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From Manufacturer to Forward Operating Base

This article examines the resilience of the Army's class IV supply chain and analyzes differences between a Department of Defense supply chain and a for-profit business supply chain.

You are at your desk on a gloomy afternoon when your boss rushes in to say there has been an explosion at a port in South Carolina and terrorists are threatening to use dirty bombs in cities across the United States. You and your colleagues rush to the closest television set and turn on CNN. Text on a red banner scrolls across the bottom of the screen describing the detonation of a small nuclear device at the Port of Charleston, and the announcer reports that cargo on ships at two other ports in Pennsylvania and New York have triggered radiation detectors, indicating the possible presence of nuclear devices.

The Coast Guard has sealed off the affected ports, the Navy and Air Force have scrambled their assets to form a defensive perimeter off of the east coast, and the Department of Homeland Security is considering closing all ports in the United States until it determines the extent of the threat. Is this another 9/11, with boats instead of airplanes delivering terror to our doorstep? As you ponder this, the television goes dead and all power goes out in the building. You look out of your office window and the city is dark. After 10 years, America is again under attack.

It is not implausible that the next attack on the United States will be a highly planned and synchronized operation with near-simultaneous attacks on several different targets. While there is never a good time to be attacked, there are certainly worse times. What if the next attack occurs during a critical juncture in our overseas contingency operations in Iraq and Afghanistan?

While we are executing two simultaneous combat operations in the Middle East—drawing down personnel and equipment in Iraq and building up forces and supplies in Afghanistan—in addition to all of the other military commitments the United States has around the globe, are our military supply chains resilient enough to absorb the impact of an event that closes down all traffic into and out of seaports across the United States?

The intent of this article is to examine the impact, if any, to Soldiers in Afghanistan should a terrorist event in the United States close our seaports for an extended period of time.

Building Combat Infrastructure

Imagine moving the entire population of Annapolis, Maryland, or Leavenworth, Kansas (cities with more than 35,000 residents), halfway around the world and resettling them in a harsh desert or mountain environment with few roads, no infrastructure, no buildings—nothing but stark, barren terrain.

Although we have numerous base camps and forward operating bases (FOBs) in Afghanistan already, to accommodate the influx of a small city's worth of troops, we must expand and improve upon what currently exists and create what is not yet in place. Living quarters, dining facilities, latrines, hospitals—the gamut of life support infrastructure required to support tens of thousands of Soldiers—must be built.

Much of this infrastructure requires class IV (construction and barrier materials). Almost all construction materials, from lumber and plywood to plumbing supplies and heating, ventilation, and air-conditioning equipment, fall into the class IV category. Concertina wire, pickets, fencing, sandbags, and other force protection materials are also class IV.

Moving this amount of lumber and related building and force protection materiel requires the procurement of thousands of 20- or 40-foot containers from either the continental United States (CONUS) or offshore suppliers and the movement of these containers to the point of need in Afghanistan.

Military and Private Sector Supply Chains

According to Ronald H. Ballou in Business Logistics/Supply Chain Management:

The supply chain encompasses all activities associated with the flow and transformation of goods from the raw materials stage . . . through to the end user, as well as the associated information flows. Supply chain management [SCM] is the integration of these activities, through improved supply chain relationships, to achieve a sustained competitive advantage.1

A simple way to think about a supply chain is to envision a product in the hands of a consumer at the checkout register of any retail store and imagine how that product got there. Think about the entire process, from raw-materials extraction to transformation at a plant or mill, movement of these materials to a manufacturing plant, assembly of the product's various components, packaging and further movement to a warehouse or distribution center, delivery to the retail store's loading dock, and finally stocking on the store's shelves.

All of the steps in a product's life cycle (including forecasting demand or determining requirements, research and development, procurement, purchasing, manufacturing, distribution, pricing, marketing and sales, inventory management and control, finance, logistics, and even customer service and information systems) are critical pieces of the supply chain whole.

