Managing Change

Written by Peter Buxbaum

The military sees senseand- respond logistics as part and parcel of its transformation to information-intensive, network-centric operations. But network-centricity, by its nature, emphasizes technology implementations and data sharing rather than organizational changes. Last year’s Quadrennial Defense Report, for example, advocated “extending the communications backbone down to the smallest tactical unit in the field.”

Sense-and-respond logistics, as it is being implemented, has also revolved around technology. But this emphasis has missed the mark when it comes to the important organizational aspects of the concept. Technology may have improved the military’s ability to “sense” logistics needs but not necessarily to more effectively “respond.”

Sense-and-respond logistics is based on management theories developed by Stephan Haeckel at the IBM Advanced Business Institute. Haeckel’s original work aimed to create greater adaptability in commercial enterprises. His theory posited that companies should reengineer themselves to become sense-and-respond organizations when their customers’ needs changed faster than the company’s ability to respond to them.

In Haeckel’s view, senseand- respond revolves less around technology and more around a concept of management and organization. In a sense-and-respond organization, hierarchy is replaced by a dynamic network of capabilities. For Haeckel, the most important aspect of implementing the methodology involves revamping an organization’s management structure, from a hierarchical system of command and control, characterized by carrying out pre-set procedures, to a system based on people being accountable for outcomes.

“In my ten-year stint as a corporate futurist at IBM, I became convinced that the underlying logic of an information intensive economy was unpredictable change,” said Haeckel, who is now president of Adaptive Business Designs, a management consultancy in Pound Ridge, N.Y. Haeckel also served as an advisor to the Office of Force Transformation, since disbanded, when it housed the sense-andrespond logistics effort. Today, it falls under the Office of the Undersecretary of Defense for Acquisition, Technology and Logistics. Traditional organizations, according to Haeckel, attempt to predict their requirements and then execute efficiently what they have predicted. Sense-and-respond logistics, under Haeckel’s formulation, attempts to drive the process “from the current need back rather than from the predicted requirement forward.”

“The idea is to give up trying to specify procedures and processes, inputs and outputs in advance and instead to design a system focused on the effect to be produced,” he explained. A business will typically strive to provide value to its customers. In military organizations, the focus could be thought of as providing negative value to the enemy.

But military logisticians have found it easier to focus on implementing technologies, rather than transforming their organizational structures, Haeckel complained. “This has enabled them to get better at predicting what is predictable,” he said. “It doesn’t help them become adaptive to provide logistics support for unpredictable needs.”

From a Department of Defense perspective, sense-and-respond logistics is designed to “improve the readiness and availability of weapons systems,” according to Jim Hall, assistant deputy undersecretary of defense for logistics plans and studies. The desired results include “reducing unscheduled maintenance and reducing the cycle time for scheduled maintenance.”

Lou Kratz, vice president and managing director for Focused Logistics Enterprise at Lockheed Martin Corp., said this involves “moving the demand signal forward as close to the customer as possible. That is the sense piece.” In this context, the customer is the end user of equipment and supplies. In other words, the warfighter.

For Kratz, sense-and-respond logistics transforms the “static linear flow” associated with traditional supply-chain management into a “robust supply network to respond to the unforeseen.” A traditional logistics system, Kratz said, would wait until a piece of equipment failed, then have it diagnosed, then have a replacement or repair requisition written.

By placing sensors on equipment, Lockheed Martin, working with companies like its subsidiary, Savi Technology, seeks to anticipate trouble and respond before the equipment fails. “We are pulling data on the health of the platform right off the platform itself,” Kratz explained. “On the back end, technicians in our operations centers perform an engineering analysis to anticipate and initiate material support before [military units] even know they need them. This minimizes the time required to respond to demand.”

In a similar vein, Hall noted that DoD has developed an “autonomic logistics system” for the Joint Strike Fighter aircraft, which pulls data off platform sensors, analyzes them, and orders parts for aircraft without human intervention. “This allows us to quickly turn aircraft around for their next sorties,” he said. The Marine Corps is in the process of retrofitting its Light Armored Vehicles with sensors that will perform a similar function, Hall said.

