A New Approach to Class IX Control
|by Chief Warrant Officer 4 Martin D. Webb
An organizational culture exists within Army
units that expects maintenance and supply
personnel to anticipate operational requirements. This culture extends from food service personnel to maintenance managers. Consequently, a “just-in-case” requisitioning mentality prevails.
Many maintenance and supply managers order nearly anything with a national stock number (NSN) just in case their unit needs it in the future, and this practice is costing the Army millions in transportation and supply expenditures.
Army logistics systems quickly fill requests for class IX (repair parts) supplies from the field; however, I contend that Army logisticians can change the just-in-case requisitioning mentality by anticipating units’ class IX needs. This is comparable to performing market research in the civilian business sector to determine what the people want or need and how to get it to them.
Emulating Fortune 500 Companies
Fortune 500 companies do not let the store manager determine what to stock, and neither should the Army. Walmart, a Fortune 500 company since 1995, performs many of the same logistics functions as the Army supply system—contracting, transportation, distribution, warehouse storage, and retail-level supply. One main difference between the Army and Walmart is that Walmart does not expect the store manager to determine what to stock. It uses full-spectrum supply-chain logistics systems, market analysis, stock control, and accounting procedures that minimize costs and maximize profits.
Standard Army Management Information Systems (STAMISs) and support agencies, such as the Logistics Support Activity, the Army Materiel Command, and the Defense Logistics Agency, have the tools to enable the Army to mirror a Fortune 500 company by providing warfighters with 80 to 90 percent of their operational and supply requirements. To resource warfighters for success, minimize costs, and maximize profits, the Logistics Support Activity should—
- Collect usage and fleet failure data.
- Determine the most essential fleet repair parts.
- Forecast the effects of anticipated changes in unit equipment or operating conditions.
In Army terms, these actions equate to increased readiness.
Shop Stock and Bench Stock Procedures
Let’s look at class IX supply procedures for units deployed in support of Operations Iraqi Freedom (OIF) and Enduring Freedom. This will address the current logistics situation, in which the Army operates under a just-in-case requisitioning mentality with no perceived budget constraints.
Nearly every unit puts its motor sergeant or maintenance officer in the advance party to set up maintenance operations and to establish its class IX account at its supporting forward distribution point (formerly supply support activity). He quickly assesses the unit’s organic and theater-provided equipment density and starts ordering anything and everything that he thinks he might need to sustain the fleet. This includes engines, transmissions, transfers, differentials, radiators, generators, windows, brakes, calipers, water pumps, and so forth. Imagine all of those items plus many, many more for multiple fleets of vehicles for every unit in theater—just in case.
A field maintenance company has the added responsibility of providing pass-back maintenance support for armament, communications and electronics equipment, ground support equipment, and service and recovery to the brigade combat team. Therefore, it will have a second shop stock to support those shops.
High-visibility systems, such as the long-range advance scout surveillance system (LRAS–3), have
field representatives who maintain and provide manufacturer-recommended parts, totaling over $1 million, to keep those systems fully mission capable. And topping off the list of supplies is the “gee-wiz” stuff people order, like computers, plasma screen televisions, LCD [liquid-crystal display] monitors, plasma cutters, air compressors, knives, camelbacks, and every special
tool and hand receipt shortage with an NSN.
Since the Standard Army Maintenance System- Enhanced (SAMS–E) automatically replenishes shop stock and bench stock items using 12-priority requisitions with no required delivery dates, units typically order the items they want to stock as an “offline” requisition using an 02 priority requisition with a required delivery date of 999, which indicates the need for expedited handling. Of course, ordering parts this way gets them in faster. Once the parts arrive, they are added to shop or bench stock for management.
So, we have units ordering everything they can think of for every fleet of equipment they support.
We have replenishment requisitions competing with
not-mission-capable supply requisitions for both
allocation and transportation. Moreover, we have
units ordering every “cool-guy” NSN they can find.
As you can see, we have a supply and maintenance management problem of epic proportions that is straining the budget and the logistics systems.
The current shop stock and bench stock policy is a relatively simple way to reduce Army inventory cost. It is a decentralized system that allows units to stock the items that their demand history reveals they order most. To cut costs even further, the Army has reduced the maximum number of prescribed load list lines from 300 to 150.
For an Army that had not been required to support combat operations in 20 years (from Vietnam to the first Gulf War), these policies may have served us well. However, as I see it, this policy has some fundamental flaws. It is typically based on the 180-day demand history of a unit in a garrison environment
and calculated against the unit’s garrison fleet of equipment. Using the demand history from the past 180 days in garrison is not representative of our wartime operating tempo or mission requirements. The most significant shortcoming of the current shop stock and bench stock policy lies in its failure to incorporate forecasting. The policy does not take into consideration immediate changes in unit equipment density, upcoming deployments, seasonal requirements, or operational requirements.
Now that units are primarily using theater-provided equipment, quite often demand history is lost between incoming and outgoing units during the relief in place and transfer of authority processes. Coalition Forces Land Component Command policy prohibits the transfer of unit Department of Defense activity address codes from outgoing units to incoming units, and the home station demand histories are useless because they were calculated against a different fleet of equipment under different operational conditions. Some units are left with a robust stock to fall in on, and others are left with little or nothing, which forces the incoming unit to do just-in-case ordering.
