Logistics and Supply Chain Management
Authored by me as Chapter 14 for the book titled Core Concerns in Indian Defence And The Imperatives for Reforms, edited by Mr. Vinod Misra and published by Pentagon Press for Institute of Defence Studies & Analysis New Delhi.
BACKGROUND
1.
Military Logistics’ covers a far wider scope of functions as compared to
the term’s interpretation in the civil world. At the outset, it is essential to
understand this fact to be able to carry out a purposeful analysis for
suggesting reforms. It is important to know that logistics in civil usually
implies actions pertaining and limited to supply chain management, unlike a
whole array of functions in the military. The scope of logistics in the
military includes design, development, acquisition, maintenance, modification,
upgrade, storage distribution and disposal. Most military leadership may
hesitate to agree that everything outside actual operations, Op plans (strategy
& tactics) and Op training is a part of logistical functions.
“I am tempted to make a slightly exaggerated statement that logistics is
all of war-making except shooting guns, releasing bombs and firing the
torpedoes.”
- Adm Lynde D. McCormick, US Navy
2.
It is therefore apt that logistics and supply chain management, which is
sometimes an afterthought in military strategies and acquisitions, has been
included as a separate chapter within this treatise. In consonance with Adm McCormick,
I would go further to say that logistics and supply chain issues are at the
core of a combat force; without these no analysis can ever be comprehensive.
3.
One common factor among all
proposed reforms is that the suggestions are based predominantly on either of
the two aspects, viz. technological solutions or org structural changes. The
human aspect usually gets buried under the pile of bureaucratic procedures and
more rules defined as a part of reforms. Consequently, the big picture conceived
by the committee for reforms gets diffused before moving on to implementation
stage.
“We cannot solve our problems by the same
level of thinking that created them.”
- Albert Einstein
4.
The fact that many a reform has failed to produce the intended outcome
need not deter us from continuing the endeavour. However, treading the beaten track is sure to
disappoint. Instead of following a strictly formal approach of listing out
inconsistencies, a different approach has therefore been attempted here. The
following popular methods have to be avoided.
(a) The obsession of subdividing a system in an attempt to optimise parts
with a belief that the system shall consequently improve.
(b) Going through the same process over and over again hoping to find a different (expected) answer this time.
THINK SYSTEMIC
5.
The theme
of this book is systemic. An
attempt at systemic threading through various elements at higher levels
including planning, budgeting, acquisition, R&D and industry is therefore a
must. Systemic thinking and systems approach bring to mind two of the most
valuable works, ‘Fifth Discipline’ by
Peter Senge1 and ‘Theory
of Constraints’ by E.U. Goldratt 2. I will base most of my thoughts on these two concepts. It will be
useful to remember the following precepts.
(a)
Don’t optimize parts, implement global
measures.
(b)
Areas of maximum leverage are often obscure - identification is important.
(c)
Org Structure determines behaviour - Field level constraints often point to
causes at policy level.
(d)
Cause and Effect are often not related in time and space.
(e)
There is no blame – people are good, our assumptions
are bad
6.
The reader
may need a little introduction to Theory of Constraints. Elliyahu M. Goldratt
developed the ‘Theory of Constraints (TOC)
as a management and improvement philosophy. His books including The Goal 3,
The Goal II- It’s Not Luck 4
have illustrated the philosophy in an interesting story like style. The
simplicity of approach in problem solving is the defining feature of TOC.
7.
At the root of the TOC thinking
process lies a conflict resolution approach called Evaporating Cloud (of conflict). The systemic cloud is drawn as shown in Fig 1 to represent real life
situations and solving conflict surrounding a given
problem. The prerequisite is an
objective (block A), which is a positive systemic objective. B and
C are needs; both are positive and supportive of the objective. The actions
and wants at D and D' individually supporting the needs at B and
C respectively are, however, conflicting with each other and cannot exist
together. Also that D jeopardises the need at C while D' jeopardises
the need at B; this is what makes the conflict really tight. The TOC
paradigm that people are all good;
only our assumptions are bad - brings out the power of conflict
resolution. The assumptions are verbalized for each of the links AB, BD, AC,
CD’, D’B and DC as shown below:-
·
In order to have A, we must have the requirement B because <reason 1>
-
-
In order to have A,
we must have the requirement B
because <reason m>
·
And similar verbalisation for
links AC, BD, and CD’.
Then
·
If action D is carried out then we cannot get
C because <reason
1>
-
-
If action D is carried
out then we cannot get C because <reason
r>
·
And similar verbalisation for
the link D’B.
8.
Lieutenant’s Cloud. We will use the
evaporating clouds method to visualise conflicts in various situations.
Detailed verbalisation to validate or invalidate assumptions will however be
left out of this work. Kelvyn Youngman 5 has called the conflict shown
here in Fig 2 as 'The
Lieutenant's Cloud'. Here the lieutenant wishes to perform a task but is
stopped by a rule which prohibits him. At
“Systemic thinking is a difficult task in the bureaucratic environment
where there is a strong drive to hold on to turf and protect domains.”
- Jeremy Rifkin
WHAT’S MILITARY LOGISTICS: WHOSE JOB IS IT?
10.
