in mind, there are reports that suggest the system could be further improved by extending visibility to the end user—that is, the soldier. The committee heard many anecdotal reports of instances of over-stockage, excessive inventory, and low confidence that ordered items would be available when needed. One contributor to this situation may be the (real or perceived) lack of visibility for the end user about whether or when an ordered item will be delivered as requested.
Companies like Amazon, FEDEX, and UPS push shipment and delivery information to the customer. The UPS Supply Chain Solutions organization actually monitors the stocks levels of inventory and advises the customer of the need to reorder based on restocking thresholds provided by the customer. Better resupply in-transit visibility for Army commanders and unit-level operators could go a long way toward relieving the problems that lead to excess orders, stockpiling of supplies, and cannibalization. There are reports that say providing this information is something that would give commanders more confidence in the logistics system.
The Army also uses radio frequency identification (RFID) tags to provide in-transit visibility. DoD is transitioning to an improved RFID tag and infrastructure technology. The new tag addresses operational shortcomings by alleviating tag numbering constraints, improves interoperability with coalition partners, and improves tag capabilities for sensor functions. However, conversations with active-duty soldiers having recent experience in Afghanistan reveals that many containers arrive in country missing their RFID tags. They had been removed during container handling, possibly intentionally. The result is that many containers arrive with no indication of what is actually in the container. Depending on when the RFID is removed, visibility is lost for some part of the container movement.
Finding 6-7. Differences of opinion between the public and private sector continue to exist on how far the in-transit visibility system should extend.
Recommendation 6-5. The U.S. Army, in coordination with commercial supply chain companies, should look at the cost /benefits and advantages/disadvantages of extending the in-transit visibility system to the end user/soldier.
Finding 6-8. The Army continues to encounter challenges, posed by the operational shortcomings described above, with use of radio frequency identification technologies, and these challenges are affecting in-transit visibility.
Recommendation 6-6. The Army should develop robust, reliable radio frequency identification tags that address operational shortcomings experienced with current tags.
Finding 6-9. Technology demonstrated recently will allow for better visibility of in-theater fuel supply.
Recommendation 6-7. The Army should continue to develop and field technologies that improve visibility for in-theater fuel supply levels.
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3 Various discussions between LTG (ret) Mitchell H. Stevenson, former Deputy Chief of Staff, Army G4 and former commanding general, Combined Arms Support Command, and Leon Salomon, committee member.
MAKING BETTER LOGISTICS DECISIONS
GCSS-Army and the LMP will be the underpinnings for virtually all Army support systems for logistics decisions. The various components of the logistics ERP, when combined with operations research (OR) expertise, provide advanced analytics to support enterprise strategy and integration. The ERP will bring the necessary visibility to the movement of supplies and parts through the logistics system. Current decision support systems, which depend on existing stove-piped data systems, will in the future be supported by the GCSS-Army and LMP data systems. Considerable effort will be required to transform present decision support systems into GCSS-Army and LMP applications—that is, to tap into and make use of the GCSS-Army and LMP systems and data sets.
The truly exciting prospect for GCSS-Army, however, is that all of the Army enterprise data will be in one federated data base. GCSS-Army and LMP will open up incredible opportunities at all levels of the Army for the development of decision support systems that were simply not possible before. The new decision support systems will be the vehicles for vast improvements in logistics operations, bringing with them increased efficiency.
Decisions made during the execution of the Army logistic mission are made at every level, from supply sergeants and maintenance technicians to the commanding general of AMC, and can be very complex. These decisions can include things like which system to work on first, whom to assign to a job, when and where to send supplies, which route to use, how much force protection is needed, and thousands of others. Each of these decisions usually involves considering several alternatives. More often than not, the only decision support currently available is in the form of a “Bunch of Guys (or Generals or Gals) Sitting Around a Table,” known colloquially as BOGSAT. Effective analysis can result in major savings (Box 6-1).
During the early Fall of 2002, less than a year after commencing Operation Enduring Freedom and with Operation Iraqi Freedom imminent, the commanding generals for the U.S. Army Aviation and Missile Command (AMCOM) and AMC initiated an ambitious study effort to improve logistics operations in order to better relate resource investment levels to force readiness and future force capabilities.
