It used to be that when the U.S. military needed something— a fighter plane, a satellite or a radar system—it commissioned its own.With an almost limitless budget (particularly in the Cold War days) and an apparent disdain for commercial technology, the Pentagon just researched and developed whatever it wanted from scratch. And for a while it worked: While the commercial sector was still figuring out how to put cargo in handy metal containers, the U.S. Army was moving all the props needed for a whole wartime theater of operations across the Pacific. And while everybody else dithered over the best bar code to use (Interleaved 2 of 5 Codabar), the Department of Defense (DOD) in 1981 simply went ahead and adopted a single standard (Code 39), revolutionizing the commercial viability of that technology for keeping track of inventory.
More recently, the Defense Department has begun installing and using an international system of active radio-frequency identification (RFID) tags and readers, designed to track every pallet and container of DOD equipment and material moving around the world—a "total asset visibility" system, or TAV. But this time, it's not using proprietary technology; it's using equipment and software bought wholesale from a commercial vendor: Savi Technology of Sunnyvale, Calif.
This is apparently the way of the future. Gone are the days when exciting new technologies emerged from the secret machinations of the government's defense industry—when NASA's need to shield its equipment from high temperatures encountered in space exploration produced Teflon, for example. Today, if the U.S. military can buy off the shelf, it will. The various branches of the military —Army, Marines, Navy and Air Force—now all employ full-time scouts who keep an eye on the new logistics technologies being developed by private and publicly held companies, and they're constantly observing best practices at large commercial shippers such as Wal-Mart and carriers like Federal Express.
In some ways, the change is a loss to the commercial sector, as it means the government is no longer shouldering huge R&D costs for technology, producing free side benefits in the non-military world. But the U.S. military's new attitude includes an unprecedented degree of openness about its experiences in deploying huge, complex cargo tracking systems.Most startling of all, the military is reportedly open to the possibility of sharing cargo tracking networks.
Changes in attitude
The changeover has been as swift as a blitzkrieg. "We're relying 100 percent on external IT now," says Capt. Gary Clement, U.S.Marine Corps transportation systems project team leader and project officer for the Marines' automatic identification technology (AIT) project. Indeed, the Marines have been using wireless technology from Symbol Technologies Inc. of Holtsville, N.Y., to read and transmit bar-code information on their kit and supplies at the case and piece level since 1999. Symbol, which has been supplying the U.S. military with equipment for more than 20 years, does customize the equipment—the handheld readers, for example, are "ruggedized" for the sorts of knocks and shocks encountered in field use—but increasingly, the stuff it provides in military contracts is the same as what's sold to everybody else. Even the vocabulary used by the military to describe the challenges it faces sounds more boardroom than barracks: "It's hard to redesign our business processes to take advantage of the new technological capabilities, says Clement, discussing the Marines' next step— introducing RFID tracking technology.
None of this would have been possible without the "acquisition reforms" introduced in the mid '90s. For one thing, the U.S. military had to be weaned away from the elaborate specifications it once issued for even the most non-specialized materials. The U.S. Army used to have an eight-page specification for doughnuts, for example. That's gone now. Another symptom of a wholesale change in attitude is that the U.S. military no longer assumes it knows best. "I personally look at FedEx and go: 'Wow, if we can get that, we'll be darn good,'" says Clement.
By stepping back and allowing the commercial sector to take the lead in technology development, the Defense Department may have lost some cache but saved some money. "[The military] has lost its cutting-edge status. Now, especially in information technology, the marketplace, not the DOD, dictates the winner. That wasn't the case even four years ago," says Leonard Gliatta, senior programs manager for Symbol's government group. "They reap the benefit of what's commercially available, and because of the competitive nature of all this, they're able to obtain stuff at a very good price and rely on the infrastructure that the corporation —in the case of Symbol—has built up internationally, to support that equipment across the globe."
Why has the shift happened now? Gliatta points to the rise of the personal computer. As computing power migrated from the mainframe into the hands of anyone with a PC, he says, "big organizations like the DOD had less to say about things. The marketplace, with all its players, now decides the technological winner." Another reason is that logistics technology in the commercial sector simply got a lot better. A shipper can now book and track cargo electronically with more than 90 percent of the world's ocean liner capacity using only three Web-based "pOréal" services. General Motors can deliver a car within days, instead of weeks, of receiving an order.