We had acknowledged a far wider
scope of military logistics compared to its civil counterpart. Besides design, development, acquisition,
maintenance, modification, upgrade, storage distribution and disposal of
material, in fact, logistics in the context of military also includes functions
related to infrastructure, healthcare and personnel. No wonder the realisation
that besides war fighting strategy and tactics, every other function could
be termed as logistics gives an uncomfortable
feeling to some - so aptly expressed as follows:-
“In peace, Generals stride confidently and can invade a world simply by
sweeping their hands grandly over a map. In war they must stride more slowly ....
Generals fear logisticians in war, Generals try to forget logisticians in
peace.”
-
Anonymous
11.
Logistics
holistically connecting with operations can be represented as shown in Fig 3.
At this
12.
Ordnance in the Army was reorganised in
the early 20th century into three separate departments viz. factories,
stores and inspection, all under the Director General of Ordnance. In due
course, through the war and later in independent India
13.
Indian Navy had its Directorate of
Stores formed out of Directorate of Supplies shortly after independence. This
was renamed as Directorate of Logistics Support in early seventies. The Supply
& Secretariat branch was first merged with the Executive branch before a
specialist Logistics cadre was created in the Executive branch in 1989. The
logistics function for stores (victualing, clothing, etc.), personnel administration and material management
are performed under different heads at the top management. However, the working
level base is provided by the logistics
branch officers who specialise besides personnel administration, primarily in
stores and supply.
14.
Among
Indian Armed Forces, the Air Force is
arguably credited with having the most well integrated logistics system. Right
at the birth of the Air Force, one of the first six officers commissioned was
in the Equipment branch, albeit by chance because he could not qualify as a pilot for reasons of shorter leg length.
Keeping abreast with global trends in the seventies, the branch was renamed
‘Logistics’, notwithstanding the fact
that its functional purview remained the same. With technological sophistication
and the growth of the Air Force, ever so gradually, the logistics
responsibility has increasingly been undertaken by the engineers while pilots
focus on sophisticated flying/ operational functions.
15.
The field logistics can be attended to only by those close to the fleet –
the combat men. There has, however, been a distinction between pilots and all
other combat men in terms of the training requirements for individual skills. Towards
development and maintenance of individual skill, till the levels of commanding
a squadron, the pilot has to devote huge time and effort, which are unmatched
by any other combatant. Therefore, a pilot-engineer arrangement has evolved
best described by “engineer getting on the
cockpit ladder as the pilot comes off it”. The buddy engineer takes on all
responsibilities ranging from transportation of squadron men/ material and
general upkeep of aircraft & systems, to the highest levels of maintenance.
Therefore, corresponding to the operations men from the Army and Navy, here is
a duo in the Air Force that together attends to the field logistics and
logistical planning while a specific entity looks after the storage and supply
support needs.
The Global View
16.
Semantics do play an important
role. Logistics as the title name for a set of people without adequate
authority, ownership and consequent responsibility for comprehensive logistic
management can get confusing. This can lead to inappropriate commitments within
and inter services matters. In international cooperation and joint exercises,
we have had experiences where logistics exchange programmes represented from
our side by supply/stores personnel have been found to be woefully inadequate
to deal with the holistic fleet support issues including life cycle
maintenance.
17.
How does the world understand
the terms ‘logistics’ and ‘logisticians’? It may be good to maintain that we go by our original
thinking and not get tempted to copy models. However, more damaging it is when
we end up adopting parts without understanding the whole concept. Let us see
the top level of understanding of the terms logistics, logisticians and
globally held expectations.
18.
UK The available, open literature
indicates that UK
(a)
The interpretation of logistics
is comprehensive, ranging from maintenance and upgrade extending to storage and
distribution.
(b)
Acquisition and maintenance/
logistics go hand in hand.
(c)
Integration at the highest
level is vital.
19.
USA
(a)
Their structures provide for
integrated function of logistics.
(b)
The term Logistics is neither
interpreted nor semantically tagged with the elements dealing with only
storage/ supply/ distribution – it means holistic support.
(c)
The structures are well
integrated at the highest levels of the organisation also.
The
Services’ Common Precept
20.
In comparison to the global
affairs and understanding, we may now appreciate the muddle that our services
are in. Some of the following problems are of concern:-
(a)
The semantic confusion created
by adoption of the name logistics for
a smaller part function (as in Navy and Air Force).
(b)
Vertical isolation among
different elements contributing towards comprehensive logistics.
(c)
Structural inefficacy caused by
inadequate authority with the elements ultimately responsible for the fleet
upkeep.
(d)
Non-integration of the function
at the higher levels within forces as well as at joint services levels.
LIFE CYCLE MANAGEMENT
21.
A weapon system or sub-system
life cycle goes through the phases viz. acquisition, induction, usage,
expansion, major repairs/ overhauls, modifications, upgrades/ re-fits,
obsolescence, removal from service and disposal. I have included expansion here
as this is the most common happening in our defence services. Contrary to
original plans, with changing scenarios we have found merits in expanding in-use
fleets of weapon systems/ platforms to replace life expired/ retiring
inventories. Steadily rising number of SU-30 MKI after the initial acquisition
is a pertinent example.
22.
Now, what exactly is Life Cycle
Management? Life Cycle Management, in logistics parlance, is usually seen from
the point of view of the supplier, to deal with issues ranging from market
needs through manufacture, sales, to supply chain collaboration and contract
management. However, Life Cycle management from the users’ perspective in
military is entirely different and challenging. Compared to any civil
organisation, defence forces have huge inventories in much wider variety to be
managed over far greater life cycles of the order of up to 40 years or so.
