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July 1, 2003

the best defense: interview with Roger Kallock

Plucked out of the private sector by the Department of Defense, Roger Kallock was brought in to help bring order to supply line chaos. What he discovered was that the business world could learn a thing or two from the military.

By Mitch Mac Donald

For Roger Kallock, the call came late on a Friday night. The Department of Defense was on the line, urging him to come work for them in Washington. There would be adjustments, Kallock knew. He had spent the better part of the past 35 years as a private consultant. Joining the notoriously closed ranks of the U.S. military as an outsider guaranteed him what could be politely described as a wary reception.

And adjustments there were. In the next three and a half years, Kallock would find himself visiting more than 60 military installations around the world, overseeing a budget of over $80 billion, testifying before Congress and producing his own Pentagon paper (a DoD-wide report titled "Logistics Transformation: Update, Focus and Accelerate")—not to mention getting used to being called "sir." And as he predicted, his arrival was met with skepticism—particularly when it became known that one of the Defense Department's big contractors was his former employer, Computer Sciences Corp.

But Kallock overcame all that. Though he entered the department as deputy undersecretary of defense (logistics) in May 1998, he was soon nominated by the president to become deputy undersecretary of defense (logistics & materiel readiness), a post he took over in September 2000. In that position, Kallock served as the principal advisor to the undersecretary of defense (acquisition, technology and logistics) for policy and oversight of the military departments' logistics activities. In January 2001, he received the Department of Defense Medal for Distinguished Public Service.

So how did a man who professes no political connections get tapped for this prestigious posting? It's really no surprise, given his vast experience and the industry respect he's earned over the years. During his 35 years in the logistics industry, Kallock's been a consultant with A .T. Kearney, Cleveland Consulting Associates (which he co-founded) and Computer Sciences Corp., working with clients in industries ranging from computers, consumer goods, health care, pulp and paper, and steel to air, rail, truck and water transportation. Before the consulting gigs, Kallock worked at Procter and Gamble in a series of distribution and customer service posts. Whether shipper or consultant, he's always been a leader in the field, earning the Council of Logistics Management's Distinguished Service Award in 1990.

With his stint with the military behind him, Kallock has gone back to private consulting work with both industry and government. He's also become active in the logistics educational community at Pennsylvania State University and its Center for Supply Chain Research, where he's an adjunct professor of business logistics and an industry director in Penn State's Executive Programs focusing on DoD/private-sector relationships.

Roger Kallock

Q: What brought you to a career in logistics?

A: It was just the way things happen in life. By pure chance when I interviewed at Procter & Gamble for an operations management position, I happened to interview with a group that was hiring people for the warehousing and shipping plant, what they called their inside logistics activity in 1961. I got excited about it. I was intrigued by what it took to tie the production facilities at P&G through to their ultimate consumer. I took the job. Over time I moved on to other roles at P&G, most notably transportation planning and scheduling. I then got involved in planning distribution center and warehouse activi ty. Over the course of all this, we worked with some consulting houses. That exposed me to the consulting business. Clyde Johnson, a professor at the University of Michigan whom I respected a great deal, suggested to the folks at Kearney that I might be a good fit with their practice, so they called me. The next thing I knew, I was a consultant in Chicago.

As a consultant, I had an opportunity to learn how the carrier industry worked—whether it's motor carriers,airlines, railroads or barge lines. Then I got involved with logistics planning. Those were the early days of computer modeling. I ended up staying with Kearney from 1965 to 1969, when I came over to start the company's Cleveland office. Then in 1974, a couple of us hung out our own shingle and co-founded Cleveland Consulting Associates.

Q: What opportunity did you see in striking out on your own?

A: We wanted to move forward more aggressively using computer capabilities to integrate the functional silos within physical distribution into what we would today call the supply chain. We recognized that the computer would allow us to evaluate a lot of options quickly. It gave us a foot in the door.

Q: You mentioned something that we hear often—that what you were doing was supply chain consulting, they just didn't call it that back then. The push for faster throughput and increased velocity has always been there; really all that is new is the name.Wouldn't you agree?

A: Absolutely. It has always been there, but because people tended to look at things more tactically than strategically and more internally than externally, I don't think they fully realized how interrelated the activities really were. The important thing is how you reduce the time that elapses from production to the ultimate consumption by, not the customer, but the consumer.

Q: Do you believe that's the true measure of success?

A: I have always held total cycle time reduction to be the driving force. The philosophy that I later brought to the Defense Department was that I didn't really care how much we had in the pipeline. The important thing was, when that war fighter needed something, we had the ability to get it there, even if the need was not entirely anticipated in the planning stages.And we needed to get it there very quickly. The soldier is the consumer.We need to make sure that the consumer has exactly what is needed for the job, and we want him or her to have a very high level of confidence that it will be there.

Q: How did you come to be involved with the Defense Department?

A: I got this call out of the blue. Bob Lake, who was the founder of ROLS (the former Roadway Logistics), had passed my resume along to the folks in Washington when he heard the position's requirements. They wanted somebody senior and well-respected who understood logistics, had the time, and was willing to take the financial penalty that goes with that kind of job. I had no political contacts, no military experience, no defense contractor experience and had never worked in government. I went down to the Pentagon and had four interviews. At the end of the day, they asked if I knew any high-ranking politicians. I told them I didn't really know any politicians at all. Well, three weeks later, after I had gone to the Wh ite House for an interview with Clinton's personnel staff and then back to the Pentagon three times, they called me on a Friday night and said, "We really would like you to take this job."

Q: So you were brought in to bring some private-sector principles to bear on military operations. What was the reception like?