Lockheed Martin and Savi Technology also operate the Global Transportation Network on behalf of the Defense Logistics Agency, which provides visibility into shipment of equipments, supplies and parts.

The system uses radio frequency identification technology to keep track of the 30,000 shipments moving through the DoD supply chain at any given time. RFID tags attached to containers and equipment are read as they pass through a network of 2,600 tag readers worldwide. Visibility of supply is thought to be a key element of sense-andrespond logistics, according to an IBM white paper on the subject.

“We are not only tracking where the shipments are but can also feed inventory management systems with information on the integrity of the supplies,” said David Stephens, general manager, Americas, at Savi Technology. For example, special sensors affixed to medical supplies, perishables and sensitive equipment can indicate whether they have been exposed to excessive cold, heat or humidity. “We also take that information and put some intelligence around it to enable our customers to make the right decisions,” Stephens said. “We provide the U.S. military with automated prognosticating capabilities as well as the ability to build convoys.”

But for Haeckel, all of this talk of technology obscures the real essence of sense-and- respond logistics. “The real question is what military logistics would look like if it were organized to respond efficiently to current needs as opposed to predicted needs,” he said. “The focus on technology promotes higher levels of efficiency but it misuses the concept of sense-and-respond logistics as I meant it.”

The fact that the military is improving its predicative capabilities is a positive development, as far as Haeckel is concerned. “But that does not address the central sense-and- respond issue where unpredictability is predicated,” he added. “Getting better at predicting doesn’t seem to be the logical answer to dealing with unpredictability.”

DoD’s Hall says his office “fully supports” the growth of sense-and-respond logistics within the department by, among other things, looking for opportunities to “cross-pollinate” the concept and for venues in which to educate and inform military logisticians.

Hall acknowledged the management side to the sense-and-respond equation which “calls on us to redesign processes for maintaining and supporting weapons systems.” “We also need to understand how additional sensing data can be brought to bear so that we can see things and do things sooner than we can we do today,” he added. “If we had more sensing data and a stronger ability to interpret that data, we would be able to respond to logistics needs better and sooner.”

For Hall, interpretation of data is the key sense-and-respond challenge. “This is no longer a technical challenge,” he said. “Interpretation involves a combination of technology and human capabilities. We can apply sensors to weapons systems and exchange that data. The management challenge is to determine what data is critical, when we need it, what decisions will be made on the basis of that data, and how to integrate those into supporting process such as supply, transportation and maintenance so we can achieve the most effective response.”

Haeckel, for his part, acknowledged that “technologies are important, but they can’t be exploited to produce a truly adaptive organization if they have to operate under the traditional top down, plan forward way of thinking.

“The real challenge is to integrate technology into the net-centric way of warfighting,” Haeckel said. “But without a new managerial framework to exploit these technologies, it is really difficult to be effective rather than efficient.”

Hall expects that DoD will soon move from the introductory phase of sense-andrespond logistics to a stage of “refinement and improvement” as more of the department’s services and agencies accept the concept. His office is attempting to institutionalize sense-and-respond logistics by including the concept in joint publications that are circulated throughout the department.

But Haeckel doesn’t expect DoD’s way forward to be easy. No large business organization has successfully implemented sense-and-respond on the enterprise level, he admitted. “They have found that it is too much of a change,” he said.

The military has opted for a technology emphasis, Haeckel said, because it is easier to measure its costs and because it avoids the messy business of changing how people behave and how they relate to each other and to their organization.

“Sense-and-respond is not an elixir,” Haeckel said. “It sets forth a new set of decisions that are required without specifying what the right decision is. You can operate in a sense-and-respond organization and fail if you make the wrong decision in that framework. Ultimately, it is the quality of individuals making these kinds of decisions that makes the difference.” ♦