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Under pressure: Tight budgets, aging systems add to logistics challenges

Dec. 9, 2013 - 06:09PM   |  
By ADAM STONE   |   Comments
Retrograde, Bagram Air Field Aerial Port
Military vehicles and equipment at Bagram Airfield in Afghanistan await shipment back to the US. (US Air Force)

For those responsible for moving people and goods from Point A to Point B, the only thing as challenging as the start of a war is the end of one.

“You have all this equipment overseas and a lot of it is in areas where we are not going to leave it,” said Greg Diven, a business development manager in the government segment at UPS. He points to the military’s 80,000 containers and 20,000 vehicles now in the Middle East awaiting final disposition. “You have constraints on the budget, and at the same time, in many cases, the cost of the transportation exceeds the value of the goods.”

The wartime drawdown is just one piece of the puzzle. For logisticians inside and outside government, these days are fraught with complexity.

Pulling it together

At the Office of Federal Procurement Policy, Administrator Joe Jordan points to the challenges of “disaggregation.”

On one hand, he explained, there is a certain elegance in end users throughout government procuring their own supplies — hospitals, for instance, ordering drugs as needed.

“This is tempting because I know my local needs. My granular awareness is much closer on the ground,” Jordan said.

But it’s a lot cheaper for the government to buy in bulk, and so, a tension exists.

“If you buy through a central set of contracts, how do you get those goods onto the ground where they are needed?” Jordan said. “That is the logistical issue that really needs to be worked out.”

That’s the kind of thing logisticians worry about at the top level: systems and processes that drive efficiency.

But there are more immediate challenges, as well. For example, who will be around to run those systems in a time of budget uncertainty?

“The civilian furlough period caused delays in maintaining equipment,” said Zina D. Merritt, director of Defense Capabilities and Management at the Government Accountability Office. She cited Navy data showing that delivery dates were delayed throughout the furlough period and about 36 aircraft and 87 engines and engine components were not delivered in fiscal 2013 as planned.

Even when people are allowed to come to work, the impact of furloughs takes its toll on logistics.

“We have a very stressed workforce,” said John Thackrah, executive director of the Military Sealift Command. “With sequestration, furlough, government shutdown, our people are really stressed, and it makes it hard to do their jobs.”

In some cases, even subtle changes can stymie efforts to transport needed goods. This spring, for example, new Postal Service rules went into effect, banning shipments of lithium batteries to and from APO, FPO, DPO and other international addresses.

This is expected to make it much more difficult for troops, retirees and federal civilians overseas to obtain mobile phones, laptops, watches, cameras and other items that use the batteries.

Updating systems

Against such a backdrop, government logisticians and supporting vendors continue to wrangle with the challenges inherent in outdated government systems.

“The biggest issue facing the federal community is the systems and solutions they have in place have not adapted and upgraded as quickly as the commercial environment. They have some aging infrastructure. They have some oversized infrastructure that is costing them money,” said Jim Kilfeather, vice president of Cubic Global Tracking Solutions.

In the commercial world, Wal-Mart set the logistics standard years ago with visibility, coordination and just-in-time operations among all of its suppliers. Government infrastructure still lags.

“They haven’t achieved nearly the full integration or the success of the commercial entities,” Kilfeather said. Federal logisticians might want to overhaul their systems, “but it just isn’t a quick and responsiveness bureaucracy.”

There have been incremental improvements on this. At the nonprofit logistics consultancy LMI, Bill Ledder, vice president for the logistics technology division, points to the Defense Transportation Coordination (DTC) Program.

Under the orchestration of contractor Menlo Logistics, DTC negotiates long-term contracts with logistics partners, thus discouraging people from organizing shipping on the kind of one-off basis that can be inefficient. The program has saved about $40 million since 2009, or about 20 percent of the overall costs in that period, Ledder said.

“The real value of that program is not that $40 million,” Ledder said. “If you look at this from a higher level, the Menlo system has given us better data and visibility than we ever had in the past regarding when a shipment was picked up, when it was delivered.”

It is just such visibility that GAO says is needed throughout defense logistics. With better transparency, the Defense Department could “more efficiently manage the inventory, minimize unneeded procurements, conduct lateral redistributions — from service to service — of inventory in an automated fashion, and reduce transportation costs of shipping inventory,” Merritt said.

That’s a laundry list of what every logistician aims for, and also a pretty good indication of what hurdles still lie ahead. ■

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