Then, would independent actions concerned with managing material, technology,
infrastructure, storage, distribution, personnel, training, etc. in all phases
of life of a weapon system be called life cycle management? Partly yes, and
holistically no! We would then deal with parts only without looking at the
system as a whole – and may I remind the reader not to attempt optimisation of parts as a solution. This is what
exactly we have been doing, dealing with parts as they came, because we have
not made efforts to develop a Life Cycle
Management Tool despite immense software potential within the country,
defence services own skills, and DRDO running several labs engaged primarily in
simulation software work.
23.
The Services have recently come
up with the concept of Life Cycle Costing for comparative evaluation of weapon systems before acquisition. Yet, none
has a life cycle fleet management tool to play around with the outcome as one
or more of the hundreds of parameters change. As we go along the usage of a
newly acquired system, we won’t even know whether the system follows the trends
which qualified it for acquisition. More worthy would be the benefits to
planning as we ride on the life cycle progression curve and tweak the governing
variables to optimise. The life cycle
management software would be a visualisation tool that would connect different
phases of transition of material or weapon systems right from acquisition to
disposal thus providing a framework for
logistics planning while enabling refinements in estimations for forecasting in
future.
24.
A good Life Cycle Management
Tool will connect various determining factors through all phases. An example
would help in appreciation. An aircraft fleet gets inducted and we wish to
establish indigenous overhaul facilities for aero engines. The Manufacturer’s
prescribed TTL (Total Technical Life) is
2000 hrs and the TBO (Time Between Overhauls) is 1000 hrs. It would mean that for every 2000 hrs of aero engines usage, we
would need to carry out one overhaul. The total aero engine usage will
depend on the fleet size and the average utilisation rate per aircraft. The
estimated requirement of infrastructure would be accordingly based on these
calculations. Now, as is common, after confidence generation and relevant
tests, the manufacturer may increase the TTL. As an example, consider a TTL
raise to 3000 hrs while keeping the TBO fixed at 1000 hrs. The arising will
increase by a ratio of 2/3000:1/2000, i.e. 1.33 times. This would mean that a
facility established for 50 would need to stretch to accept 66 aero engines.
If, over a period, the fleet size is increased to 3 times the original plan, we
can see that the rise will be of the
order of 1.33 x 3 = 3.99, i.e. 200 aero engines instead of 50.
25.
Aero engines and major sub
systems themselves have a large number of parts. Aircraft and weapon systems
like ships, submarines and tanks have parts and variables that cannot be even
counted easily leave alone kept track of for interdependence without a
management tool. The effect of management decisions based on even a few
variables, which depended on just one assumption could go widely wrong with a
small change in that assumption. The effect could be turbulent and realised
late enough to take a call in absence of a Life Cycle Management Tool.
26.
The Life Cycle Management Tool
will effectively connect with life cycle costing besides just
being an evaluation tool for use during acquisition phase. Not only for
material, the tool would relate to manpower planning and training also. This
can help in evaluation of the sustainment cost advantage in view of
commonalities or with intended reduction in variety. Life Cycle Management Tool
can also be configured to deal with a group of systems or a system of systems –
it would then be delightful for the top management and finance to visualise
deeper insights as they consider a few services together to derive advantages
of commonality.
27.
The Life Cycle Management Tool
threads through the whole logistics arena. The development of life cycle management
software is therefore a must today to envisage needs ranging from budgeting, manpower
and infrastructure planning, costing, sustainment, to life extensions and
replacements. All services are on their way to develop ERPs (Enterprise
Resource Planning) not only to include the processes relating to demand/
supply/ disposal transactions, but also their state transition during field
usage/ maintenance, repair, overhauls and upgrades. The icing on the cake will
however be when the Life Cycle Management Tools integrated with material
management ERPs will provide for holistic logistics planning.
28.
Access to a Life Cycle
Management Tool would be a delight to one and all; operations, administrative
and acquisition wings, finance (both at MoD and Service HQs), and eventually
for the logistics management and maintenance.
THE ACQUISITION, MAINTENANCE AND DISPOSAL LOOP
29.
The life of material flows from
the requirements conception stage leading to acquisitions into maintenance and
upkeep in service leading back to conceptualising replacements alongside
disposal of obsolete material. Logistics is all about working through the life
cycles of material (and also men). In short, the chain of activities
effectively executed to link acquisition, maintenance (including supply chain)
and disposal means good logistics.
30.
Acquisition logistics would
include an assessment of all activities
through the life cycle beginning with envisaging the size (numbers) of
acquisition and estimation of cost. The determining factors are listed below.
·
Assessment of possible
indigenous content.
·
Maintenance support plans,
including establishment of indigenous facilities (in-house as well as with
industry).
·
Operational support needs and
field maintenance requirements (infrastructural and material).
·
Time schedules for arising
needs for various maintenance requirements.
·
Spares requirement depending
upon all the above.
·
Storage, handling and
distribution requirements for main equipment/ systems/ sub-systems/ as well as
spares.
·
Requirement of personnel and
training.
·
Technical publications.
·
Commonality of parts, support
equipment, skills, and sources of supply with other systems and also user
services; existent and planned in future.
31.