Similarly, the Army uses an end-to-end, enterpriseapproach to logistics support. One 2008 Army Posture Statement information paper explains the logistics enterprise in this way:

The Logistics Enterprise consists of the logistics architecture, organization, personnel, processes, and governance and is the operating environment that enables the holistic approach to sustaining the Army. . . . Logisticians are able to provide better support to the warfighter by maintaining visibility, control and accountability and directing the distribution of assets in supply chains that span the globe.2

The Army's enterprise approach to logistics support and Ballou's privatesector-focused definition of SCM have similarities, but there is a marked contrast between how a for-profit business leader and a military supply chain professional view the concept of supply chain resilience and determine the most critical links of their respective supply chains.

Resilience is “the positive ability of a system or company to adapt itself to the consequences of a catastrophic failure caused by power outage, a fire, a bomb or similar event.”3 Flexibility, adaptability, redundant systems, and a culture of resilience are critical for overall supply chain resilience and determine whether a company succeeds or goes out of business when confronted by a significant disruption anywhere along its supply chain—on the production line, in the distribution system, or when a supplier fails to provide raw materials to the plant.

Private-sector businesses expend varying levels of energy and focus on the resilience of their suppliers, manufacturing processes, end-to-end financial systems, and critical distribution links in their supply chains. In order to meet the needs of the commander on the battlefield, the Army more narrowly focuses on specific downstream supply chain activities than on activities farther up in the supply chain, such as raw materials extraction and manufacturing.

The Army's attention is on ensuring an uninterrupted supply of goods, distributing those assets, and maintaining visibility of supplies in the pipeline. In general, however, distribution—moving supplies over “the last tactical mile,” where the enemy can affect mission success—is often the greatest challenge in a military supply chain. Commercial businesses obviously are not faced with this particular challenge.

The Army logistics system is not a private business whose main goal is the bottom line; its success is not measured in dollars. Going out of business is not an option, and success means providing the right item in the right quantity to the right unit at the right time to ensure the maneuver commander has the flexibility to apply maximum combat power at the time and place of his choosing.

It has been said that logistics alone cannot guarantee victory on the battlefield, but lack of logistics can all but guarantee failure. Inability to overcome supply chain shortfalls in business may result in lost profits, decreased market share, or at worst, bankruptcy. Military supply chain failure may lead to battlefield failure and, by extension, the loss of life.

Private-sector businesses seek to maximize supply chain performance in order to gain competitive advantage and increase market share. They emphasize accurate demand forecasting, streamlined manufacturing, efficient inventory management, and maximized distribution processes, and the goal of profit guides their key decisions.

The Army needs a dependable, efficient, successful supply chain, too, but it instead places intense focus and energy on two particular supply chain links: ensuring a dependable supply of goods and timely distribution of supplies to set the conditions for battlefield success. Businesses aim to make money; the Army aims to win our Nation's wars.

Military Logistics Support Structure

At the strategic level, the Department of Defense (DOD) manages several supply chains. Each class of supply, and most individual items within a class of supply, has a distinct supply chain that usually begins with a contracted supplier manufacturing or providing a particular item. The supplier has the responsibility to provide the finished product to DOD. The contract determines the point at which the item enters the military warehouse, depot, or distribution system for subsequent delivery to forward storage points in the combat theater of operations.

While there are dozens of civilian and military players in any DOD supply chain, four of those players are most critical: the Defense Logistics Agency (DLA), Army Materiel Command (AMC), U.S. Transportation Command (TRANSCOM), and Military Surface Deployment and Distribution Command (SDDC). DLA and TRANSCOM are joint organizations; AMC and SDDC are Army organizations.

Most of our Armed Forces' supplies are provided and managed by DLA, DOD's executive agent for supply chain management. DLA “is the Department of Defense's largest logistics combat support agency, providing worldwide logistics support in both peacetime and wartime to the military services as well as several civilian agencies and foreign countries.”4 It has responsibility for nine supply chains, including six traditional supply chains and three specialized chains.

The traditional supply chains include classes I (subsistence), II (clothing and individual equipment), III (petroleum, oils, and lubricants), IV, VII (major end items), and VIII (medical materiel). The specialized chains include land systems, aviation systems, and maritime systems. A nearly $37 billion enterprise, DLA provides the military services with over 80 percent of their repair parts, 100 percent of their fuels, food, clothing, and medical supplies, and nearly all of their construction materials.

