Arendt Dissertation 8-15-12.v15

391 Pages·2012·11.63 MB·English

ABSTRACT

Title of Document: APPLICATION AND IMPLEMENTATION
OF THE SUPPLY CHAIN OPERATIONS
REFERENCE (SCOR) MODEL AT THE
UNITED STATES DEPARTMENT OF
DEFENSE (DOD)

Michael James Arendt Jr., Ph.D., 2012

Directed By: Roger C. Lipitz Chair in Public Policy and
Private Enterprise, Dr. Jacques S. Gansler,
School of Public Policy

DoD’s supply-chain supports over 1 million uniformed, civilian, and contract
employees, manages over $90 billion in inventory, and maintains some 15,000
aircraft, 300 ships, and 30,000 combat vehicles. The supply-chain is undeniably the
backbone of DoD operations, ultimately enabling it to achieve mission success under
a variety of situations. In recent years, the DoD has pursued numerous initiatives for
the purposes of improving its supply-chain. Motivations to seek improvements (such
as asset tracking, reduced errors, etc.), decreased costs, and increased responsiveness
for the warfighter have been plentiful; however, measured improvement thus far has
been difficult to ascertain. It is the intent of this research to establish a framework to
enable DoD to use industry best practices and process improvements from the Supply
Chain Operations Reference Model (SCOR) as a tool for Defense supply-chain
modernization efforts. To accomplish this, the dissertation will address the following
research questions:
1. How can the Supply Chain Operations Reference (SCOR) model be adapted
for use as an enterprise-level tool by the United States Department of
Defense?
2. Once adapted, what barriers to the implementation of this new tool exist?
3. How can these barriers be overcome?
APPLICATION AND IMPLEMENTATION OF THE SUPPLY CHAIN
OPERATIONS REFERENCE (SCOR) MODEL AT THE UNITED STATES
DEPARTMENT OF DEFENSE (DOD)

By

Michael James Arendt Jr.

Dissertation submitted to the Faculty of the Graduate School of the
University of Maryland, College Park, in partial fulfillment
of the requirements for the degree of
Doctor of Philosophy
2012

Advisory Committee:
Professor Jacques S. Gansler, Chair
Dr. Sandor Boyson
Dr. Tom Corsi
Ms. Lisa Harrington
Dr. Paul Tesluk
© Copyright by
Michael James Arendt Jr.
2012
Table of Contents