This flow of life of material is
often restrained because of the absence of a firm handshake between the
acquisition and maintenance. Even within the maintenance phase, the
inappropriately perceived purchase
specialisation tends to further separate the two parts. The predicament can
be viewed by the following two expressions:-
Acquisition à Maintenance: “We buy, you maintain”
Maintenance ß Supply: “Tell us
the specs and we shall buy what you need”
32.
Each one of the above three
parts intends to do good (people are all
good), but, they end up optimising their own parts as maintenance and upkeep gets squeezed from the two sides. The
first of the possible reforms could be to consider merging the three functions together
as is the case within US Defense services Material Commands – ‘structure determines behaviour’.
33.
Fig 4 shows the conflict between the responsibilities and authority of
Purchase Manager and Maintenance Manager as presented in 'Deming and Goldratt´ by Lepore and Cohen
6. The Maintenance Manager is measured by the 'uptime' of his production infrastructure. But, he does not have
the authority to buy requisite spares. The spares are purchased by the Purchase Manager, who is measured by the least expenditure on purchases. Accordingly, he follows laid
down rules for purchase of cheapest available spares.
34.
The dependencies and
assumptions are verbalised as given below:-
AB. In order to have the company
to be profitable (A) we need control
on the purchase process (B), because
increased purchase costs would reduce profits.
BD. In order to have control on
purchase process (B) we have to
authorize only Purchase Manager to buy (D),
because only he can strike the best deal following laid down norms.
BD'. If maintenance Manager buys
spares (D'), accountability would be
lost and we cannot (jeopardy)
exercise control over purchase process (B).
BD'. If maintenance Manager buys
spares (D'), he would wish to buy
costly spares for his perceived reasons of reliability of spares and the
control would be lost (jeopardy) on
purchase process (B).
AC. In order to have the company
to be profitable (A) we need to have
good quality spares (C) because good
spares will give us high uptime and consequently higher production and profits.
CD'. In order to have good
quality spares (C) maintenance Manager
must buy spares (D') because only he
can assess the quality.
CD. If Purchase Manager buys spares (D), we cannot (jeopardy) be assured of quality (C), because he would go for least price.
35.
The assumptions can now be
examined.
·
Is it true that only purchase
manager can strike the best deal?
·
If Maintenance manager
advises Purchase manager for spares (instead of himself buying), will the control on Purchase
Process still be lost?
·
If the Maintenance Manager buys spares which are not the
cheapest, will it really end up in costs going up such as to bring profits down?
36.
The first two questions throw
up a solution that if Maintenance manager advises on spares purchase, purchase
process can be controlled by the Purchase Manager. And also that good quality
spares can be purchased with the intervention of the Maintenance Manager.
However, even if the Maintenance Manager advises Purchase Manager for spares,
the accountability
of both remains substantially diluted, as the responsibility gets
divided. The answer to this negativity can be provided by breaking the logical
separation between D and D'. Now, the question (iii) also needs
to be answered about profit really reducing if Maintenance Manager advises
spares which are not the cheapest. The answer therefore lies in throughput
accounting for the system rather than local optimization for individual
performances measures. In this case especially it turns up as given below.
·
Good quality spares may
increase cost of spares.
·
But, good quality spares will
enhance uptime and reduce breakdowns.
·
Good quality spares will need
fewer replacements.
·
Enhanced uptime will increase
throughput of the system.
·
With increased throughput (T), enhancement of
profits can be ensured even if the operating cost (OE) goes up marginally
(Profit = T – OE).
37.
The
change shown in Fig 5 enables Maintenance Manager extend advice for spares
purchase. But, he is now responsible for the throughput, which is systemic
rather than uptime of machines. And in the purchase process, instead of only
purchase cost being of concern, operating expense which again is a systemic parameter
now becomes the measure. So, the Maintenance
Manager while advising for spares
can be made responsible for both, maintaining
high throughput as well as controlling operating expense. The Purchase
Manager moves conveniently out of the conflict.
38.
There are several other areas
for improvement besides just procurements. These are issues related to mindset.
Oversight or deliberate compromises due to budget or time constraints during
acquisitions are often blamed for maintenance nightmares later on. Procedural
compulsions weigh so heavily on the staff at Service HQs that conclusion of
contracts itself is considered a great
39.
The
above example has shown inappropriateness of measure of performance as ‘Down time’ and ’Least expenditure’ for
Maintenance and Purchase functions respectively. These measures were required
to be changed to ‘throughput’ and ‘operating expense’. Similarly, all
elements involved in acquisition, as in all other activities, have to be
measured in global units. The procurement rules are backed by great wisdom and
all sincerity to
40. The outcome of maintenance
philosophies depends on vital parameters like war reserves, scales of
holding spares for units/ depots and repair tasks on DPSUs or depots. MTBFs
are not held, repair yields vary, ageing fleets need unprecedented spares and maintenance!
These situations need dynamic actions, but we get bogged down by the
procedures. Theoretically, we have mechanisms to periodically review once in
three years or every year, etc. But the only 10% parts which severely affect
are not reviewed separately – we follow procedures!
41.
A word about disposal is
extremely important. Every service suffers from enormous delays in approvals
for obsolete inventories to be disposed off purely on account of procedural
requirements. There are too many agencies involved, none really worth adding
much value while entitled to ask questions and taking its own sweet time
without accountability for delays. The cost of carrying obsolete inventories is
exorbitant although not ever estimated well because of lack of a life cycle
management tool. The procedures for disposals need a comprehensive review to
lay down timeframes for approval within six months so that obsolete inventories
can be disposed off within a period of about two years. Does the two years
period seem long? Today, it takes indefinite amount of time - 10 to 15 years is
usual.
