United States Transportation Command

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FORT BELVOIR, Va. (USTCNS) --- Strategic Distribution, formerly known as the Strategic Distribution Management Initiative, is an effort designed to transform the Department of Defense worldwide distribution system by integrating the key elements of stock positioning and transportation to drive down customer wait time and cost while improving the quality and reliability of service.

Since the program’s inception in 2000, the strategic partnership of Defense Logistics Agency, and the US Transportation Command have resulted in dramatic improvements in the performance of the DoD supply chain.

Customer wait time -- the total elapsed time between issuance of a customer order to satisfaction of that order -- has been reduced from a pre-SD average of 15 days to 11 days for European Command units. At the same time, proper positioning of stocks in support of forward deployed customers has reduced transportation costs by shifting cargo volume to scheduled transportation services, and away from more expensive premium transportation modes.

This improvement in response time has been sustained even in the face of surge requirements related to Operation Enduring Freedom. The flexibility of processes introduced by SD enabled the system to respond rapidly to support contingency operations.

The U.S. Navy Pacific Fleet, Fleet Supply, has been involved with SD since June 2001. “SD has supported an opportunity to review the supply chain's response to the war fighter from a holistic perspective,” said Commander Randall Moore, Pacific Fleet Supply. “It is providing opportunity to optimize transportation and stock positioning to achieve the required response to war fighter requirements.”

The Pacific Fleet has seen quantifiable improvements in transportation service as the result of SD, Moore said, exemplified in both the surface and air metrics.
“Additionally, as a result of SD Phase 1, the Pacific Fleet has recently received the first End-To-End Channel Sparing - Analysis Tool for the Pearl Harbor Naval Shipyard and will be using the analysis tool to determine optimal stock positioning trade-offs with available transportation.” This tool takes a requisition from the beginning and walks it through each potential source of supply until it is filled or backordered.

Participants in SD-Europe created a Theater Distribution Management Cell to reduce the backlog of air transported cargo.

This SD innovation reduced customer wait time, transportation and overall requirements for frequency air channels from Germany to the Balkans. “By scheduling inbound inter-theater air transported cargo against scheduled intra-theater air transport, potential backlogs were diverted to ground transportation,” said Mark Paun, the U.S. Army Europe, Chief of the 21st Theater Support Command Distribution Management Center. “The ground lines of communication option virtually eliminated the air transport backlog and reduced the requirement for frequency channels. The program has been so successful that it has been expanded to Aviano, Italy and Mildenhall, England.”

An example of SD’s focus on the supply chain as a whole, is forward stocking -- positioning applicable materiel closer to the customers in Europe and the Pacific. Forward stocking has substantially reduced customer wait time and transportation costs. For example, air shipments to Korea and Japan are arriving three to five days earlier, and surface shipment time has been reduced by 17 percent since October 1999.

Improving such a massive logistics system requires a great degree of coordination and synchronization. The biggest challenge is getting the various command and service computer systems “talking” to one another in a common language. Creative solutions and “out-of-the-box” thinking are still required to meet this challenge. Part of the problem was that stock delivery and positioning were not assessed by DoD on a global basis. DLA, through the SD process, is working to change all that.

Working very closely with European Command and Transportation Command, the 21st Theater Support Command Distribution Management Center, and the 200th Material Management Center Velocity Management team, DLA has been able to assist with other SD improvements.

Two years ago, 90 percent of materiel transported to Bosnia and Kosovo were flown in by U.S. military airlift. That percentage has been reduced to less than 30 percent moved by air, with customer wait time for Bosnia alone reduced by 26 percent -- from 15 days to 11 days. “This is a dramatic reduction of $1.5 million in transportation costs annually to the Army,” said Paun.

Perhaps not as critical as air transport, sea transport is also making great strides in reducing customer wait time. In sea deliveries to European military customers, customer wait time has been reduced, on the average, from over 55 days to less than 40 days – a 27 percent reduction. “A customer wait time reduction of one day,” Paun said, “equates to about a $4 million savings to U.S. taxpayers.”

Certainly, DoD leadership has been pleased with the results of SD. According to Air Force Maj. Gen. William Welser III, Director of Operations and Logistics, U.S. Transportation Command, the program is having a substantial impact on DoD’s ability to support the war on terrorism.

“Rapid movement of sustainment supplies in support of Operation Enduring Freedom clearly demonstrates that SD efforts are on target. The enhanced velocity is a direct result of the SD partnership between the services, DLA and USTRANSCOM,” said Welser.

“Since 11 Sept., customer wait time for military air door-to-door service remained steady at 11days compared to the pre-SD average peacetime wait time of 16 days,” said Vice Adm. Keith W. Lippert, Director, DLA.

From this promising start, DLA is moving forward to realize the full potential of the SD partnership through its initiatives, specifically:

- CONUS Stock Positioning – By continuously and aggressively reviewing opportunities for moving stock to Strategic Distribution Platforms in Susquehanna Pa. and San Joaquin Ca., DLA supply centers are optimizing support to customers while minimizing costs. The key metric measuring this effort, the facing fill rate (stock coming from the designated location), is now 73 percent, an improvement of 13 percent from the pre-SD baseline.

- Forward Stock Positioning – Building on the success of efforts in European command, DLA is expanding to support Pacific Command customers in Hawaii, Japan, and Guam. The current focus is on determining the optimal mix of in theater stock positioning and transportation channels to enhance support and reduce cost. Efforts are also underway to analyze the current logistics infrastructure in the Central Command. This analysis will identify all current inventory levels, sources of supply and shipment modes and frequency. The data will be used to evaluate the potential for establishment of a Theater Distribution Platform.

- Expansion of Scheduled Truck Program – Scheduled truck deliveries are a key component of the SD effort to minimize cost while reducing customer wait time. This innovation is now institutionalized as a DLA business practice and is expanding to include three new truck routes and 41 additions to existing routes. As a result, surface wait time to all customers is down by 20 percent.

- Partnering with GSA – Discussions continue between the Defense Distribution Center and the General Services Administration regarding the establishment of an Integrated Distribution System. This partnership represents significant opportunities for enhanced performance and efficiency through the integration of GSA material into DLA stock positioning and scheduled truck programs.

We know that SD is working well, but we must be vigilant in seeking further improvements to the system. Additional customization of distribution processes will be required. Initial efforts are underway with the Army to configure shipments to meet the needs of deployed or deploying units. For example, pre-configured loads can reduce the personnel and equipment needed to establish operations in forward bases.

So the SD work continues. All personnel involved with SD will need to use their imagination, flexibility and commitment to continually create “business success” in peace and war, and in times of unanticipated customer requests. Our people are up for that challenge.