Last week, I reported “DOD from backorders to surplus: What to do rescue billions” that elicited a response to the problem from USAF General Robert Mansfield who had responsibility for a large part of the vast defense supply chain. When you read headlines like in the Federal Times article last week, they offer large numbers as potential saving targets, but General Mansfield suggests that a key part of the issue is simply the cost of military preparedness for anticipated, possible, and probable events as well as the unknown.
There is a discipline called predictive science, and that may bring operations into more accurate alignment, however there is simply going to be a large buffer cost no matter what you do. For that reason, politicians and leaders must be conservative in foreign policy and stingy in the deployment of military assets because it is very costly business.
Here is General Mansfield’s response provided as a news exclusive:
“Leadership challenge: DOD from backorders to surplus: What to do rescue billions
I have had the opportunity to be near both ends of the supply chain for spare parts. I was the commander for DoD disposal operations. And I was the Air Force Director of Supply (with a number of assignments up and down the AF internal supply chain) and in retirement, the Director of Global Sustainment at Lockheed Martin Aeronautics Company.
What Jim is stating has a lot of truth in it; particularly the comments about politics and complexity. There is not a simple answer, and for many reasons. First and foremost is that there is really no organization in charge of the end-to-end supply chain. There are many reasons this has occurred. But my observation is that the situation is primarily due to the focus on programs, vice the supply chains that support all of them.
Indeed, the development of our high tech (and expensive) weapons systems need the program focus, particularly until they reach fielding–then the supply chain takes over. This is well known, but the organization alignments do not reflect that reality. There have been many attempts to “transition” from program management to supply chain management over the last 50 years at least. All have had only limited success–mostly due to internal and industrial politics.
Another reason why the DoD suffers from sizeable surpluses is that the financial systems do not reflect the reality of demand. Indeed, the creation of working capital funds have been used to try to overcome this, but ultimately they are constrained by bureaucracy and politics.
Additionally, and for very important reasons, keeping systems operational and ready for combat always trumps inventory management algorithms, best commercial practices, and trying to budget and program many years into the future. Include the nature of business in the industrial base needing some financial stability, and it is incredible the system does not produce more shortages and surpluses that it does.
That no one really ever asks the folks at the end of the DoD supply chain for their opinion on how to reduce surplus seems a bit odd to me. The disposal people did a heroic job trying to find users for surpluses and get residual value, but most often they are ignored. The see patterns at the end of the supply chain that may be useful. Also, those who actually work in the inventory systems are rarely invited to comment on ways to improve it. It’s the policy folks who make those decisions, are asked to comment, with little input from the supply chain operators.
Since this is a leadership discussion group, I should say something about leadership. Leadership many times require a technical and professional competency to be effective. Building a competency in the complexity of DoD economics (it’s not Capitalism or business economics), demand and inventory management for weapons systems (it’s not Ace Hardware or Walmart) and the IT that supports it (it’s not all enterprise COTS) by the leadership will go a long way to reduce a surplus, but it won’t ever go away. Why, because, for example, until the last B-52 is prematurely retired there will be parts in the warehouses and on order, so when the last Buff is cut apart in Arizona there will be surplus, and it will be a lot of dollars that bought them. However, they will have little value or use other than scrap value. Sad, but true.
How political is the concern about the weapons systems surplus may be a question to ask too?”
Response by Robert Mansfield, Jr.
Robert Mansfield, Jr.
Executive Director, Center for Aviation and Aerospace Leadership
Dallas/Fort Worth Area
Embry-Riddle Aeronautical University,