PROVISIONING AND PROCUREMENT
42.
Provisioning is the lead in
activity before procurement of material to keep the inventory levels up to what
is called the stockage objective. Provisioning and forecasting are activities,
which are considered most challenging and therefore of great interest to all
logisticians. There are two distinct elements involved here – one of
forecasting the needs for a specific period, and the other of procurements of
necessary quantities of material to last that period of forecast.
43.
Forecast requirements bring
back memories of grandmother days. Once a year, she got the food grains
purchased. These were procured at the best prices in season, then cleaned,
processed and stored at home under large storage created for the purpose.
During the year, the availability usually fluctuated heavily with the
corresponding variations in prices as well as the quality of grains. Not so affluent
homes had smaller storage to last only for a few months, which also took care
of smaller ups and downs in availability in local market. However, the poor had
to contend with their purchases every day or even for every meal. The poor had
to take a bigger brunt of the non-availabilities and corresponding steep price
shoot up – but, they had no choice. Unaffected by the market uncertainties, an
affluent grandma stored enough to see through the year and a little more.
Today, better storage facilities and changed doctrines have smoothened market
variations. Long term storage philosophy in every household has therefore been
rendered old fashioned.
44.
However, storage of spare parts
for a long forecast military requirement does not seem to go out of fashion at
all. A few norms associated with the military have resulted in rules that bind the Lieutenant (ref TOC example). We have for long
believed that we needed to write unique specs for our needs (military is
different from the civil world!). Most proven COTS products needed alterations
for us - we did however instantly lose the COTS advantage of cost, lead time,
wide support, life cycle upgrades etc. Even more damaging has been the blind
acceptance of archaic rules of provisioning and forecasting, called myths by my former colleague Wg Cdr
Kaushik Das 7. Some of the norms followed for determining the
forecast requirements could only be termed as ludicrous. It is time for a big
shake up to question the following norms:-
·
To forecast and provision for a
period of the order of 3 to 5 years.
·
Long processing delays before
placement of orders and even longer supply lead time.
·
Supply lead time of the order
of 18 months and above even for PSUs.
·
PSUs do not forecast by
themselves - Time starts for them only after Service HQ orders.
·
The agreed timeframes are
routinely exceeded by big margins.
45.
When we face some of these
questions squarely, we begin to wonder WHY! Why is it that we need a change and
we can’t make it? Why is it that respective PSUs cannot be made to partner in
the provisioning process so that they have a fair idea of our requirements well
before orders placement? Most weapon systems, even from foreign sources, are
supported by someone known as OEM (Original Equipment Manufacturer). If not,
then why don’t we identify the single supply agency with the help of the
country’s government? Why do we hesitate partnering with even the foreign
supplier despite knowing well that we are wedded for as many as 25 to 40 years?
Yes, we are obsessed with rules and in absence of a life cycle management tool,
we have no way of assessing the damage. We are unable to get an appreciation of
cost comparison (cost of delays) making justification with finance very vary cumbersome.
The
cost world remains dominant over the throughput world in absence of a measure
for war potential. The procurement cloud shown in Fig 8 indicates the
conflict.
46.
As
we verbalise assumptions, a few facts emerge clearly.
·
In order to have effective
fleet sustainment we need to control purchase cost because reduced cost means
potential retained for sustainment.
·
But, the questions to ask are:-
§
If inadequate spares were
purchased, or purchases delayed in search of lowest cost, what are the
operational losses?
§
Is purchase cost a global
measure?
§
Can we look for a global
measure like maintaining low life cycle maintenance cost?
§
Can we further modify the need (at
’B’) as ‘low life cycle maintenance cost per available system’?
47.
With
those questions for validation, we can now modify the block B
to carry the need as “Low life cycle cost per available aircraft or weapon
system” – and surely a lot of intelligence begins to filter in. Now, least cost
spares in individual deals are not good enough if the deals make us wait
indefinitely or the fill rates remain less than 100%. The modified cloud can
then be drawn as shown in Fig 9.
48.
A partnership model with OEMs
for win-win solutions to logistics support issues is the only answer. However,
as explained earlier in introduction to TOC, a perpetual and undue fear that the
situation will get worse (cost will shoot up) if we share information
with the supplier keeps us paralyzed in the present.
49.
The procurements are also
affected by the following two distinct factors:-
(a)
The most common factor is the
involvement of too many agencies, which incidentally has been a master bureaucratic
stroke that ensures non-accountability of any one. A number of agencies like
user, indenter, purchaser, technical evaluator, cost accounting specialist,
Deputy CFA, financial advisor and the CFA make a long list. It is therefore
essential that the list be kept down to a maximum
of three besides the CFA.
(b)
The second vital factor is the
distance of the purchaser from fleet appreciation and knowledge. The purchaser,
carrying out a support activity, should not begin to dominate with the rule
book. The dynamics of maintenance and usage (operation) determining the
requirements over a long life cycle are often overlooked by those who don’t see
beyond procedures and part numbers. The result has been the use of statistics
of fill rates etc. as measures of satisfaction while critical spares remain
unsupplied year after year.
OUTSOURCING AND PERFORMANCE BASED LOGISTICS
50.