Even though budgets were increasing in the immediate aftermath of a decade of neglect during the post-Cold War drawdown, rapidly growing back orders for parts and unfunded requirements for spares were causing increasing concern, yet their impact on readiness was not at all clear. Aggregate aviation fleetwide readiness was beginning to decline, and across the Army expensive weapons systems were declared nonoperational owing to a lack of relatively cheap parts. However, all these concerns were accompanied by widespread perceptions of enormous inefficiencies and disconnects across the logistics support system. An initial year-long effort led to several initiatives, including improved demand forecasting, improved inventory management policy, and improved retrograde operations.
Early results based on analytical demonstrations, experiments, and field tests from 2003 to 2005 clearly revealed that readiness could be improved with significantly reduced costs if specific catalysts for innovation were adopted. Among the catalysts identified were mission-based forecasting (MBF), readiness-based sparing (RBS), and readiness responsive retrograde (R3), each of which was key to adopting a systemwide, end-to-end enterprise perspective, referred to in academia and the commercial sector as integrated supply chain management. Each of these catalysts is described in more detail in Appendix G. Each—MBF, RBS, R3, and connecting condition-based maintenance (CBM) to the supply chain—is estimated to be saving on the order of hundreds of millions of dollars annually for the Army aviation fleet. Their combined effect, once they have been fully implemented, is likely to be the saving of many billions of dollars, giving the Army a several-orders-of-magnitude return on its investment.
SOURCE: Parlier (2011, p. xxi).
Now, as overseas operations abate, Army budgets are decreasing. This situation, combined with the effects of a broader national fiscal reality, is renewing the quest for more efficient, cost-effective operations and giving it new urgency. A phrase now used to describe this goal has been costwise readiness. The Army’s persistent inability to relate resources to readiness, which is due to both inefficient supply chain management and poor forecast accuracy, has been masked by massive infusions of resources for much of the past decade but is again becoming apparent, resulting in mounting pressures to find efficiencies and generate savings.
To the extent that significant savings can be generated from within the materiel enterprise by adopting, refining, and implementing new analytical approaches, at least some of the force structure that would otherwise be eliminated due to fiscal pressure could instead be retained. Savings obtained by transforming Army supply chain management could help to preclude the re-emergence of a “hollow force,” caused by the damaging effects of precipitous budget drawdowns traditionally seen during postwar periods.
Finding 6-10. The application of advanced analytics, systems analysis, and emerging information technologies (e.g., enterprise resource planning systems) provides a powerful opportunity to create effective enterprise decision support systems.
Recommendation 6-8. The Army should strongly support the application of advanced logistics analytics to develop enterprise decision support systems in conjunction with emerging information technologies, sensor-based technologies, and supply chain simulation technologies.
GCSS-Army has the potential to quantify spare parts usage and empirically track the readiness production function for major systems. Consequently, vast amounts of data and information will soon be available at the tactical level. However, if the new tactical-level data collection and warehouse systems are not connected to the larger supply chain, then enterprise-wide visibility will not exist to generate the knowledge needed (e.g., using multiechelon readiness-based sparing) to fully capitalize on their promise. Conversely, if this customer (readiness) demand information is made visible using information technology (IT) and provided to the entire logistics enterprise, then the bullwhip effect can be drastically reduced.4 This can be accomplished for the very first time by providing actual consumption information in near real time to all production, provisioning, distributing, and inventory supply elements in the supply chain. By providing such visibility, collaboration among all organizations can be drastically improved and focused directly on supply performance for readiness capability needs that are now apparent to all. Uncertainty is thereby removed, and inefficiencies induced by information lag across previously independently operating logistics organizations can be dramatically reduced. The supply chain becomes more responsive to real customer demand—that is, to actual readiness requirements. Capability and readiness performance can be improved and aggregate investment levels reduced and tied directly to performance outcomes, thereby linking resources to readiness. The Army has an unprecedented opportunity to improve logistics planning and reduce logistics costs and response times through the use of information being generated under AESIP.