Hard lessons in the Arabian Gulf
And the truth is, U.S. military logistics were ripe for an overhaul. The U.S. Army abandoned 1.6 million tons of excess material and equipment in Vietnam, according to U.S. Army General (Ret.) John Coburn, who was in charge of developing the TAV system for the Defense Department. Things hadn't improved much by the 1990 Gulf War. "We were good at shipping but we didn't know what we had," says Gen. Coburn. The official estimate was that the Armed Forces ended up opening between 20,000 and 40,000 containers after the war just to see what was inside them, but Coburn reckons it was even more. "Clearly that was unacceptable, so we got serious about developing a system for total asset visibility, so we could see not only what we have on hand but what we have in transit."
Coburn supervised the introduction of active RFID tags, which are capable of announcing their own presence before being "pinged" with a reader, making it easier to find them and identify the contents of the container to which they're attached. The TAV system now includes more than 750 "nodes"—locations of fixed and portable readers throughout the world, which transmit data to a centralized DOD database and software system called In-Transit Visibility (ITV). That's a significant improvement over the last Gulf War, according to David Stephens, Savi's senior vice president of public sector, based in Washington, D.C. Stephens says several Government Accounting Office reports claimed that the military could have saved $2 billion had this system been in place during the first Gulf War. The U.S. Armed Forces shipped out 30 percent fewer troops this time—and 90 percent fewer containers to support them. "There are a lot of anecdotes about how they could find material within minutes as opposed to days," says Stephens. Growth of the TAV system continues apace.
As part of the new openness, the DOD intends to share the benefits of the TAV system with the commercial sector in a symbiotic effort to improve cargo security. Savi and a host of leaders in the logistics industry—including former Deputy U.S. Customs Commissioner Sam Banks and the heads of two of the largest port-owning companies in the world— have together launched Smart and Secure Tradelanes, an initiative to leverage the technology and extend TAV's physical infrastructure. The idea is to use the RFID tag readers mounted at crucial points in ports to read off information about commercial cargo passing through—information useful both for security and commercial purposes. The Phase One pilot stage, which ran with 19 international commercial shippers from July 2002 to June 2003, was, by all accounts, a success. Savi's Stephens says Phase Two will extend the network and include more shippers and cargo.
Everyone wants RFID
Meanwhile, both the commercial and military sectors are abuzz about RFID. Right now it's anybody's guess as to who will be first to deploy at the case and pallet level across its entire operation. Last June,Wal-Mart mandated that its top 100 suppliers provide RFID capabilities by the beginning of 2005. In July 2002, Gen. Tommy Franks, who led the invasion of Iraq, issued an unclassified memo that specified that all pallets and containers moving around under the control of U.S. CENTCOM (the U.S. military's central command for the Middle East, Southwest Asia, Northeast Africa and the Arabian Gulf) would have to be fitted with RFID tags. That initiative, too, will be under way by 2005. It seems, overall, that operations of the U.S. military and the commercial sector are more in synch than ever.
"It's more recognition that our interests are the same when it comes to logistics and the whole issue of supply chain management," says Coburn. "It's being taken very seriously by the U.S. military, just as it is by the commercial sector." Logistics, he says, has moved not only from the back room to the boardroom in the commercial sector, but has become a top-level military concern as more people realize that though good logistics may not win wars, bad logistics can lose them.
Yet it's important to recognize that the needs of military logistics and commercial logistics will never dovetail perfectly, Coburn points out. "We in the military use commercial practices where we can, but we can't do it all the time," he says. "I don't believe in just-in-time inventory. Fighting a war is all about risk and we can't afford that extra risk of just-in-time because you're talking about soldiers' lives. But I don't believe in just-in-case inventory either. We don't have piles of stuff lying around any more. I believe in justright inventory."
The challenge, Coburn says, is to work out the likely rate of use of each individual piece of military equipment and supply item, and to make sure those responsible for ordering those items know exactly how much they already have and how many days away a new order is. To any experienced supply chain professional, that sounds a lot like a job for enterprise resource planning (ERP) software—a popular tool in commercial logistics management. Sure enough, all branches of the military are currently at varying stages of deploying ERP.