Table of Contents ......................................................................................................... ii
List of Tables ............................................................................................................... iv
List of Figures ............................................................................................................... v
Chapter 1: Introduction to the Department of Defense Supply Chain ...................... 1
Introduction .............................................................................................................. 1
Fundamental Definitions .......................................................................................... 4
Historical Baselines for Supply-Chain Management in Business ........................... 6
Military and Commercial Supply Chains ................................................................ 9
Chapter 2: Literature Review .................................................................................... 33
Introduction to Supply Chain Management (SCM) ............................................... 33
Metrics for Measuring Improvement in Supply Chain Management .................... 35
Cost as a Measure of Improvement .................................................................... 38
Cost and Activity Time as a Measure of Improvement ...................................... 40
Cost and Customer Responsiveness as a Measure of Improvement ................... 41
Flexibility as a Measure of Improvement ........................................................... 43
Integration as a Measure of Improvement .......................................................... 44
Frameworks for Measuring Supply-Chain Management Performance Improvement
............................................................................................................................ 47
SCOR in the Literature .......................................................................................... 48
SCOR at HP ........................................................................................................ 49
SCOR at Intel ...................................................................................................... 51
Chapter 3: The MILSCOR Framework .................................................................... 54
What is the SCOR Model? ..................................................................................... 54
Introduction to MILSCOR ..................................................................................... 56
What is MILSCOR? 
 ......................................................................................... 57
Why is MILSCOR Important? 
 ......................................................................... 62
MILSCOR’s Target Audience ............................................................................ 64
The MILSCOR Framework 
 ............................................................................. 69
Weighting Metrics in MILSCOR ........................................................................ 75
MILSCOR Performance Attribute: Supply Chain Reliability ............................... 79
Supply Chain Reliability Perfect Condition Case: Body Armor ...................... 107
MILSCOR Performance Attribute: Supply Chain Responsiveness ..................... 108
MILSCOR Performance Attribute: Supply Chain Agility ................................... 115
Supply Chain Agility: Upside Supply Chain Flexibility Case: Mine Resistant
Ambush Protected Vehicle (MRAP) ................................................................ 126
Supply Chain Agility: Downside Supply Chain Adaptability Case: F-22 Fighter
........................................................................................................................... 144
MILSCOR Performance Attribute: Supply Chain Cost ....................................... 150
Supply Chain Cost: Supply Chain Management Risk Mitigation Cost Case: Fuel
........................................................................................................................... 160
MILSCOR Performance Attribute: Supply Chain Asset Management ............... 162
Supply Chain Asset Management: Return on Program/Initiative Investment
Case: DoD’s Corrosion Prevention Program .................................................... 165
ii
Chapter 4: Transformational Elements for Organizational Change at DoD ........ 167
Leadership ............................................................................................................ 173
Leadership in the Literature .............................................................................. 173
Leadership Barriers at DoD .............................................................................. 177
Recommendations for Improvement ................................................................. 184
Vision, Mission, and Strategy .............................................................................. 187
Vision in the Literature ..................................................................................... 187
Mission in the Literature ................................................................................... 190
Strategy in the Literature .................................................................................. 192
Vision, Mission and Strategy Barriers at DoD ................................................. 195
Recommendations for Improvement ................................................................. 207
Culture .................................................................................................................. 209
Military Organizational Culture ........................................................................ 210
Cultural Barriers at DoD ................................................................................... 216
Recommendations for Improvement ................................................................. 231
Chapter 5: Transactional Elements for Organizational Change at DoD .............. 234
Structure ............................................................................................................... 235
Organizational Structure in the Literature ........................................................ 235
Structural Barriers at DoD ................................................................................ 241
Recommendations for Improvement ................................................................. 254
Systems ................................................................................................................ 257
Systems (Policies and Processes) in the Literature ........................................... 257
Systems (Policies and Processes) Barriers at DoD ........................................... 261
Recommendations for Improvement ................................................................. 270
Task Requirements and Individual Skills ............................................................ 273
Task Requirements and Individual Skills and Abilities in the Literature ......... 273
Task Requirements and Individual Skills and Abilities Barriers at DoD ......... 275
Recommendations for Improvement ................................................................. 281
Motivation ............................................................................................................ 284
Motivation in the Literature .............................................................................. 284
Motivation Barriers at DoD .............................................................................. 288
Recommendations for Improvement ................................................................. 298
Management Practices ......................................................................................... 299
Management Practices in the Literature ........................................................... 303
Management Practice Barriers at DoD ............................................................. 309
Recommendations for Improvement ................................................................. 320
Work Unit Climate ............................................................................................... 322
Work Unit Climate in the Literature ................................................................. 322
Work Unit Climate Barriers at DoD ................................................................. 325
Recommendations for Improvement ................................................................. 329
Chapter 6: Case TF-34/CF-34 Aircraft Engine ..................................................... 330
Chapter 7: Conclusion ............................................................................................. 336
Appendix A: Organizational Change Survey and Results ..................................... 337
Bibliography ............................................................................................................. 354

iii
List of Tables

Table 1. Adaptation of the Supply Chain Maturity Model for MILSCOR. ................ 61

Table 2. DoD Opportunities for Cost and Performance Improvement as Identified by
the Defense Science Board ................................................................................. 62

Table 3. Differences Between Recent DoD Supply Chain Approaches and
MILSCOR. .......................................................................................................... 67

Table 4. Selected Supply Chain IT Systems Applicable to MILSCOR. .................... 72

Table 5. Summary of MILSCOR Framework. ........................................................... 74

Table 6. Pair-Wise Weighting Methodology for MILSCOR. ..................................... 76

Table 7. Sample Contract Performance Evaluation Criteria for % of Orders Delivered
in Full. ................................................................................................................. 90

Table 8. Sample Contract Performance Evaluation Criteria for Delivery Performance
to Customer Commit Date. ................................................................................. 94

Table 9. Number of Distinct Business Systems at DoD. ............................................ 98

Table 10. Sample Contract Performance Evaluation Criteria for Perfect Condition.106

Table 11. MILSCOR Supply Chain Cycle Time Components. ................................ 110

Table 12. MILSCOR Flexibility Components. ......................................................... 116

Table 13. MILSCOR Upside Supply Chain Flexibility Input Components. ............ 119

Table 14. MILSCOR Upside Supply Chain Flexibility Resource Availability
Assessment & Ramp-up/Lead Time Components. ........................................... 120

Table 15. Sample Contract Performance Evaluation Criteria for Upside Supply Chain
Flexibility. ......................................................................................................... 125

Table 16. MILSCOR Upside Supply Chain Adaptability Components. .................. 129

Table 17. MILSCOR Upside Supply Chain Adaptability Input Components. ......... 132