The key requirement for the development of software applications (i.e., software tools or apps) is to be able to access data from GCSS-Army. It should be possible for people at all levels of an organization to develop apps appropriate to their jobs. As an example, a warrant officer in a unit may develop an app that makes transferring equipment easier. The process is currently manual and involves a significant number of steps. It might be possible to develop an app that would do all the steps
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4 The bullwhip effect describes the tendency for the variance of orders in supply chains to increase as one moves upstream from consumer demand (Croson et al., 2013).
automatically based on simple input from the user. This app could then be shared with others in similar jobs. A clearinghouse for GCSS-Army apps would accelerate the process of implementing GCSS-Army and would take advantage of considerable expertise that exists in the operating units of the Army. Most of us use apps on our phones from similar clearinghouses (i.e., app stores). This process could be adapted from the civilian world to meet the needs of the Army.
Finding 6-11. The Army currently has no processes, plans, procedures, funding, people or other resources aimed at encouraging the logistics community to develop and propagate apps and higher level tools using data from the Global Combat Support System-Army, the Logistics Modernization Program, or other data systems to improve the decision process.
Recommendation 6-9. The Army should take advantage of contributors at all levels to develop and distribute apps and other tools to fully realize the potential of the Global Combat Support System-Army. A concept similar to those used in commercial app stores should be implemented to distribute such tools and provide ratings for them.
Operations Research and Logistics Decision Making
The Army is investing heavily in an effort to fully capitalize on the enterprise-wide promise offered by IT. Although enormous sums have been invested by the corporate world in ERP solutions, these investments have had very mixed results (Brown, 2003). Emerging evidence indicates that it is possible to achieve dramatic improvements in performance and competitiveness with IT systems. This success, however, has only been achieved by companies that have applied IT solutions to appropriate, efficient, and mature business processes. Information (especially ERP) systems alone cannot compensate for the lack of such a business-practices. In fact, the evidence suggests the opposite, that attempts to implement IT solutions absent such a business practices actually lead to poorer performance (Heinrich and Simchi-Levi, 2005).
It is important to differentiate between (1) the purpose and functions of OR, which uses knowledge-based decision support systems, and (2) transaction-based ERP technology, which is used to acquire and process raw data and to compile and communicate accounting reports.
ERP solutions have increasingly been touted as a panacea for all kinds of corporate decision-making processes, but they lack the analytical capabilities needed to optimize the efficiency of those transaction-oriented processes.5 While ERP systems provide considerable visibility into events that have happened, they provide very little insight into why they happened, even less about what is likely to happen, and certainly nothing about “what should happen if current conditions either continue or change.” As Massachusetts Institute of Technology Professor Jeremy Shapiro observed, “Enterprise Resource Planning (ERP) is really a misnomer because it fails to provide insights into decisions affecting ‘resource planning’” (Shapiro, 2007, p. 35).
In contrast, OR has been described as the “science and technology of decision making” and can be traced to multidisciplinary teams applying several scientific methods to military operations during the early years of the Second World War.6 Over time OR has become recognized as the discipline of applying advanced analytic and modeling frameworks to the challenges of complexity and uncertainty, especially in large-scale systems and organizations. Utilizing principles from mathematics, engineering, business, computer science, economics, and statistics, OR has developed into a full-fledged academic discipline
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5 See, for example, Hugos (2003), Essentials of Supply Chain Management, p. 127.
6 For additional information, see Fisher (2005), A Summer Bright and Shining; Nye (2004), Blackett, Physics, War, and Politics in the Twentieth Century; and Air Ministry (1963), The Origins and Development of Operational Research in the Royal Air Force.
FIGURE 6-2 Difference between the data resident in ERP systems, labeled “Operational,” and the data in prognostic, predictive, and prescriptive analytics, labeled “Analytical.” OLAP, online analytical processing. SOURCE: Josh Call, HQ AMC G-3/4, Ron Lewis, LMP PMO, Henry Singer, Team CSC, “Logistics Modernization Program (LMP) Enterprise Resource Planning (ERP) 101 Education & LMP Capabilities Overview,” presentation to Army Materiel Command (AMC), November 6, 2013.
with practical applications in business, industry, government, and the military. Its purpose is to provide managers and executives with insight and guidance, using advanced analysis to interpret information and create knowledge for them as they apply their decision-making processes to complicated management issues (Parlier, 2005).
