From Factory to Foxhole
FROM FACTORY TO FOXHOLE
DoD is focusing efforts to better integrate asset movement requirements with major transport shippers, ensuring key assets and data reach crucial points of logistical supply.
by Peter A. Buxbaum, MLF Correspondent
The key organizational change came in September 2003, when former Secretary of Defense
Donald Rumsfeld vested the commander of the United States Transportation Command (USTRANSCOM) with authority as distribution process owner, or DPO. USTRANSCOM thus became responsible for all strategic movement activities and policies for the Department of Defense.
“USTRANSCOM serves as the quarterback or the orchestrator,” explained Army Lieutenant Colonel Leonard Grzybowski, chief of the Strategy Branch at USTRANSCOM. “The DPO provides one strategic distribution face and peer accountability to the warfighting commander, responds to that commander’s issues and challenges, and integrates sustainment and distribution processes from an end-to-end perspective.”
Providing USTRANSCOM with overarching authority over transportation was designed to eliminate the stovepipes that had developed among individual service-specific transportation agencies. “Our observation was that the system was disjointed,” said Eric Mensing, president and CEO of APL Maritime Ltd., a U.S.-flag ocean carrier and logistics provider. “We in industry deal in a world of end-to-end logistics. We understand that in the military world, the warfighter calls the shots, but there is the potential for suboptimizing the network by having systems that are not end-to-end.”
All that was supposed change with USTRANSCOM as DPO. But the military transportation enterprise is vast, and, while organizations and processes have been streamlined, they are by no means consolidated into a single structure. USTRANSCOM has yet to assert authority over all military transportation contracts, unit commanders still order transportation services outside of USTRANSCOM’s aegis, and some suppliers control their own transportation processes and services and deliver direct to warfighters, completely circumventing military transportation systems and policies.
A big part of USTRANSCOM’s duties as DPO is to provide contract vehicles to commercial transportation providers for the benefit of military shippers. By coordinating requirements among all of the armed services, USTRANSCOM acts as a broker that matched requirements, mission sets, and service provider capacities. The military’s end-to-end distribution focus has also meant that relationships have changed significantly with commercial carriers. Before, commercial providers were oneoff providers of a commodity-type of service. USTRANSCOM contracts tend to focus on providing a package of integrated services.
Illustrative of USTRANSCOM’s multifaceted transportation contract is the Defense Transportation Coordination Initiative, a contract it awarded last year to Menlo Worldwide Government Services. Under DTCI, which is worth a potential $1.6 billion, Menlo will be responsible for designing and operating an integrated logistics solution for planning, optimizing, executing and managing DoD shipments in the continental United States, including deliveries to seaports and airports for overseas transport to the theaters of operation. The contract also includes consolidation of DoD distribution centers and streamlining of its transportation network.
“This long-term partnership with Menlo Worldwide Government Services allows us to implement several commercial best practices into our transportation operations,” said Air Force Colonel James Lovell, director, DTCI Program Management Office. Lovell expects the benefits of the program to include increased operational efficiencies and cost savings, better visibility of freight movements, and better delivery on warfighter expectations. Still, DTCI is expected to capture only about one-third of the military freight moving within the continental United States. DTCI will be handling at least some of the freight on the first leg of its journey from the U.S. to Southwest Asia. The other two legs of the distribution process involve getting the supplies overseas and making the final delivery to end users.
“We have established a robust relationship with commercial partners and U.S. flag carriers for sealift, airlift and ground transportation including rail and truck,” said Grzybowski. “Today approximately 95 percent of our passengers move via commercial air, and the overwhelming majority of sustainment sealift is delivered by commercial carriers.”
DoD’s new distribution focus has changed how USTRANSCOM approaches international transportation. The choice between using commercial providers and military airlift and sealift resources “is a balancing act,” according to Grzybowski. But the new emphasis on end-to-end service favors commercial carriers, by allowing them to unleash the global capabilities they have been developing over years for the benefit of the military. Maersk Line Ltd., the U.S.-flag component of the Netherlands- based global transportation provider A.P. Moller-Maersk Group, provides deliveries directly to warfighters in Iraq and Afghanistan. The carrier presently contracts with the transportation components of the various armed services, but Rick Boyle, the company’s vice president for liner services, expects those contracts to be subsumed by USTRASCOM in the next contracting cycle.
“Cargo is booked through defense transportation system either for pickup from the sourcing location or the port, depending on the contract,” said Boyle. Maersk’s contracts cover the gamut of cargo types, including containers, roll on/ roll off (ro/ro) cargo, and break-bulk cargo, which includes noncontainerized and non-wheeled shipments. The company often uses special ro/ro vessels to move military freight from the U.S. ports of Oakland, Newark, Norfolk, Charleston and Houston to the overseas ports of Kuwait and Shuwaiba in Kuwait, Umm Kasr in Iraq, and the Pakistani ports of Karachi and Port Kassim for deliveries to the landlocked Afghanistan. Maersk, which has considerable logistics capabilities, arranges for the transportation to the port by truck or rail if its contract calls for those services.
