Electronic Commerce Advances Cut Cost and Speed Deliveries

By Stanton, John J. | National Defense, December 1998 | Go to article overview

Electronic Commerce Advances Cut Cost and Speed Deliveries


Stanton, John J., National Defense


Electronic commerce advances are speeding supplies and equipment

to troops in the field and making it considerably easier for government and industry to interact.

Many problems have yet to be resolved, but this digital paradigm is rapidly revolutionizing the way the Defense Department is conducting its multi-billion dollar a year logistics business.

The Defense Department is "literally awash in paper," according to Deputy Defense Secretary John J. Hamre. "For example, the Defense Finance and Accounting Service in Columbus, Ohio, processes about $43 million an hour in contract payments. There are huge sorting wheels to sort through the mail in the morning and 15 miles of linear shelf space for contracts."

This Byzantine process is something that Hamre and much of the Pentagon leadership would like to eliminate. Drowning in paper costs, the Pentagon wastes hundreds of millions of dollars a year that could otherwise be directed to much needed research and development and readiness programs.

Coming to the rescue are a series of aggressive electronic commerce and electronic data interchange initiatives (EDI)-technologies and programs that are linked to the emergence of the Internet and other potentially lucrative marketplaces. The Defense Logistics Agency (DLA), alone, proclaims itself to be an $11 billion market for prospective suppliers.

And on the commercial side, International Data Corporation, Framingham, Massachusetts, estimates the business-to-business electronic commerce market at $208.5 billion. Forrester Research, Cambridge, Massachusetts, sets it higher at $320 billion.

For some organizations, such as the Army's Tank-automotive and Armaments Command (TACOM), Warren, Michigan, electronic commerce, or e-commerce, is a means of survival, but many industry regard it as a spendthrift government initiative.

With aggregate potential savings and profits in the billions dollarsincluding tax revenue-it's no surprise that government and industry are moving rapidly to create a world where all transactions are conducted electronically.

Becoming a Player

As with any global initiative, a new stream of policies and organizations must be understood to determine how one becomes a player. This reality, according to an industry official, "does not endear electronic commerce to small and medium sized businesses." Pat Dempsey-Klott, meanwhile, TACOM ecommerce/EDI program manager, mentions that "it's tough for the new entrant into this field to navigate."

Negotiating this welter of policies, program literature, and web sites is no easy task. Several organizations have been established to assist government and industry managers.

From a policy perspective, President Clinton's release of the Framework for Global Electronic Commerce in 1997 provided a template for the U.S. marketplace and worldwide electronic commerce. The report revealed the intricacies involved: privacy, network security, transborder data flows, technical standards, Internet protocols, reliable telecommunications networks, internal cultural barriers, customer access, copyright law and international cooperation.

To make the policy work, handle the dicey issues, and ease the transition for government, the federal electronic commerce program office provides coordination and is co-chaired by representatives from general services administration and the Pentagon.

The joint electronic commerce program office, JECPO, is a critical e-commerce organization within the government. Run by the Defense Information Systems Agency (DISA) and defense logistics agency, JECPO manages the acquisition aspects of electronic commerce and seeks to achieve a paperless contract solution by 2000.

Within JECPO, DISA handles technical matters including architecture and systems engineering issues while DLA with management, including outreach programs and business cycle questions. …

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Electronic Commerce Advances Cut Cost and Speed Deliveries
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