In the corporate world the term business intelligence is used to encompass both analytics and the data processes and technologies used for collecting, managing, and reporting decision-oriented information. It is critical that the Army recognize and build on the potential offered by its ERP implementation by developing and connecting to analytic capabilities provided by decision support systems. What is needed is a symbiotic—not merely a complementary—relationship between decision support systems (incorporating analytically based forecasting, planning, and optimization technologies) and ERPs to fully capitalize on the promise of an integrated logistics enterprise. The difference between ERP data systems and advanced analytics, which includes prognostic, predictive, and prescriptive analytics, is shown in Figure 6-2.
Furthermore, the Army materiel enterprise lacks an engine for innovation, a virtual test-bed that can provide a synthetic, nonintrusive environment for experimentation and evaluation of innovative ideas and concepts. Such a synthetic environment is needed to guide and accelerate transformational change along cost-effective paths, providing the analytical glue to integrate and focus what otherwise would be disparate initiatives and fragmented research efforts. In essence, such a capability functions as an engine for innovation to sustain continuous performance improvement. To some extent, the Logistics Innovation Agency has been serving in this capacity by developing and assessing logistics tools and methods for the Army’s tactical environment. If these existing, although limited, Logistics Innovation Agency capabilities
could be complemented with several others across the broader DoD support community, the Army could generate vastly improved simulation capacity, modeling capabilities, testing, and experimentation. Not only would this allow the rapid assessment of useful logistics tools prior to their infusion into the force, but it would also dramatically improve enterprise supply chain management across multiple classes of supply.7 These capabilities could streamline development and responsive implementation of tactically relevant, cost-effective logistics tools and concepts and provide the ability to better define new system requirements in support of the acquisition community. This is discussed in more depth in Appendix F.
Finding 6-12. The Army lacks a comprehensive strategy and implementation plan incorporating effective decision support analytical tools (i.e., operations research) along with the appropriate IT required to enable and provide the decision support needed to achieve cost-effective, performance-oriented results. In this era of dramatic resource constraints, the Army logistics community must better harness and apply operations research and strategic analytics across the materiel enterprise.
Recommendation 6-10. To obtain the full decision support potential of the integrated logistics enterprise, the Army should ensure that enterprise resource planning system data transactions and management information systems are complemented by the operations research capabilities needed to conduct modern analytics. The goal should be effective integration of analytics into organizational decision making.
Recommendation 6-11. The Army should develop an engine for innovation for the logistics community and adopt, apply, and refine management innovation as a strategic technology (see Appendix F).
Technology readiness levels (TRLs) represent one approach commonly used to support decisions on the front end of the acquisition life cycle (pre-Milestone C).8 There is currently no analogous measure that can be applied to fielded systems or fleets operating in the sustainment phase of their life cycles or to new systems proposed or under development in the early phases of the acquisition process. No matter the life-cycle phase, sustainment or development, insight into issues of costwise readiness and affordability—the likely future operation and sustainment costs (and cost growth)—can be gained by simply asking whether specific sustainment concepts, policies, or methods are in use, are planned for use, or are not planned. The same is true for the ability to credibly relate budgets (current resources) to near-term readiness and for the ability to relate programs (future resources) to future capabilities. With this in mind, there may be value in considering the concept of sustainment readiness levels (SRLs). Analogous to TRLs, SRLs are post-Milestone C graduated thresholds for a sustainment maturity model, which consist of critical supply chain management policies applicable across all platforms. The supply chain policies identified below support development of readiness-driven supply networks and, collectively, form the analytical foundation for pursuing and achieving cost-wise readiness. Their effects should be assessed and measured in terms of enterprise outcomes: sufficient availability for current operations (current readiness) and systems available for anticipated missions including Defense Strategy Guidance requirements (future capabilities). Adopting such a sustainment maturity model would be a significant
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7 These could include, for example, the Systems Integration Laboratory at Pennsylvania State University’s Applied Research Lab; high-resolution supply chain modeling and simulation capabilities developed by the Center for Systems Reliability at Sandia National Laboratories; and the Virtual Factory simulation framework for optimizing complex systems at North Carolina State’s Industrial and Systems Engineering Department.