When Maersk does pick up overseas freight at the factory it is generally in charge of moving the shipment all the way to the ultimate end users in the theater of operations. “Global carriers like ourselves have networks of offices around the globe,” Boyle explained. “We have offices in Pakistan that operate the same way and offer the same capabilities as our offices in the U.S. They contract out the trucking, manage the inland haulage, and provide warehousing and distribution if required at the same level of detail as elsewhere.”
Security on the overland routes into Iraq and Afghanistan has improved over the last couple of years, Boyle noted. “Shipments now consistently move by convoy and are escorted by a security team,” he said. “The threat still exists but attacks have become fewer. We also try to blend military cargo with commercial cargo and that also helps.”
Air carriers provide the same level of service as their ocean counterparts, according to Bruce Dumler, director of global government operations at UPS. “We pick up the freight just the same as we do for commercial customers and move it to its destination,” he said. “We use our various networks and connections to deliver shipments to warfighters in Iraq and Afghanistan right down to the customer it is addressed to.” Military shippers choose air movements generally because of the transit time required for the particular shipment, according to Dumler. Shipments destined for Southwest Asia are generally processed through UPS’s hub in the United Arab Emirates and from there airlifted directly into Iraq or Afghanistan through commercial airports or landing facilities at military bases. Final delivery to military units is accomplished through the UPS network directly or through contracts with local delivery companies.
UPS also provides services to individual military units outside the rubric of USTRANSCOM. “Our sales force sometimes meet with transportation officers at a local command and are requested to provide transportation services in a particular lane,” said Dumler. “We can do that as long as the service requested is not on USTRANSCOM’s restricted list.”
Technology has played an important role in developing a more efficient military transportation network, primarily in providing visibility into the location and movement of assets and supplies. The ocean carriers send electronic data interchange (EDI) messages directly to USTRANSCOM’s command and control system after specific events, such as pickup, vessel loading, vessel departure and shipment discharge and delivery occur.
“Whenever we provide an E DI transmission, it signifies we’ve finished that particular task,” said Boyle. “These milestones are fed electronically directly into USTRANSCOM’s system.”
USTRANSCOM is also “the DoD lead proponent” for the adoption of radio frequency identification (RFID) and automatic identification technology (AIT) in the DoD supply chain, according to Grzybowski. “Asset visibility is the key to providing the situational awareness at all levels to make informed and actionable decisions,” he said. “We are experimenting with various active and passive systems to achieve the desired level of visibility. We are currently testing satellite tagging on highrisk ground routes. The results so far have been excellent.”
Some movements of warfighter supplies simply are not captured by USTRANSCOM. For example, The Boeing Company is contracted to provide sustainment, primarily spare parts, for some of the aircraft, such as the F-18 Hornet fighter and the heavy-lift C-17 Globemaster III, that it provides the U.S. military. “We have the responsibility to get material from the source to the warfighter personally, all the way down to the squadron level,” explained Steve Georgevitch, supply chain manager at Boeing Logistics Solutions. “We must ensure that all material that warfighters need to install on airplanes are there when and where they are needed.”
In this case, Boeing contracts for its own transportation through commercial providers such as FedEx and DHL. That means that these shipments move outside of the military system, are not subject to military contracting and policies, nor are visible within USTRANSCOM’s tracking systems. “We’re not just in the business of getting the parts to their destinations on time,” said Georgevitch. “Boeing has to help keep the airplane available in the field. That is how our performance is measured.”
This situation creates a certain anomaly. Parts shipped directly by Boeing move outside of the USTRANSCOM umbrella, but Boeing parts shipped as part of a different program would most likely be shipped under a USTRANSCOM contract and be visible to the Transportation Command. It is even likely, said Georgevitch, that different shipments of Boeing parts being transported on the very same flight could be subject to this disparity in policies and visibility.
“It is an interesting challenge that USTRANSCOM has today,” said Georgevitch. “Shipments carried under a USTRANSCOM contract are required to be compliant with TRANSCOM policy. We are not required to do anything beyond adhering to Boeing policy.”
“There appears to be a certain amount of disjointedness involved,” Georgevitch continued. “We could be moving something as big as an F-18 wing to a squadron, and USTRANSCOM doesn’t even know about it. We are trying to figure out how to solve this problem. We want to see what we can do to integrate these two branches of the military supply chain.”
It has been five years since USTRANSCOM has been named distribution process owner, and, clearly, some significant challenges remain before it can claim to have developed a single, integrated distribution system for the United States military. The enormity of the enterprise and the exigencies of the current conflicts are major obstacles to achieving that ultimate aim. That is not to say that USTRANSCOM cannot claim its successes, in terms of efficiencies and cost savings.
“Cost efficiencies for using commercial versus military lift assets are difficult to target because the benefits are realized in timeliness, readiness and flexibility through expanded capability,” noted Grzybowski. “Overall, DPO initiatives have validated cost avoidances of more than $1.9 billion since fiscal year 2004.” ♦