The Army has no system or program that will maximize readiness and minimize logistics costs by telling a maintenance activity what it should stock based on its equipment density. The following recommendations are intended to help change this situation. I am certain that we have the technological ability and the STAMIS systems to support these initiatives.
Establish and Follow Budget Controls
The first thing the Army can do to get expenditures under control is to implement budget controls during extended combat operations. Units need to get away from the attitude that they can order anything with an NSN because there are no budget constraints or that spending does not matter because they are using Global War on Terrorism funds. I would not recommend establishing such controls in the first 6 to 12 months of an operation (such as OIF I) but possibly during the subsequent 13 to 24 months (such as OIF II and beyond).
Many units are living and working on well-developed forward operating bases now and have achieved some degree of “normalcy” in their battle rhythm. Managing a budget is well within their capabilities, even while deployed.
Centralize Shop Stock Management
Another huge step toward reducing our maintenance and supply costs would be to make a commitment to manage logistics at the Army level. That equates to transitioning from decentralized shop stock and bench stock management systems to a centralized management system. However, the Army could, and probably should, manage these systems and many other logistics systems jointly with the other Department of Defense branches since they use many of the same pieces of equipment and logistics support agencies.
Enough data are available on each major end item to determine the exact items and quantities that each maintenance activity should stock. I recommend that the Logistics Support Activity provide the database
for Army logistics management and use the data in Property Book Unit Supply Enhanced, which manages all unit property, to determine with a great deal of accuracy what property each unit has.
Let’s say that the Army wants to focus its efforts on stocking the quantifiably correct parts for Department of the Army Pamphlet 700–138, Army Logistics Readiness and Sustainability, and Master Maintenance Data File reportable items. The Army would identify all its reportable systems. Then it must analyze historical class IX requisitioning data from each project management team, the Army Materiel Command, and the Defense Logistics Agency to determine the most essential items required for maintaining each end item at the highest possible readiness level.
Next, the Army would quantify the optimal stockage requirements in the form of an algorithm or program for each unit in the Army, based on its equipment density and operational requirements. Then it would push that shop stock and bench stock list down to the unit level and require the units to stock those exact items.
The key to sustaining success on this front is to actively manage this system to achieve the desired reduction in logistics costs and increased readiness levels. Shop stock and bench stock quantities may need to change when units prepare for deployment, prepare for redeployment, or move from an overseas location to an installation in the continental United States.
After the program is written, it should essentially be a continuous system that works nonstop to optimize readiness and reduce costs by monitoring changes in unit equipment density, forecasted seasonal or geographic changes, or operational changes in mission. Furthermore, by implementing an Army centralized shop stock and bench stock policy, we eliminate any ambiguity about how many lines of shop stock or bench stock a unit can have because we have created
a tailor-made listing for every unit in the Army.
Manage Authorized Stockage Lists
This same approach can also be applied to managing warehouse authorized stockage lists. The only difference is that when doing the computations, the programmer should consider the equipment that each customer unit is responsible for maintaining and the shop stock and bench stock items and density that
the unit has been directed to stock. Ideally, we want
to make sure that the warehouse can quickly replenish
the unit’s shop stock and bench stock.
Store Major Assemblies in Warehouses
I think that all major assemblies, such as engines and transmissions, should be stored in warehouses. The Army loses national-level visibility of these items when units stock them. I have seen units with stacks and stacks of engines and transmissions in their shop stock—just in case. Surely, some unit in the world could use one of those engines to fix a truck right now. Keeping this type of item at the warehouse under Army Materiel Command ownership until needed to repair a not-mission-capable vehicle would save the Army millions of dollars in unnecessary purchases of major assemblies. Frankly, if a truck goes down for an engine, the mission will continue whether the engine is available or not. Surely a unit can wait a day or two for its requisition to be processed by the warehouse to get that truck up and running again. A unit could use that time to pull the engine while it waits.
Put an End to Just-in-Case Ordering
Eradicating just-in-case ordering is going to be difficult to accomplish without first resourcing units with adequate shop stock and bench stock to support them. Once a maintenance operation has been sufficiently stocked, fewer 02-priority replenishment orders that compete with real 02-priority requisitions will be placed. Making any type of software change will not help. (A unit could just order 10 engines against a pair of night-vision goggles to get what it wanted.) To change the mindset and culture of our motor sergeants and maintenance officers, the Army should first resource them for success and then train them on the implications of their actions.
To reduce some of the temptations of units to order so much nice-to-have but unneeded stuff, the Army needs to have a serious talk with the Defense Logistics Agency. How or why a computer or plasma screen television got loaded into the FedLOG catalog as class IX-expendable is beyond me. All of those items are property book-type items and, at the very minimum, should be cataloged as class II nonexpendables. That would prevent SAMS–E systems from ordering these items and would save the Army a lot of money—and quite a few careers.
Our logistics systems do an outstanding job of providing the warfighters with the parts and supplies they need on the ground anywhere in the world. The question then is, what can we do better? The answer is: forecast. We can anticipate and forecast what our warfighters will need with the same level of accuracy expected from a field artilleryman targeting the objective. We need to use the logistics systems we have to anticipate and resource our Soldiers with the parts and supplies they need to sustain combat readiness at the highest possible levels and with the least amount of strain on transportation assets. Implementation of these recommendations will be a huge step in the direction of cost reduction and increased readiness levels.