Integrating the Department of Defense Supply Chain: Techincial Report

By Eric Peltz; Marc Robbins | Go to book overview

CHAPTER SEVEN
Scheduled Trucks—Apply a Systems View for Shipment
Consolidation

In the mid-1990s, in collaboration with the Army as part of its Velocity Management initiative, DLA instituted scheduled trucks from its SDPs to major Army installations. These allowed full-truck-load-like rates with express-delivery-like service. Prior to scheduled trucks, shipments from an SDP to an installation were shipped by different modes, depending on the priority. By consolidating shipments for an installation across all priorities on a periodic basis, a lower shipping rate could be achieved for all shipments, even low-priority shipments.1 Additionally, within an installation, a truck can stop at supply activities in a standard order at scheduled times, enabling improved receipting times and productivity, which is also aided by one delivery per day rather than multiple deliveries from different transportation modes. The greater the volume that can be consolidated, the lower the average shipping cost per pound and the more frequent the trucks, leading to faster delivery times. Thus, scheduled trucks work best when the facing fill—the percentage of shipments from the designated first source of materiel for a customer—from the supporting SDP for a truck’s customer set is high and as much of the material sent to an installation as possible is sent via the truck. Through the Strategic Distribution Management Initiative and continuing efforts by DLA Distribution, the scheduled truck network was expanded to cover most large installations in CONUS.

To demonstrate this benefit, Figure 7.1 shows the requisition wait time (RWT) in days and shipping cost per pound for different shipping modes from DLA DCs to customers in CONUS in FY 2011. Each column shows the RWT, with the lower black portion of the columns showing the median time, the middle yellow portion of the columns showing the 75th percentile time, the upper grey portion of the columns showing the 95th percentile time, and the red squares indicating the mean times. The blue triangles indicate the cost per pound using the right y-axis scale. Unless there is a single very large order, which can fill a full truck, shipments are sent via five primary modes. Low-priority shipments are shipped via small package surface carriers or via LTL, depending upon the size. Both have much longer RWTs than scheduled trucks with LTL being a little more expensive and small package shipments much more so. High-priority shipments are shipped via overnight express air service, such as FedEx or UPS, or commercial air freight, depending upon the size and weight. Overnight air times are similar to scheduled truck times but are close to an order of magnitude greater in cost, with commercial air freight being a little slower and also much more expensive. These comparisons are to the average scheduled truck cost and performance, although execution quality and the

1 Mark Y. D. Wang, Accelerated Logistics: Streamlining the Army’s Supply Chain, Santa Monica, Calif.: RAND Corporation, MR-1140-A, 2000.

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