Subordinate to DLA is the Defense Distribution Center, an organization that stocks well over 3 million items costing nearly $98 billion. While some commodities may bypass CONUS distribution centers and go directly to a port of embarkation for sea or air movement to the combat theater, distribution centers are the point where many commodities officially enter the military distribution system from the military industrial base. From these distribution centers, supplies are distributed worldwide with affixed radio frequency identification tags to maintain visibility from the warehouse through the entire distribution network to the FOB.

The other major logistics supplier for the Army is AMC. AMC “is the Army's premier provider of materiel readiness—technology, acquisition support, materiel development, logistics power projection, and sustainment—to the total force, across the spectrum of joint military operations. If a Soldier shoots it, drives it, flies it, wears it, eats it or communicates with it, AMC provides it.”5

TRANSCOM has the mission to “develop and direct the Joint Deployment and Distribution Enterprise to globally project strategic national security capabilities; accurately sense the operating environment; provide end-to-end distribution process visibility; and responsive support of joint, U.S. government and Secretary of Defense-approved multinational and non-governmental logistical requirements.”6

“With its people, trucks, trains, railcars, aircraft, ships, information systems and infrastructure, as well as through . . . commercial partners providing 1,203 aircraft and 379 vessels in the Civil Reserve Air Fleet (CRAF) and Voluntary Intermodal Sealift Agreement (VISA), respectively, USTRANSCOM provides the U.S. with the most responsive strategic mobility capability the world has ever seen.”7 DLA provides the consumable supplies, AMC ensures materiel readiness, and TRANSCOM, DOD's distribution process owner, is responsible for coordinating the movement of those supplies.

Lastly, the mission of SDDC is to “provide expeditionary and sustained end-to-end deployment and distribution to meet the Nation's objectives.”8 SDDC “is a unique Army command that delivers world-class, origin-to-destination distribution solutions. Whenever and wherever Soldiers, Sailors, Airmen, Marines, and Coast Guardsmen are deployed, SDDC is involved in planning and executing the surface delivery of their equipment and supplies.”9

DLA Troop Support

DLA's executive agent for the class IV supply chain is DLA Troop Support. In keeping with an enterprise approach to logistics support, DLA Troop Support has transitioned “from managing items to managing the supply chain.”10 DLA Troop Support uses a combination of long-term contracts with integrated suppliers and prime vendors, often with direct vendor delivery as the means to bring supplies into the military logistics system.

“Prime Vendor” is a DLA-developed supply chain management concept that has improved the efficiency and effectiveness of its logistics support. “Prime Vendor eliminates the layering of supplies at multiple echelons and shifts inventory, inventory management, transportation, and personnel costs from the Government to commercial firms. Prime Vendor programs take advantage of the experience of commercial vendors, whose profit-based business practices demand lean inventories and rapid deliveries.”11

Direct vendor delivery is “a materiel acquisition and distribution method that requires vendor delivery directly to the customer.”12 Direct vendor delivery is not a concept employed only in peacetime; rather, DLA Troop Support has contracts in place with vendors that require delivery to predetermined locations, whether that location is a warehouse in CONUS, a warehouse in Kuwait, or a FOB in Iraq or Afghanistan.

The Class IV Supply Chain

Dozens of items fall into the class IV category: lumber, concertina wire, metal pickets, sandbags, plumbing and roofing supplies, and HESCO protection barriers, to name a few. Each has its own particular supply chain with numerous suppliers, contracts, and leadtimes for production and delivery of that item. For simplicity, this article focuses on lumber.

The first step in virtually any supply chain is de-termining requirements. Retailers use sophisticated forecast models, point-of-sale data, and to a lesser extent, historical data to predict consumer demand 3, 6, or 12 months out. The military, specifically the Army, is not much different.