8 A milestone marks the start or finish of a program phase and has defined entrance and exit criteria. Milestone C is an acquisition program review conducted at the end of the Engineering, Manufacturing and Development phase of an acquisition program. The purpose of this review is to make a recommendation or seek approval for an acquisition program to enter the Production and Deployment phase (AcqNotes, “Acquisition Process: Milestone C,” http://acqnotes.com/Acquisitions/Milestone%20C.html, accessed March 18, 2014).
step toward bringing together previously separate, diverse groups to focus on a shared purpose driving toward common goals and readiness-oriented outcomes.
For currently fielded systems in the sustainment portion of their life cycles, empirical impacts for various sustainment policies could be assessed using SRLs. For example, it could be determined whether a policy was being implemented with measurable effect within a cost-performance (resources vs. readiness) trade space. For new systems, these criteria could be used as an assessment and planning checklist in conjunction with TRLs. This approach would be significant because the development of new programs has historically not focused (for various reasons, including lack of empirical operational data) on the costs and logistics implications of the operation and sustainment phase, even though sustainment costs typically constitute more than 70 percent of total life-cycle costs of a program. SRLs could be reviewed by the Joint Requirements Oversight Council for sustainment capability assessment and by the relevant Milestone Decision Authority (MDA). SRLs could provide a means for DoD officials, program managers, and materiel management centers to address, and focus attention on correcting, numerous problems in supply chain management, including persistent deficiencies in demand forecasting, inventory policy, and strategic resource planning.
Specific sustainment management policies—that is, catalysts for innovation (refer to Box 6-1)—should be included as critical enablers for this SRL concept. Management policies for which SRLs can be established include these:
- Mission-based forecasting (MBF),
- Readiness-based sparing (RBS),
- Multiechelon RBS (MERBS),
- Condition-based maintenance (CBM),
- Intermittent demand,
- Readiness-responsive retrograde (R3), and
- Sustainment early warning system (SEWS).
A broader discussion of the above concepts, including possible assessment criteria, is included as Appendix G.
Finding 6-13. Inadequate attention has been focused on the long-standing need to correct numerous problems in supply chain management, including persistent deficiencies in demand forecasting, inventory policy, and strategic resource planning.
Finding 6-14. Unlike pre-Milestone C technology readiness levels for major acquisition programs, there are no Joint and/or Army requirements for post-Milestone C sustainability assessments.
Recommendation 6-12. The Army should adopt critical supply chain management policies—catalysts for innovation—and apply a sustainment readiness level (SRL) maturity model concept to both currently fielded systems and new systems in development. The Army should further extend the SRL concept, particularly mission-based forecasting, beyond Class IX to other classes of supply as well, especially III and V.
(Lack of) Analysis of Logistics Issues Related to Acquisition
Anecdotally, there are many instances when, as a program faces budget constraints (which all programs inevitably do), the first requirements that are sacrificed are those related to logistics and sustainment. They are sacrificed in favor of those that more directly affect warfighting performance. There exist many examples, such as relaxation in reliability, fuel consumption, system life, maintenance
access, and the like as the first requirements relaxed to save dollars. Whether or not these ultimately proved to be good decisions, they were generally the best available to a responsible decision maker forced to operate with incomplete data. These decision makers, when choosing a logistics-related requirement rather than a nonlogistics requirement, are typically presented with the benefits of each choice in an apples-to-oranges comparison. For example, reliability improvements to an artillery system, expressed in terms of mean time between failure, would not usually compete well against rate of fire, range, or other capabilities more easily quantified in terms of combat measures. Yet improved mean time between failure would have beneficial mission impacts such as more mission-ready systems available to the commander and less likelihood of a system or subsystem failing during a mission. Despite its significant effort looking for apples-to-apples assessments of logistics versus nonlogistics system analyses, the committee was unable to find any. One emerging capability that shows promise is the Whole System Trades Analysis Toolset developed for the Army’s Ground Combat Vehicle program and now being applied more broadly by PEO Ground Combat Systems.