A call for outsourcing various
functional responsibilities within the defence services, alongside defence PSUs
and Ordnance Factories, has got intensified in the last one decade. It picked
up momentum especially after the Kelkar committee recommendations on the
subject of strengthening ‘Self Reliance in Defence Preparedness’. It is however
no surprise that, in USA
51.
The concept of outsourcing the
maintenance, repair & overhaul (MRO) activities globally gained popularity
with the booming of civil aviation industry. However, in absence of a well
grouped civil aviation industry, the well organised MoD framework has attracted
industry attention for potential business development in defence.
52.
Outsourcing as an option has
been considered favourably by business houses from the developed countries more
for the reasons of off-shoring to take advantage of the cheaper labour
available in countries like China ,
India and Sri Lanka
53.
Outsourcing by the government is
usually recommended with the intention of cutting bureaucracy and bringing in
agility in functioning. Defence forces, although a part of the government, are
not typically the offices of the government. Routine outsourcing is therefore not
appropriate, except for a few administrative support functions. The downside of
outsourcing has to be kept in mind, viz. loss of in-house expertise, inability
to meet the unprecedented and unforeseen wartime surge requirements, and a
significant loss of control. At the same time, it is important to note that shifting work from military depots to public
sector units cannot be considered as outsourcing. In recent years, we have
seen a spate of outsourcing most of the maintenance activities to DPSUs.
Compared to in-house depots, these have never been cost effective while adding
an unnecessary layer of bureaucracy to make logistical responses excessively
sluggish.
54.
Notwithstanding all the above,
outsourcing should be undertaken in a fair measure as the services doing
everything in-house will never bring worthy
return on investment even from the point
55.
Performance
Based Logistics took roots in around 2001 when the US DoD declared PBL as a
preferred approach and asked for the development and implementation of PBL
strategies. These strategies were to include best use of public and private
sector capabilities through partnership. The intention in PBL is to move away
from functionality oriented support programmes to seeking operational
readiness, reliability and maintainability. Here we buy an integrated
performance package instead of contracting for spares, repair technology, data,
tools and licenses.
56.
With the above explanation it
would be clear that PBL is entirely different from outsourcing depot
maintenance i.e. MRO. And although it involves the whole range of logistics
activities, it is not the same as contracting out logistics despite the fact
that PBL switches most of the supply chain’s risk and responsibility from
customer to the supplier. The defining reality is that PBL requires committed
and balanced contribution from both the parties. In our case, there have been a
few half hearted attempts to contract PBL without having made the commitments
and including only part responsibilities. Long term repair or maintenance agreements
have been considered as PBL, while many a contract has been undertaken without
adequate study on our part as we remained satisfied with foreign vendors
passing on imported hearsay knowledge, usually
advantageous to them.
57.
Logistics engineering and Performance
Based Logistics are parts of graduate courses abroad. Along with late Air Cmde
Jasjit Singh’s anguish over the lack of strategic education in national
universities, this lack of logistics education also remains a surprise. Perhaps
the reasons are lack of attention and importance to logistics by professional organisations and also the
fact that logistics by avoidance of a qualification is considered a
non-engineering domain. Engineers on the other hand find it convenient to twist
the term itself and call it ‘Performance Based Maintenance’.
58.
Like the outsourced MRO, PBL
also would be essential for adoption by defence services, but, in a suitably
small measure to begin with indigenous fleets. A start with indigenously
developed systems and also those manufactured under foreign licenses by our
PSUs would be best for developing concepts in the next few years. PSUs, which
lay back without concern as services struggle, with indigenisation and
substitution of difficult to procure foreign components, surely need to be
tasked better and contracted for PBL. It is only natural that academic studies
and research in most institutions can begin after a reasonable success and
commercialisation of the PBL in industry. However, the development of concepts
for defence can preferably be carried out with the help of think tanks like
CLAWS (Centre for Land Warfare Studies), NMF (National Maritime Foundation) and
CAPS (Centre for Air Power Studies). The design and development (specification)
of performance requirements, performance metrics and the contractual framework
would call for defence and industrial experience and acumen.
59.
In the two models discussed
above, either the customer or the supplier carries all the ultimate
responsibility. However, a third model of arrangement has been emerging to
enable offsetting the disadvantages to the customer. This is a partnership,
which would apply to all support arrangements, viz. totally in-house
maintenance including depot overhaul, outsourced MRO, and PBL. I wish to call
it the Customer Supplier Partnership
(CSP) model. According to this model, the human resource is always put together
by both, the customer and the supplier. With totally in-house facilities, a
small (about 5 to 10 %) workforce can be contributed by the contractor to maintain
currency on licensing, updates, modification etc. The composition is reversed
in facilities completely owned by the supplier, where the customer contributes
a small part of the work force (10 to 20 %) to cater for the negative effects
of loss of expertise, loss of control, and to maintain surge capacity. It may
be noted that the supplier need not necessarily be a private company. And
therefore, the model is named CSP and not PPP (Public Private Partnership).
60.
It is no secret, and in fact a
matter of regret that deputations from the services are not quite kindly taken
by even DRDO and DPSUs. The loss has been immense, especially in the last three
decades. I would even recommend mandatory deputations in the opposite direction
into services, which have a tremendous potential for logistics innovations. The
fact of the matter is that controlling a mix of human resource does not seem to
be in our comfort zones. Therefore, with regard to CSP, I reckon that the most difficult aspect would be the
specification of contract and consequent sincere honouring of commitments.