The old-school method of determining requirements involved using mammoth requirements tables and looking up the amount of plywood and other lumber required based on the level of intensity for a given combat operation, the geography and climate, the number of troops to be supported, and other factors. These books of tables have been mostly supplanted by computer programs with updated data tables and algorithms. In many cases, the Army uses recent historical data for such estimates. For example, to determine the amount of lumber needed for the Operation Enduring Freedom (OEF) surge, we may have referred to how much lumber and associated materiel we used during the troop surge for Operation Iraqi Freedom.

The requirement for class IV supporting the OEF surge, including lumber, ran into the thousands of 20-foot equivalent units (which are units of cargo capacity often used to describe the capacity of container ships). Where did we get this much lumber? Strategic planners at DLA determine the amounts and types of lumber already on hand and where it is in the supply chain—in theater stocks, in depots and warehouses closest to the fight (Kuwait or Europe), in other storage locations worldwide, and due in to military supply activities from external suppliers. DLA Troop Support then contracts for the amount that cannot be sourced from on-hand stocks.

Once firm requirements are determined (and most importantly, funds are allocated), contracts are written, submitted, bid upon, finalized, and executed. These contracts specify the amounts of commodities to be delivered over time, with stipulations as to where the items will be delivered (to a CONUS or outside CONUS defense distribution center, a port of embarkation, a tactical distribution center in Afghanistan, or even a specific FOB).

In this manner, DLA Troop Support, and by extension DLA, buys capacity and places the burden of a potential supply chain disruption on the contracted vendor. If the vendor does not deliver the specified amount of class IV to a particular location at a specific time, then the vendor suffers financial penalties. Therefore, the forces at work in the marketplace work to the military's advantage. Vendors who fail to honor their contracts may find themselves barred from future contract negotiations.

It is generally most cost efficient to obtain commodities as close to the point of consumption as possible. DLA Troop Support has contracts in place with lumber providers in CONUS, but it also has the ability to grant individual awards to procure materials in Europe or elsewhere. This has the benefit of shorter distances to move the product, hence shorter delivery times and lower transportation costs. Having multiple suppliers in various locations provides flexibility and a good kind of redundancy.

Once class IV enters the military distribution system, the key supply chain link is distribution to the point of use. Assuming the lumber is procured in CONUS, it will move by civilian contracted carrier either to an Army distribution center or to a port of embarkation. Based on the amount and priority, and given its bulk and weight, lumber usually travels by commercial sea vessel.

According to SDDC, as of early 2010, sustainment moves by sea from Norfolk, Virginia, averaged 34.4 days transit time to the Port of Karachi, Pakistan. TRANSCOM and SDDC play key roles for transportation carrier contracting, coordination, and end-to-end visibility using various tracking systems. In emergency situations or when it is determined to be a high priority, class IV may move by air or multimodal means.

If DLA Troop Support sources lumber from suppliers in Europe, from either Germany or Scandinavia, a similar process is used for onward movement into theater and subsequent distribution to the end user. The lumber likely enters the military distribution system through the Defense Distribution Depot Europe (DDDE) in Germersheim, Germany, and moves by ground from DDDE along the Northern Distribution Network (NDN) into theater using contracted carriers.

At the outset of OEF, most supplies were moved into Afghanistan by ground on southern routes from the Port of Karachi or by air from various staging bases in the U.S. Central Command area of operations. Since then, to increase flexibility and redundancy, logisticians have looked for alternate routes to avoid the bottleneck at the single seaport of entry and the heavy traffic on the southern ground routes.

The NDN, with various spurs traversing parts of Latvia, Georgia, Azerbaijan, Russia, Kazakhstan, and Uzbekistan, has become much more robust than in the past, offering additional flexibility for supply distribution into theater. According to DLA Troop Support, more than 80 percent of all class IV now moves into Afghanistan along this route.

Therefore, regardless of whether it moves from CONUS or Europe, lumber enters Afghanistan primarily by ground and proceeds to either forward storage points or to a specific FOB. Virtually all ground movement of supplies into Afghanistan is accomplished by local civilian contracted carriers, which is a supply chain link fraught with in-transit visibility challenges.