Finding 6-15. When systems are being developed, the results of logistics analyses are not quantified in terms of warfighting effects. As a result, logistics systems and logistics requirements do not fare well when competing with other types of systems or subsystems.
Recommendation 6-13. The Army should develop and implement methodologies to quantify the warfighting effects of logistics in analyses.
During data gathering for this report, a subset of the committee visited the Training and Doctrine Command (TRADOC) Analysis Center (TRAC) at Fort Lee, Virginia (TRAC-Lee). During this visit the committee learned that TRAC-Lee is responsible for performing most of the Army’s analyses supporting logistics decisions for TRADOC. Yet TRAC-Lee has only about 25 trained analysts to perform these studies and analyses. Overall, the entire TRAC enterprise, consisting of centers at Fort Lee, Fort Leavenworth, Monterey, and the White Sands Missile Range, has about 250 analysts. Thus only 10 percent of the analysis force is dedicated to logistics analysis, even though sustainment costs typically account for more than 70 percent of a system’s overall life-cycle costs.
While it can be difficult to perform comparative analyses of logistics and nonlogistics systems using common relevant measures of effectiveness, it is generally possible. The main requirements to successfully do this are quality analysts and well-designed tools.9 If such analyses were broadly available, the committee believes that in many cases better acquisition decisions might be made. Rather, the decision maker is usually forced to make a choice between two or more alternatives with only experience and advice from others with the same information deficits. No data exist to indicate how often a decision is made where the alternative would actually be a better choice for the Army. However, given that the decision is generally made to sacrifice the logistics requirement, and given the large portion of the Army budget devoted to support systems, it is likely that there is a substantial long-term cost impact of poor decisions.
Finding 6-16. Because logistics decisions are complex, are often mostly subjective, and often have great impacts on life-cycle cost, an investment in logistic decision support systems could result in significant savings over a system’s life cycle.
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9 Two examples of Army efforts along these lines are the Contingency Basing Initiatives and Joint Operational Energy Initiative. The Joint Operational Energy Initiative is discussed in Chapter 3. The Contingency Basing Initiative is focused on making contingency bases more efficient, reducing waste, reducing energy demand by reducing usage and using alternative energy sources, and reducing water demand by more efficient usage and recycling efforts.
Many logistics-related issues are not being addressed at TRAC-Lee, despite its role in performing logistics assessments. For example, TRAC-Lee currently does not perform assessments of the potential impacts of adopting CBM+ across major weapon systems and vehicle fleets and their supporting supply chains. As a consequence, the potential impacts on tactical workload and unit-level workforce reduction have not been quantified. Nor has the possibility of significantly reduced forward stock levels or aggregate requirement objectives for CBM-enabled components been assessed. With the exception of the Joint Operational Energy Initiative, a lack of analysis appears to generally be the case for most ongoing and contemplated logistics technology initiatives. Another example of failure to assess logistics impacts is the recent decision to reduce the size of brigade combat teams from 4,000 to 3,000 personnel authorizations within the current program (which encompasses fiscal year [FY] 2016 to FY2020), assuming that robotics will somehow enable this reduction in manpower. TRAC-Lee has neither the necessary analytical experience nor the modeling capabilities to actually assess, much less validate, such a crucial decision.
Army leadership, particularly in making acquisition decisions, has become accepting of the difficulty in analyzing logistics systems vis-à-vis nonlogistics systems. As a result, they do not demand comparison of such alternatives using common metrics. The committee believes that such comparisons are usually possible, and Army decision makers should insist on such results from their analysts.
Finding 6-17. Modeling and simulation resources (personnel and tools) are insufficient at Training and Doctrine Command Analysis Center-Fort Lee to evaluate, compare, and contrast various science and technology initiatives and their respective impacts on both the force structure alternatives currently under consideration and operational outcomes across the spectrum of operations.
Finding 6-18. Institutional enterprise-wide modeling, simulation, and analytical capacity for conducting strategic logistics is fragmented and is inadequate to provide the cause-and-effect understanding essential for designing the force of the future.
Recommendation 6-14. The Army should revitalize its logistics analysis capability by acquiring the necessary tools and qualified people in quantities commensurate with the number and impact of logistics decisions that need to be made.