Honouring the partnership with shared responsibilities will remain the most
challenging and sensitive element of these contracts.
STANDARDISATION
61.
An Army officer moves out of
his unit always with a movement order. A Naval officer is recognised outside
his parent ship with the information provided on the Gen Form carried by him.
And in contrast, the Air Force officer on temporary duties just moves and
reports to the destination without even carrying authorising signals. Each one
of the procedures has its own information closing in loops and cross check
mechanisms. If one looks at the data requirements for an officer’s temporary
move from a unit to another, these would be very similar for Army, Navy and Air
Force personnel. But, each service is happy, and rather proud about its own
distinct service procedures. A joint services unit has to however keep all the three
provisions.
62.
This is not all. A simple spark
plug of a motor vehicle commonly used by all three services is recognised by
three different part numbers in the three respective inventory systems.
Inventory codification schemes, data structures, forms and procedures for
issue, receipt and transfer of items of inventory are entirely different for
all three services. Tri services commands and units, which seem to be joint
when viewed from outside are actually considerably disjointed in low level
procedures despite honourable intentions. As discussed earlier, the
dissimilarities have come up through the legacies adopted along with the genesis
of each service.
63.
The scope of operations has
expanded well into the joint regime. We won’t make effective use of resources
if we only appear to be joint despite having Headquarters Integrated Defence
Staff (HQ IDS) and also a few Joint Services Commands. Army, Navy and Air Force
have a large number of common items of inventory. Most of these are held under
different part numbers, names and descriptions, as the classification systems
are quite different in the three services. The result is despite the
commonality of parts no exchange or sharing of resources is possible in times
of need during joint operations. And standardisation is not only useful for
joint operations but also for mutual transfers of inventory items in need by
one service when the other can share. Each service maintains reasonably good
inventory database management systems, but these can’t be joined together
because of lack of a common code. When a service is ready to dispose off
inventories of a weapon system and the other service holds systems in use of
similar origin, it is a fair guess that many sub components could possibly be
made use of instead of being sold as
scrap. But, in absence of a common picture, technicians can only be tasked to
carry out cumbersome physical inspections. The predicament is not limited to
situations of need across two services – suppliers often deliver items common to
two fleets within the same service without ensuring uniqueness of part numbers.
64.
Well, the standardisation in
military is not something new. The need for military standards was realised
during the World War II when the allied forces could not even share small items
as bullets. In India
·
In case of common interest to
more than one service, lay down standards for the following:-
§
Specifications for products,
interfaces, and services.
§
Guidelines for procedures and
practices.
·
Lay down codification scheme
and implement a standard codification for defence inventories.
§
The robust and scientific NATO
system of codification has been adopted.
§
Codification of inventories is
given priority for those systems which are common to two or more services.
·
Recommend rationalisation of
inventories through variety reduction.
·
Effect entry control during
induction of systems/ components in services.
·
Guide in identification of
alternative utilisation of inventories under disposal, and also verify plans
for replacements.
65.
In over five decades, the
Directorate of Standardisation has received significant acknowledgement at the
national level. Efforts have been put in by its zestful staff. However, if one
looks back with introspection, there has been little accomplishment, which
could be marked as noteworthy or gainful for defence services. I would tend to
agree that a large part of contribution towards this lack of achievement has
also been from the services because the directorate has not been able to
project itself as a part of them. The Directorate of Standardisation has been
seen by the services as only a necessary
bureaucratic step in acquisition and disposal processes consuming its own given
wasteful time. On its own part the Directorate of Standardisation has been satisfied
in being a part of MoD, Department of Production and Supply, and not
technically answerable to Service HQs. As a result, there has never been a
review of its functional efficacy in five decades – org structure does determine behaviour.
66.
Standardisation affects the
status of logistics preparedness in a major way. The subject is too vital to be
neglected for any longer than the five decades of sluggish bureaucratic
approach. The following few actions are recommended for immediate
consideration:-
·
A functional review of
Directorate of Standardisation by a joint services team.
·
Organisational restructuring to
place Directorate of Standardisation within HQ Integrated Defence Staff (HQ
IDS).
·
To ensure greater connect of
Directorate of Standardisation with Services.
·
The services logistical requirements
should drive the defence R&D and industry from the standardisation point of
view.
IT ENABLEMENT FOR AN NTEGRATED APPROACH TO LOGISTICS
67.
Inventory management along with
accounting functions was the first to get the benefit of IT (then better known
as computer technology) in defence services. After the initial COBOL based
programs the inventory database management systems (DBMS) continued to be
developed in-house in all services. New systems replaced the older hardware/
software combinations almost at the rate of one every five or six years because
of the fast change of computer systems. These DBMS packages called Management
Information Systems (MIS) required huge effort in off-line data entry, which
always lagged behind the work processes besides requiring specialist (according
to the then standards) data-entry-operators. Consequently these MIS packages
produced limited success for statistical analysis and were useful as intermediate
steps in further progress of info technology.
68.
To most Indians the term IT
appears to be synonymous with the Indian character. However, it would be
surprising to realise that most dollar earning Indian IT business has been of
sub-contracts for parts of application and not total systemic solutions. Justifiably,
the services have not been quite keen to adopt and totally depend on foreign
made systems like SAP. The leveraging of IT even with the help of industry for
organisation wide ‘Enterprise Resource
Planning’ logistical solutions have therefore fallen short of expectations.
