Defense Dept. Begins New Effort to Better Track Military Supplies

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September 2007

By Sandra I. Erwin

The Defense Department expects to unveil this month its latest plan to improve the management and distribution of combat supplies, repair parts and materials that make up the Pentagon’s $162 billion logistics chain.

The plan seeks to fix what congressional critics deem wasteful inefficiencies in the way supplies are managed and to improve the timeliness of deliveries to troops in the field.

Since the beginning of the war in Iraq, the Defense Department has made “noticeable progress” in managing its enormous supply chain, Sen. George V. Voinovich, R-Ohio, told defense officials at a hearing of the Homeland Security and Government Affairs Committee.

But the improvements achieved so far are not enough, Voinovich said. The Defense Department’s “supply chain management” has been on the Government Accountability Office’s list of high-risk programs since 1990, he noted. The Pentagon “wastes 5 percent of its budget — more than 20 billion dollars a year at current budget levels — on redundant and outdated business practices,” Voinovich said. “Based on my experience as a former mayor and governor, I believe it’s more like 10 percent rather than 5 percent.”

In December 2006, the Defense Department asked the GAO to remove supply management from its “high risk” list on the basis that the Pentagon had improved its logistics operations, but GAO declined.

Pentagon officials frequently stress the complexity of military logistics. For the wars in Iraq and Afghanistan, the job of moving troops and equipment can be daunting, even by Pentagon standards.

For the first five months of this year, the Defense Department arranged transportation for 80,000 troops and 280,000 tons of materials. On an average day, it processes 6,000 requisitions from deployed Army and Marine Corps forces, said Jack Bell, deputy undersecretary of defense for logistics and materiel readiness. At the hearing, Bell noted that these requisitions typically take 16 days to fulfill — compared to 24 days two years ago. “Where possible, key commodities and components are now stocked forward and delivered as soon as they’re made available,” Bell said.

The next phase in the Defense Department’s efforts to bring more efficiency into logistics operations is the introduction of new technologies that can help track inventories and make more economical use of transportation assets.

In charge of executing the plan is the U.S. Transportation Command. “Our goal is to publish the implementation plan this fall, which will address both asset visibility and your considerations in terms of improving the supply chain,” Air Force Gen. Norton A. Schwartz, head of the Transportation Command, told lawmakers.

The “asset visibility” technologies, which include radio-frequency identification (RFID) tags, satellite tracking, and barcodes, would allow logistics depots and equipment distributors to more efficiently stock and deliver supplies.

The Transportation Command also is seeking better ways to monitor shipping containers in war zones. GAO estimated that the Pentagon has failed to account for 54,000 containers in the U.S. Central Command area. But Schwartz noted that the number has been reduced to about 4,400.

Sen. Daniel Akaka, D-Hawaii, chairman of the Armed Services readiness subcommittee, told Pentagon officials at the hearing that he is confident that the Defense Department will be able to soon bring modern logistics technologies to fruition.

“Asset visibility cannot be fully achieved without adequate technology applied to the supply chain,” Akaka said. “RFID, in theory will track every pallet and container from the warehouse to the war fighter. This capability has been in use in the private sector for years now and has greatly improved inventory levels and visibility. While implementation of RFID continues to move forward at the Defense Department, there is still a long way to go.”

The Pentagon also must do a better job ensuring that information systems involved with logistics can communicate with each other,” Akaka said. “Personnel in the field are being forced to find tedious, manual workarounds to exchange information between different computer systems … The Defense Department needs to formulate a unified, comprehensive strategy to address future logistics capabilities.”

William M. Solis, director of defense capabilities at GAO, said it remains to be seen whether the Pentagon has solved the problem of tracking containers. “One of the enablers to track this, of course, is the RFID tagging system,” he said at the hearing. “I think there are still issues related to whether they’re going to be able to track those containers.”

RFID tags are wireless devices that use radio waves to read data stored on a microchip.

The Defense Department will be testing the use of active RFID tags as a means to keep tabs on shipping containers. Those tags currently are attached to a container and record the contents of each box inside the container. Active RFID tags, about the size of a brick, have an internal power source such as a small battery, and have memory capacity so they can be written and rewritten.

Passive RFID tags, by contrast, do not have an internal power source. They are read-only tags that generate power from a reader device. The Defense Department considers passive RFID a complementary technology to active RFID and expects it will be more widely used because it costs less. While active tags run about $65 a piece, the passive tags cost about 65 cents. “With that kind of economics, you can maybe put a passive tag on every box,” said Bell. “We have to develop those capabilities to have real-time visibility in where our assets are so that we can measure how we’re performing in terms of customer wait time or perfect order fulfillment.”

Defense Department contracting policies mandate that all supplies shipped to Defense Logistics Agency depots be tagged with passive RFID cards. All shipping containers destined for U.S. Central Command are required to have active RFID tags.

DLA supply centers manage food, fuel, medical supplies, clothing, construction and barrier material. They also provide more than 90 percent of the military services’ aviation, land and maritime weapon systems spare parts.

The Pentagon began to mandate passive RFID tags in 2004, but the program got off to a slow start because of glitches in the technology and a steeper-than-expected learning curve that also delayed the adoption of RFID systems in the commercial sector.

The technology has matured in recent years, and is gradually being implemented at all defense logistics depots, said Alan. F. Estevez, principal assistant deputy undersecretary of defense for logistics and materiel readiness.

In a recent interview with National Defense, Estevez said RFID is essential to achieving the Defense Department’s goal of a seamless network where all supplies can be tracked.

“Visibility is a complex thing,” he said. With a combination of active and passive RFID tags, it will be possible to see supplies in the pipeline, even at points along the way where containers and pallets exchange hands, Estevez said. “RFID is a technology that is going to help do that. And it is helping us today.” One exception may be in areas such as war zones in foreign countries where it would be virtually impossible to set up the infrastructure to operate an RFID network. Other technologies such as satellite tracking devices are better suited for those remote areas, Estevez said.

He cautioned that RFID technology is not a silver bullet, and that other “business process” reforms need to take place for these efforts to be successful.

The Transportation Command has developed a “concept of operations” for the use of RFID and other automated identification technologies, and is currently putting together the implementation plan, said Estevez.

“We are just beginning the journey. It will take time,” he said. “Major corporations are impressed by how far the Defense Department is. We are sharing information with them.”

Estevez estimated that the Defense Logistics Agency depots are reading 50,000 passive RFID tags a month. “Every contract for materials coming into DLA depots requires RFID.”

For the technology to truly benefit defense logistics operations worldwide, the data from RFID tags has to stream into the military services’ business systems networks, he explained.

This will require a major systems integration effort, said Estevez. The project, estimated to cost about half a billion dollars, has yet to be funded, however. “We need to make sure we get the business value before we expand,” said Estevez. “The history of the Defense Department implementing major systems is not as stellar as we would prefer.” But the Pentagon nonetheless is committed to making this work, said Estevez.

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