Overview of RAND’s Supply Chain Management Research
Supply Chain Risk Leadership Council
Nancy Moore and Elvira LoredoOctober 8, 2008
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Outline
• Overview of RAND
• DoD’s supply chain challenges
• RAND’s supply chain research
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What Is RAND?
• An independent, nonprofit research institution founded in 1947 by the Air Force to preserve the war effort of scholars
• A producer of multi-disciplinary, quantitatively oriented research
• A tackler of large, complex problems
• A center for education and training in policy analysis
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We Are Guided by Our . . .
• Charter“To further and promote scientific, educational, and charitable purposes, all for . . . public welfare and security of the United States.”
• MissionTo help improve policy and decision-making through research and analysis
• Core valuesQuality and objectivity
• VisionTo be the world's most effective and trusted global provider of research and analysis
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RAND Has Evolved to Meet New Needsfor Research and AnalysisResearch
person years
600
500
400
300
200
100
01940s 1950s 1960s 1970s 1980s 1990s
Domestic and international
Domestic and international
National securityNational security
Project RAND formed byUSAAF at
DouglasAircraft
The RAND Corporation
formed
Domestic Research Division formed
Firstnon-USAF study
First work for OSD,
civil agencies
RAND Graduate
School established
Project RAND
becomes Project AIR
FORCE FFRDC
2000s
Army and OSD FFRDCs formed
First sustained
work in private sector
RAND Europe and
Science and Technology
Policy Institute formed
RAND-Qatar Policy Institute opened RAND
Gulf States Policy Institute opened
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Our Research Is TypicallyCharacterized by . . .
Issues that involve:
• Competing objectives and perspectives
• Intersection of public/ private interests
• "Messy" data, major uncertainties
• Implications for the future
An analytic approach that is:
• Integrative, collaborative, and multidisciplinary
• Empirical, with technical depth and methodological rigor
• Innovative, but informedby past findings
• Buttressed by demanding standards of quality and objectivity
RAND strives to build long-termrelationships with its clients
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RAND's Key Resource Is Its 737 MemberProfessional Research Staff
Degree Discipline Degree Level
Masters30%
Masters30%
Doctorate57%
Doctorate57%
None 1%Other 1%No degree
1%
Computersciences
Businessand law
Arts and letters
Physical sciences
Engineering
EconomicsMath, operations research, statistics
Policy analysis
Social sciences
8%8%
7%7%
9%9%
10%10%
12%12%
11%11%
11%11%
5%5%
12%12%
8%8% Behavioral sciences
Life sciences
Political science and international relations
3%3%3%3%
Bachelors11%
Bachelors11%
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RAND’s Customers
• Defense – Air Force, Army, Navy, Marine Corps, Defense Logistics Agency,
U.S. Transportation Command, Office of the Secretary of Defense
• Other federal government – Department of Health and Human Services, Department of
Justice, Department of Homeland Security, National Science Foundation, …
• State and local governments– State of California, City of Los Angele, …
• Foundations – Pew, McArthur, Robert Wood Johnson, …
• Companies
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IDA
All RAND Department of Defense Research Is Conducted by FFRDCs
• Source: FAR. FFRDCs ...
• Access to Government and supplier data, including sensitive and proprietary data, and to employees
• Required to operate in the public interest with objectivity and independence
• Free from organizational conflicts of interest
• Not ... use its privileged information or access ... to compete with the private sector
10 DoD FFRDCs, RAND has 3
Studies &Analysis
Engineering &Technology Development
• Congress est. 36 Federally Funded Research and Development Centers• Long-term contracts to
• ensure independence• encourage long-term engagement on key issues
CNA
NDRI
PAF
Arroyo Center
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Outline
• Overview of RAND
• DoD’s supply chain challenges
• RAND’s supply chain research
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A Significant Portion of DoD’s Budget Goes to External Providers
FY
48
FY
50
FY
52
FY
54
FY
56
FY
58
FY
60
FY
62
FY
64
FY
66
FY
68
FY
70
FY
72
FY
74
FY
76
FY
78
FY
80
FY
82
FY
84
FY
86
FY
88
FY
90
FY
92
FY
94
FY
96
FY
98
FY
00
FY
02
FY
04
FY
06
Personnel
Procurement
RDT&E
Goods andservices
DoD Total Obligation Authority (TOA) ($B)341
86
368
142
520
276
472
291
364
254
364
287
618
604
178
14
354
34
447
76
347
40
380
50
Source: OUSD(Comptroller), National Defense Budget Estimates for FY 2009, March 2008, Tables 6-1 and 6-2 http://www.dod.mil/comptroller/defbudget/fy2009/fy2009_greenbook.pdf
NOTE: Data in Constant FY2008 Dollars.