DLA Troop Support coordinates and executes the contracts for class IV after a determination of requirements. These contracts are a combination of long-term contracts with integrated suppliers, performance-based logistics, or end-state contracts, and various Prime Vendor subcontracts that ensure the required supplies are delivered in the correct amounts, to the correct locations, to the correct specifications, and at the specified times.

Each supplier has the responsibility to meet the requirements of its given contract, so DLA Troop Support focuses on contracting rules. Among the tools available to DLA Troop Support at this point in the class IV supply chain are performance-based logistics, surge clauses, and close relationships with industry partners. DLA Troop Support is not in charge of its suppliers' supply chains per se, but serving as the executive agent for the end-to-end supply chain for all of the services' class IV means that it must plan for the unexpected and have layered, flexible contracts and many suppliers in order to ensure the uninterrupted supply of commodities.

The combination of organic military capabilities, third-party logistics providers, flexible contracts, surge clauses, and appropriate contracting rules provides DLA Troop Support, and by extension DLA, with supplier flexibility and redundancy. By leveraging organic assets and additional contract carriers—rail and truck companies, the Civil Reserve Air Fleet, and other contract air carriers, as needed—TRANSCOM provides distribution resilience.

Supply Chain Resilience

Let's return to the terrorist scenario outlined at the beginning of this article. Given what we know about the class IV supply chain supporting OEF, what would be the impact on operations in Afghanistan, if any, of a significant CONUS port closure?

In his book The Resilient Enterprise: Overcoming Vulnerability for Competitive Advantage, Massachusetts Institute of Technology professor Dr.Yossi Sheffi describes the characteristics of a resilient supply chain and “examines the ways in which companies can recover from high impact disruptions.”13 While geared to the private sector, his concepts are useful for examining a military supply chain.

All supply chains are vulnerable; what varies is to what degree they are vulnerable and to what level of disruption. Dr. Sheffi developed an enterprise vulnerability map, a 2-by-2 matrix with disruption probability on the y-axis (low to high) and consequences on the x-axis (light to severe). A terrorist attack leading to port closure would fall in the bottom right quadrant: low probability and severe consequences.

According Dr. Sheffi, in the event of a low probability, severe disruption event, leaders should ask several questions regarding the operating consequences. Two critical questions when assessing vulnerability are what can be done to reduce the probability of a disruption and what can be done to reduce the impact of the disruption.

Actions to reduce the probability of a port closure, whether intentional (terrorist attack, dockworkers' strike) or unintentional (hurricane, accidental oil spill), relate specifically to port security and resilience and are beyond the scope of this article. However, thinking ahead of time about what can be done to reduce the impact of this kind of disruption is critical to designing a resilient military supply chain.

The two critical links in the class IV supply chain are dependable supply and focused distribution. A port closure is a blow to both of these supply chain links. For the private sector, a port closure means lost dollars and a potentially significant economic impact. For an Army at war in two theaters, it means potential mission failure on the battlefield and possibly fallen Soldiers.

Class IV for OEF originating in CONUS travels primarily by sea. Port closures would initially preclude this transportation mode and leave two options: using scarce military airframes or sourcing the class IV from outside of CONUS. If only east coast ports are closed, TRANSCOM, in concert with DLA, SDDC, and contracted suppliers, would reroute commercial trucks carrying class IV from their east coast destinations to either gulf coast or west coast ports.

In the event of extended CONUS port closures, DLA Troop Support can leverage vendor contracts for lumber in Germany and elsewhere in Europe, thereby exhibiting supplier flexibility and redundancy to ensure an uninterrupted source of supply. These offshore suppliers would provide the lumber and move it to DDDE for further distribution through preplanned transportation lanes from Europe to Afghanistan (by air, sea, the NDN, or multimodal means).

DLA Troop Support routinely assesses requirements and capacity to meet those requirements and factors in the increased time and transportation costs that may be incurred. For example, shipment from a west coast port versus an east coast port adds 4 to 5 days to the travel time to Karachi; moving stocks from Kuwait to Afghanistan takes approximately 3 to 4 days by truck; moving stocks from DDDE to Afghanistan using the NDN takes 80 to 90 days; and direct vendor delivery takes an average of 30 to 60 days.

