Supply chain transformation earns AMC top award
April 11, 2014
A transformation that is reducing about $4.5 billion in inventory, cutting backorders by 30 percent and lowering repair and procurement costs, earned the Army Materiel Command the 2013 Department of Defense Award for Supply Chain Excellence.
AMC's Deputy Chief of Staff G-3/4 for Logistics Integration Lisha Adams and Secondary Item Requirements Branch Chief David Frey, will accept the award in Washington, D.C., April 14.
The award recognizes a hard-fought, two-year process that completely revamped a complex system that ensures end-to-end management of after-market and repair parts for the Army's combat systems.
"This was a team effort that included a small AMC headquarters group and a larger group of people at the Life Cycle Management Commands that plan and execute the sustainment mission for those weapons systems," Frey said. Those commands include the U.S. Army Aviation and Missile Command, Communications and Electronics Command and the Tank Automotive and Armament Command Life Cycle Management Commands.
A 12-year wartime focus, budget reductions and audits all pointed to the need for a vast overhaul. "The call for change was compelling," Frey said. "We just couldn't afford to continue to operate the way we had been operating."
Faced with the need for change, the challenge was to maintain focus of the overarching mission, to continue to provide and meet the needs of the warfighter while transforming how we managed the supply chain. "We had to articulate that compelling need to the commands and get their commitment to support the effort," Frey said.
As he took the project on, Frey noted that after supporting two wars for more than a decade, supply efforts had focused on fixing issues when and where they occurred, rather than optimizing inventory. "We had a firefighting approach where a lot of heroic efforts focused on resolving the issues at hand," Frey said. "When that's happening, it's difficult to stop and plan for the future."
Part of the transformation includes building in opportunities to identify and resolve issues before they become problems and to improve gaps in planning.
The transformation process included Integrated Project Teams formed to address the biggest challenges. Among other things, these teams analyzed a fluctuating operations tempo and the potential growth of excess inventory. The teams also reviewed the lack of enterprise supply chain business rules and processes as well as the non-standardized supply chain management.
AMC looked to other organizations both in and out of the Department of Defense to gauge best practices. Those organizations included large commercial companies like John Deere, Amazon and Coca-Cola, to name a few.
"What we learned from those companies is that we're not so different," Frey said. "Of course our mission is very different, but how we get it done -- the forecasting, planning, buying and sourcing -- is similar."
Transformation teams also focused on metrics. While the Logistics Modernization Program implemented in 2003 provided more robust information and transparency than the legacy system it replaced, the new information wasn't maximized.
The transformation took advantage of that information and focused on changing metrics.
"Our transformation underscored the fact that metrics are more than just numbers. Metrics drive behavior," Frey said. "We shifted our metrics to first focus on meeting the warfighter's requirements and then meeting our fiduciary responsibilities to the taxpayer."
While this transformation process has met most of its objectives, there will always be more to do, Frey said. "Transformation is never over," he said. "Transformation is not an improvement of where we are, it's a process of getting where we need to be."
Adams said she is proud of the team and that winning the DoD Supply Chain Excellence Award is an honor for AMC. "It demonstrates to all of the Department of Defense that the AMC supply chain transformation initiative is a best practice and worthy of emulation," she said.
Adams noted that the award nomination package included not only the description of the initiative; it also included the results achieved to date.
"There are very talented and skilled logisticians within AMC. I am very proud of what they have accomplished in a short period of time," Adams said. "They embraced the concepts and defined how to implement them. When we started the effort in January of 2012, the team didn't question the task ahead, they knew this was required to help them do their job better and provide the best support to the warfighter; they questioned how leadership would accept their proposal and take action to implement. They challenged me."