The other fact is that some of the extra ordinary in-house efforts in all the
three services could not mature more on account of technological limitations of
communication and networking than computing ability or resources. This would
perhaps explain why networked inventory management systems came up sequentially
in time for Navy (Integrated Logistics Management System) and
Air Force (Integrated Material Management On Line System) before the Army, i.e. geographically smaller to larger scope.
69.
While the Air Force’s IMMOLS
has all inventory transaction provisions including provisioning, and it also
has online equipment accounting and audit facilities, all services need to go
well beyond that. Operations on material are not only transactions through
storage, distribution and disposal. Comprehensively tracking material through
its usage, maintenance, upgrade, disposal and replacement would be essential
enterprise wide. Accordingly, every process acting upon material will have to
be taken into account.
70.
Network enablement with a view
to facilitate Network Centric Warfare (NCW) has been in progress in all three
services. Network enablement is not only connecting communication networks – it
would amount to designing networks and processes in a way to provide for Network
Centric Operations (NCO) with a collaborative concept. Forces operate with men
and material. The two vital parts of the whole database are therefore operational data and formats and material data. The services are working
towards establishment of their large network under the Network For Spectrum
(NFS) project. In the meanwhile, it would be of paramount importance for all
three services to individually and collectively devise data structures and
formats for all material on inventory and processes that operate on material.
Eventually all processes will need to talk to each other to enable entities on
the network to seamlessly communicate
with each other. The design of interfaces and interface standards is
also vital not only within the material domain but also across domains to and
fro operational processes. All legacy software without Service Oriented
Architecture (SOA) needs diligent effort to provide for interfacing layers to
enable process to process communication. Comprehensive work in that area must begin
while all new add-ons are made rigorously SOA compliant.
71.
The stability of IT specific
human resource among military cadres remains uncertain. Therefore, partnership
with industry is recommended for the development of not only software systems
but also the standards.
72.
A truly integrated approach to
logistics management will emerge when the logistics information will seem
intrinsic to the operational processes. The war fighter will not require to ask
for logistics information.
CONCLUSION
73.
Robust logistics groundwork translates
into military capability. A measure of military capability is however elusive. If forces made money
instead of an abstract thing as war
potential, it would have been a simple matter to evaluate the
accomplishments of a military outfit in terms of money made in relation to
money put in. In absence of that, it is impossible to relate every Rupee put in
with the generated potential. Conversely, every Rupee cut out (inappropriately
termed as saved) from the expenditure appears
to increase efficiency as we consider output as fixed. Under such assumptions,
a delayed process would always appear to cut cost and improve efficiency. I
would recommend study and research on
the subject of quantification and transformation of units of the output war
potential as a measure of throughput generated by the armed forces. Only then
can we measure effectiveness and worth of all logistics.
The World we have created is a process of our
thinking. It cannot be changed unless we change our thinking
- Albert Einstein
74.
Logistics is not about spare
parts storage and distribution alone. It runs through all parts of military
organisations and systems. Often looked at from a parts view, the supply/
stores departmental logic dominates. Our characteristic attempts for
improvements in logistics by parts have not borne satisfactory results. A shift
in thinking to get off the beaten track would be necessary. We have to identify
maximum leverage points (core constraints) within each vital area discussed
above for exploitation through systemic measures to remove clouds of conflict.
75.
In each discussed area of
activity a combined study would be
recommended to work out the action roadmap starting with the core
constraints in each specific field. A few concluding points for consideration
are summarised:-
·
Review logistics organisation structures within services.
·
Create a higher level logistics structure over and above service HQs.
·
Emphasise on life cycle management concepts. Mandate the development of a
visualisation tool to enable cost per
available system per day to become the determining factor in decision
making.
·
Carry out a total review of stockage objectives and forecasting norms for
provisioning. Reduce the acceptable
delays to absolute minimum.
·
Move to a partnership model with all suppliers.
·
Outsource maintenance with care within a defined level. Develop
outsourcing models with private enterprises.
·
PBL is initially recommended in
cases of indigenous design/ development or license manufacturer by DPSUs.
Mandate about three major PBL contracts by each arm in the next two years.
·
Mandate a review of the functioning of Directorate of Standardisation,
and assess the requirement of restructuring.
·
Leverage IT for integrating logistics with operational processes.
·
Engage services associated think tanks for development of specifically
mandated concepts. Standardisation, provisioning/ forecasting, PBL, partnership
models, org structure and throughput
measurement (logistical war potential) are vital issues.
·
Encourage task orientation over rules to enable systemic measures
determine decisions.
REFERENCES
1.
Fifth Discipline by Peter Senge, 1996, 2006; Random House Business Books.
2.
‘Theory of Constraints’ by Goldratt EM (1999)- The North
River Press.
3.
‘The Goal’ by Goldratt EM and Cox J (1984) The North
River Press; Reprint by Productivity & Quality Publishing.
4.
‘Goal II –It's not Luck’ by Goldratt EM (1994) The North River Press;
Reprint by Productivity & Quality Publishing.
5.
On line guide in implementing TOC 2008-2009 by Dr. Kelvyn Youngman.
6.
Deming and Goldratt by Domenico Lepore and Oded Cohen; Reprint
(2010) by Productivity & Quality Publishing.
7.
Myth called MPE: A service paper by Wg Cdr Kaushik Das.
No comments:
Post a Comment