Recommendation 6-15. The Army should educate its leadership about what is possible in logistics analysis, and about the importance of demanding analyses of alternatives using common metrics.
Operations Research Support for Logistics
The military drawdown during the decade of the 1990s decimated the existing analytical brain trust of logistics-focused military operations research/systems analysts (ORSA) within AMC. Officer ORSA authorizations declined from 55 in fiscal year 1989, including five colonels, to none by fiscal year 2000, as shown in Figure 6-3 (Parlier, 2004). They have remained at zero until just a few years ago, when one position was restored to the U.S. Army Materiel Systems Analysis Activity.
Army civilian ORSAs also saw disproportionate cuts relative to the rest of the Army, declining from half of Army-wide authorizations in FY1990 to less than a third by FY2002, where they remain today (Figure 6-4). Nearly all those that remain, however, are providing matrix customer support to program management offices as cost analysts rather than analyzing supply chain challenges. Furthermore, in the case of the U.S. Army Aviation and Missile Command, for example, there have been no dedicated resources to support outsourcing logistics systems analysis, research, or studies for nearly two decades now (Parlier, 2011).
FIGURE 6-3 Officer ORSA (Army Functional Area 49) authorizations in AMC from FY1988 through FY2003. SOURCE: COL Greg Parlier, Deputy Commander for Transformation, AMCOM, “Enabling a Strategically Responsive, Transforming Army: A Systems Approach to Improve Logistics Chain Efficiency and Effectiveness,” presentation to Commanding General, Army Materiel Command, and Commanding General, U.S. Army Aviation and Missile Command, August 22, 2003.
FIGURE 6-4 Civilian ORSA strength in AMC from FY1990 through FY2002. SOURCE: Republished with permission of Business Expert Press LLC, from Parlier (2011), permission conveyed through Copyright Clearance Center, Inc.
This situation is not confined to AMC. Similarly acute conditions prevail across all levels of the materiel enterprise:
• Headquarters Department of the Army G-4 staff: No authorizations for FA49;10
• Logistics Innovation Agency: No authorizations for FA49 and no authorizations for civil servant 1515;11
• TRADOC: 2 of 30 FA49 TRADOC authorizations are in the Sustainment Center of Excellence at Fort Lee;
• TRAC-Lee: 5 authorizations at TRAC-Lee out of 84 across all four TRADOC Analysis Centers; and
• Army Logistics University: 7 ORSA instructor authorizations compared to 31 at the U.S. Military Academy.
It is also noteworthy that during Operation Iraqi Freedom, Multi-National Forces Iraq (and later U.S. Forces-Iraq) had a robust contingent of deployed OR analysts from all Services, as well as contractor support. For example, in early 2010 there were 31 Army FA49 field-grade officers deployed in a variety of organizations and staff positions across the major commands in-theater. However, no FA49 officers were assigned to the organization responsible for theater logistics operational planning, U.S. Forces-Iraq J-4, which had a staff of 200.
The Army has not conducted a thorough, comprehensive assessment of the state of OR for nearly two decades. The need for such an introspective, forthright evaluation is clear, especially for the logistics community given the paucity of existing analytical capacity (personnel authorizations) allocated to its various commands and organizations.
Finding 6-19. The Army’s ability to perform logistics studies and analyses has eroded over the last 25 years to the point where there is inadequate organic capacity left to conduct the rigorous analyses required to responsively support fact-based decision-making. An analytical renaissance is desperately needed, long overdue, and a precondition for achieving the significant improvement that is not only possible but also can be realized within a relatively short time frame (a few years rather than decades).
Recommendation 6-16. The Army should make an appropriate investment in organizing the Army analytical community to better support the materiel enterprise. Such an investment is a precondition for sustainment excellence.
Recommendation 6-17: In addition to rebuilding analytical capacity within the materiel enterprise, the committee strongly suggests a more comprehensive assessment of the state of operations research across the entire Army using an evaluation construct that includes analytical capacity, capability, utilization, organization, and contribution.
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10 FA49 is a military designation for an operations researcher/systems analyst.
11 1515 is a civilian government designation for an operations researcher/systems analyst.
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