Integrating the Department of Defense Supply Chain: Techincial Report

By Eric Peltz; Marc Robbins | Go to book overview

CHAPTER TWO
Case Studies That Illustrate the Need for Supply Chain Integration
and Systems Thinking

Two related case studies illustrate shortfalls and the need for improvement in DoD supply chain integration. The first case study starts with an example of a supply chain design without an integrated view, but it does culminate in an integrated supply chain solution aligned with the framework for the design of an integrated DoD supply chain laid out later in this report. However, in describing the journey to get to this positive outcome, the case study illuminates gaps in policy, enabling management mechanisms, and the knowledge of the DoD supply chain workforce with regard to supply chain process dependencies and distribution network design principles. The policy gaps it highlights include the absence of an integrating structural framework for the DoD supply chain, the treatment of stock positioning, and the integration of supply planning and stock positioning. With respect to enabling mechanisms, the case study focuses on how functional and organizational barriers created by metrics and budget lines can impede a shift to a more integrated design. Finally, the knowledge gap made change management difficult and could impede future efforts, including optimal execution of the change in design described in this case study.

The second case study illustrates gaps in process integration reflected in information system design shortfalls. It shows the implications when functions and processes are not tightly integrated to ensure changes are coordinated and relevant information is shared and acted on in real time or near real time across the supply chain. In this case, the result was a severe “bullwhip” effect that led to cycles of inventory stock-outs and too much inventory, which were magnified upstream in the supply chain. The case study also demonstrates how people tend to stay within process, functional, and organizational walls rather than bust through them to consider how they could improve the system. In doing so, in conjunction with the first case study, the second case study suggests a need for improved systems thinking in the DoD supply chain workforce so that systems thinking imbues all aspects of supply chain design, interaction, and management. Additionally, the second case study demonstrates how long lead times contribute to the buildup of excessive wholesale inventory when demand on the wholesale supply system declines, leading to long periods of zero orders placed with a supplier. In turn, this makes business more difficult for suppliers as they face “boom” and “bust” cycles at the end of the bullwhip, likely raising costs for DoD.

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