A: I met with a great deal of skepticism. Here is somebody who comes out of the private sector who must be connected, who must have some ax to grind, and who must have some reason to be here. It took a while to convince people that I really didn't have my foot half out the door and well into another organization. One of our big contractors was my former employer. Of course, that gave them cause for skepticism. From my point of view, it was an overwhelming situation in many ways.One was to get acclimated to the environment, the acronyms and the code names—even having folks call me "sir" all the time.

The other big change for me was the realization that unlike private-sector logistics management, in military logistics your decisions can carry life or death consequences.

Q: That's got to be a huge intellectual and emotional leap.

A: It sure is. A good example of that is the shift from concepts we are familiar with in the private sector like just-in- time. With the military, just-in-time simply doesn't cut it. As I started to figure out what they were doing and thinking about it, I realized that "just in case" wasn't what we needed either, because that results in the stockpiling of mountains of material.What we needed was "just enough," so the military leaders determined what was enough, then together we figured out how we were going to get it there efficiently and effectively.

Q: So the fighting forces were your customers?

A: Oh, absolutely. When I went to the Pentagon, I told them,"Look,I have never served our country, so I need to go out and see firsthand what they're doing and what environments they're doing it in." I needed to spend time, as does any good consultant, out with the clients and customers. My client may be the Pentagon guys at a senior level, but our customers are the men and women in the foxholes, on the ships, in the airplanes and so on.

Q: So that took you on what I guess you could call the Grand Tour. What did you learn?

A: Well, first of all I learned that each of these individuals is an American dedicated to preserving our freedom. They don't live extravagantly—they live a very simple, but very focused, life with a great deal of discipline and many expectations. We ought to be able to satisfy those expectations through our military supply chain activity as well or better than their expectations in their private lives are being supplied by, say, Wal-Mart.

Q: Wal-Mart is always a good benchmark!

A: These are folks who shop at Wal-Mart regularly. They have Wal-Mart-like facilities on their bases that provide a very high level of service. I believe when they go to work and put on the uniform, they ought to benefit from equal or better supply chain integration.

Q: To this point, we've been talking about what you brought from the private sector to the military. Tell us a little bit about what you learned and took away from that experience that might have applications in your consulting work back in the private sector.

A: I think the big lesson—and it really speaks to what you're t rying to accomplish with DC VELOCITY magazine—is the need for speed. I really liked the last line in your January issue editorial, in which you said you hoped readers would quickly come to realize that this is the magazine you need to make sure you're up to speed. I thought it was right on. The important point today is not just the speed of movement within the military or the private sector, but also the need to improve our ability to respond quickly to the unexpected.

Q: So it's not necessarily important to move fast all the time, but it is important to be prepared to move fast when you need to?

A: Exactly. That takes actionable information. That takes good training. In the world as we know it, post 9/11, you need to be prepared for the routine, and you also need to have built-in resiliency when the routine has been altered by forces outside your control.

Now, contrast 9/11 with Y2K. When preparing for Y2K, we knew the exact date, we knew the potential problem, we knew what it would cost to address the problem and we knew what tests we had to conduct to confirm that our systems were working. It was a very well understood event. 9/11 was exactly the opposite: unknown date, unknown location, unknown event. Little coordination, little preparedness, and no advance information. If you really think about what we need in order to accelerate change in the private sector, you need a crisis. You need a CEO to say, "Dammit, to be competitive we have got to change." More often than not today, that change focuses on accelerating the speed and upgrading our ability to respond to the unexpected, and that's really become my passion.

Q: How can we apply that to business logistics operations?

A: It's increasingly clear to me, post 9/11, that those of us in the private sector don't spend enough time thinking about the unexpected and testing the system under stress. Sure, nobody can predict where and when something might happen, but if you've gone through some drills as a community (and I'm talking about the supply chain community) and folks understand who's who, who the potential leaders are , and how compatible the commu nications systems are, you're more likely to respond better—even if it turns out to be a different kind of crisis. In other words, once you've gone through an exercise with a group of folks, no matter what type of crisis you ultimately face, chances are that you will do a better job—that you will "fail smartly."

Q: How would you go about that process? Are you suggesting people actually go through an exercise?

A: I think that you might do it at a tabletop level as opposed to, say, actually shutting down a plant. An example could be a case where SARS shuts down a supplier's facility or interrupts the inbound activity. What would that do to production planning and scheduling? What would it do to your ultimate customer and consumer? You would assume that the Port of Singapore was shut down, that you weren't able to get whatever was coming through by air freight for three days or so. Now I believe that folks in corporations have dealt with disruptions—whether financial or weather-related— on a fairly regular basis. They have overcome some difficulties. I think that what we need to do is coalesce around the lessons learned from these events. Then ask the same of folks throughout the extended supply chain. This is beyond your four walls. I think those folks need to come together and say, "OK, here's where we're likely to be weak and here's the likelihood that it will happen." That will differ depending on the individuals involved, the companies involved and the time dimension. Then you run an exercise. You set up a little drill. Some CEO says, "OK, it's Friday at 2 o'clock. Here are the 10 people who are going to be involved. Let's put out an all-points bulletin: Be in my office in 15 minutes. Here is the drill." You go through it just like the military does, in real time.

Q: Then that drill provides you with information you can use to determine how you can respond better and what you need to change?

A: Right. Then you build a culture around expecting to fail smartly. My goal is to help private-sector companies develop a culture that builds on basic corporate values, focuses on availability of actionable information and is prepared for the unexpected. We need resilient supply chains that are designed for flexibility and with redundancy. We need to test those systems with supply chain partners to identify vulnerabilities. Then we must implement the lessons learned promptly and passionately. Only when future supply chain leaders develop, test and improve activities that bond organizations together will we be at our best when the unexpected happens.

Editor's note: Roger Kallock, chairman of Chagrin Consulting Associates, can be reached via e-mail at Rwkallock@alltel.net or by phone at (440) 343-5954.

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