Table 18. MILSCOR Upside Supply Chain Adaptability Resource Availability
Assessment & Ramp-up/Lead Time Components. ........................................... 135

Table 19. MILSCOR Downside Adaptability Components. .................................... 138

Table 20. MILSCOR Downside Adaptability Input Components. ........................... 140

Table 21. MILSCOR Downside Adaptability Resource Availability Assessment &
Ramp-up/Lead Time Components. ................................................................... 141

Table 22. MILSCOR Cost Components. .................................................................. 152

Table 23. Inventory of DoD's Discrete Business Systems as of 2011. ..................... 199

Table 24. Organizational Missions Related to Business System Modernization at
DoD. .................................................................................................................. 202

Table 25. Typical DoD and Commercial Supply Chain Performance Metrics. ....... 225

Table 26. Types of Organizational Structures. ......................................................... 241

Table 27. Leadership Competencies. ........................................................................ 283

Table 29. Selected Theories of Management. ........................................................... 307

Table 30. Comparison of Transformational and Transactional Elements between
TF34 and CF34 Support Approaches. .............................................................. 334

iv
List of Figures
Figure 1. Distribution of Goods and Services in DoD Supply Chains. ...................... 58

Figure 2. Pair-Wise Comparison Continuum. ............................................................. 76

Figure 3. Example Pair-Wise Comparison for MILSCOR Weighting. ...................... 77

Figure 4. MILSCOR Reliability Metric Structure. ..................................................... 80

Figure 5. MILSCOR Responsiveness Metric Structure. ........................................... 108

Figure 6. MILSCOR Agility Metric Structure. ......................................................... 115

Figure 7. MILSCOR Cost Metric Structure. ............................................................. 150

Figure 8. MILSCOR Asset Management Metric Structure. ..................................... 162

Figure 9. MILSCOR Framework for Organizational Change. ................................. 171

Figure 10. Competing Values Framework Adapted for DoD. .................................. 214

Figure 11. Competing Values Framework Adapted for DoD. .................................. 228

Figure 12. Support Options for Government and Contractors. ................................. 252

Figure 13. Maslow's Hierarchy of Needs. ................................................................. 286

v
Chapter 1: Introduction to the Department of Defense
Supply Chain
Introduction
DoD’s supply-chain supports over 1 million uniformed, civilian, and contract
employees, manages over $90 billion in inventory, and maintains some 15,000
aircraft, 300 ships, and 30,000 combat vehicles.1 The supply-chain is
undeniably the backbone of DoD operations, ultimately enabling it to achieve
mission success under a variety of situations. To accomplish this feat, DoD
spends roughly $270 billion per year on supply-chain operations without
doing a world-class job (in response, reliability, costs etc.). Moreover,
maintenance costs have risen 87 percent in the last decade while the United
States has undertaken military operations in Iraq and Afghanistan. In recent
years, the DoD has pursued numerous initiatives for the purposes of
improving its supply-chain. Motivations to seek improvements (such as asset
tracking, reduced errors, etc.), decreased costs, and increased responsiveness
for the warfighter have been plentiful; however, measured improvement thus
far has been difficult to ascertain. Despite numerous initiatives, a disconnect
exists between the vision for supply-chain modernization and the level of
progress made to date. Luckily for the Department, the efficiency and
effectiveness improvements it seeks to make are not new—in fact, the private
sector has spent the last several decades embracing technology, modern

1 Estevez, A. (2010). High-risk logistics planning: progress on improving Department of
Defense supply chain management. Washington, D.C.: Department of Defense.

1
supply-chain management practices and process improvement
methodologies for the purposes of maximizing efficiency and effectiveness
while reducing costs. For example, many world-class firms today such as
Wal-Mart, Dell, Fed Ex, and Caterpillar are able to provide greater levels of
service, move more goods through the supply-chain, and sell to customers
across the globe for a fraction of what DoD spends to achieve inferior results.
Many of these practices and process improvements can be carried over and
applied to the military setting.

It is the intent of this research to establish a framework to enable DoD to use
industry best practices and process improvements from the Supply Chain
Operations Reference Model (SCOR) as a tool for Defense supply-chain
modernization efforts. To accomplish this, the dissertation will address the
following research questions:
1. How can the Supply Chain Operations Reference (SCOR) model be
adapted for use as an enterprise-level tool by the United States
Department of Defense?
2. Once adapted, what barriers to the implementation of this new tool
exist?
3. How can these barriers be overcome?
To address these questions the dissertation is organized in the following
manner. First, fundamental definitions regarding the supply chain will be
provided. Next a review of the supply chain management practices in business
2