Other important supply chain resilience characteristics are responsiveness, collaboration with industry partners, redundancy, and supply flexibility. Surge clauses in contracts and multiple suppliers provide responsiveness to unforecasted or recently identified requirements. Having redundant vendors ensures flexibility and uninterrupted supply in the event one or more suppliers cannot meet requirements. Holding this all together is the importance of coordination, communication, and collaboration with industry partners.

Another one of Dr. Sheffi's characteristics of supply chain resilience is the building and fostering of a culture of resilience within the organization. This is where the military often excels. Unlike many for-profit organizations, Soldiers and Department of the Army civilians are trained from their first day in service to be flexible and adaptable, to expect the unexpected, and to plan for unforecasted disruptions.

The Army's culture of contingency plans and what-ifs with a constant focus on security in an unpredictable, always-changing environment is what sets it apart from most private businesses. Most successful companies have resilient supply chains, and many businesses have improved their supply chain resilience—and especially their supply chain security—since the terrorist attacks of 11 September 2001. Unfortunately, the concepts of supply chain resilience and security are still overlooked in many private organizations.

Closure of CONUS ports caused by a terrorist event would have a minimal impact on the class IV supply chain supporting combat operations in OEF. While private-sector businesses focus on the links of their supply chains yielding the greatest earnings potential, the Army applies the greatest focus to the supply chain links that most directly affect battlefield success or failure. Those links include dependable supply and consistent, predictable distribution. Flexible contracts, surge clauses, redundant suppliers, direct vendor delivery, and close, longstanding relationships with multiple suppliers ensure the continued flow of class IV to the theater.

TRANSCOM and SDDC have the strategic, operational, and tactical flexibility to overcome a disruption to CONUS sea lines of communication. While land routes into Afghanistan (the last tactical mile) remain challenging, the use of the NDN and continued efforts by military logisticians to expand land routes in and around Afghanistan continue to ensure reliable means of resupply for class IV and all other classes of supply supporting operations in that country.

Colonel John C. Waller is the chief of the Sustainment Operations Division in the 3d Army/U.S. Army Central G–4. He holds a B.S. degree in chemistry-business from the University of Scranton and an M.S. degree in chemistry from Lehigh University. He is a veteran of three combat tours in Southwest Asia, and he recently completed an Army Senior Service College Fellowship at the Massachusetts Institute of Technology.

1. Ronald H. Ballou, Business Logistics/Supply Chain Management, 5th Edition, Prentice Hall, Upper Saddle River, New Jersey, 2005, p. 5.

2. Terry Battle, “Logistics Enterprise,” Army Posture Statement 2008 Information Papers, http://www.army.mil/aps/08/information_papers/transform/Logistics_Enterprise.html, accessed on 23 March 2011.

3. Resilience (organizational),” http://en.wikipedia.org/wiki/Resilience_(organizational), accessed on 23 March 2011.

4. “About the Defense Logistics Agency,” http://www.dla.mil/about_dla.aspx, accessed on 23 March 2011.

5. “About the U.S. Army Materiel Command,” http://www.amc.army.mil/pa/about.asp, accessed on 23 March 2011.

6. “What is United States Transportation Command?” http://www.transcom.mil/about/whatIs.cfm, accessed on 23 March 2011.

7. Ibid.

8. “What We Do,” http://www.sddc.army.mil/What/default.aspx, accessed on 23 March 2011.

9. Ibid.

10. “About DLA Troop Support,” http://www.dscp.dla.mil/aboutdscp/index.asp, accessed on 23 March 2011.

11. Velocity Management Team, “Prime Vendor: Velocity Management at DLA,” Army Logistician, January–February 1998, p. 4.

12. “Direct vendor delivery,”The Free Dictionary by Farlex, http://www.thefreedictionary.com/direct+vendor+delivery, accessed on 3 March 2010.

13. Yossi Sheffi, The Resilient Enterprise: Overcoming Vulnerability for Competitive Advantage, The MIT Press, Cambridge, Massachusetts, 2007, preface.




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