100
90
80
70
60
50
40
30
20
10
0
Per
cen
t
(Constant FY 2008 Dollars)
(Nominal Then-Year Dollars)
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Avionics
Assemblies, Sub-components,
PartsProducts
Supply Base
Customers
Enterprise
Goods and
services
WeaponSystems
Air Force
Army
Navy
Marine Corps
Central Command
Pacific Command
…
Purchasing Logistics
Returns
Supply Chain
Manufacturing
DoD Purchases, Operates, Repairs, Modernizes, and Overhauls Weapons - It Does Not Make Them
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Military Supply Chain ManagementFaces Unique Challenges
• Operating environment– Often austere, hostile environments
– Requires rapid response anywhere in the world
– Unpredictable and widely varying operational tempo
– Very wide range of material– Wide array of expensive service parts, many with low and highly
variable demand
• Business environment– Benefits / outcomes not measured in monetary terms
– Fixed, annual budgeting, regardless of potential project ROI
– Political constraints
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DoD Is Adopting/adapting Commercial Best Practices Where Appropriate
• Converting repair depots to lean operations
• Applying Six Sigma to processes
• Outsourcing some non-core functions– Performance Based Logistics (PBL) arrangements
– Contractor Logistics Support (CLS)
• Adopting some best practices in purchasing and supply management
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Outline
• Overview of RAND
• DoD’s supply chain challenges
• RAND’s supply chain research
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Our DoD Research Has Spanned the Breadth of Supply Chain Management
• Inventory management
• Distribution network design and management
• Database integration and metrics development
• Process improvement
• Purchasing and supply management
• Demand surge planning
• Transfer pricing and financial management
• Product design for supply chain
• Fleet management
• Outsourcing analyses
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Examples of Logistics Research
• Helped military adopt lean thinking and dramatically improve the order fulfillment process
• Developed integrated global distribution database and metrics now used to control and improve the system
• Helped minimize total costs through improved global inventory positioning based upon the tradeoffs among inventory, transportation, and material handling costs
• New inventory approaches to better handle the Army’s low, sporadic demand problem
• New strategies to better leverage global distribution network capacity in contingency operations
• Methods for determining what to position where to improve responsiveness to global contingencies
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• Began with a request to help the Air Force develop a strategic approach to competitive sourcing
• Looked to the commercial sector for lessons• Account for differences in missions, personnel rules, and
legislative and regulatory constraints
• Broadened research focus to support efforts to improve “recontracting” activities
• Emphasis on services acquisitions
• Tracked revolution in commercial sector purchasing and supply management practices
• Brought lessons to the Air Force and participated extensively in implementation activities
• Pioneered the use of spend analysis in the Air Force• Provided important contributions to the area of performance
based services acquisition
• Expanded to other Services and agencies
Purchasing and Supply Management (PSM) Research
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Supply Chain Policy Center
• New research center focused on the challenges facing the global supply chain to include
• Effects of supply chain disruptions and shifting trade patterns
• Identifying physical, operational, regulatory, and legal freight transport system vulnerabilities
• Public and private sector implementation strategies to improve the freight transport system
• Opportunities for advanced technologies to play a role in addressing critical issues, such as security, enhanced productivity, and environmental mitigation
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What RAND Brings to the SCRLC
• Knowledge of DoD’s supply chains– Legacy processes, practices, systems
• Advanced operations research/analytics
• Multidisciplinary skills/approach
• Expertise in – Product/aftermarket support
– Influencing policy makers
– Synthesizing best practices and adapting/adopting them in a government setting
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Key Milestones in RAND PAF PSCM Research
1997 - Began SAF/AQC sponsored study of best PSCM practices
1999 – Pioneered spend analyses in AF and DoD
2001 – Briefed Dr. Roche, SAF, & Gen Ryan, CSAF
2001 – Began support of F100 PSM Pilot
2004 – Briefed Gen Martin, AFMC/CC - directed PSCM implementation across AFMC Commodity Council’s, Supplier Relationship Management (SRM) established
Case for change, market research, supply strategy development, services contracting, low demand items, measuring PSCM benefits, performance-based supplier relationships, Supplier Relationship Management (SRM), Supply Chain Risks,…
2005 – Briefed Gen Carlson, AFMC/CC, Commander’s Conference on Leading Successful Change
Gained seniorleadership
support
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Supply Chain Risk Leadership Council (SCRLC)
“Bring industry luminaries together to advance the discipline of Supply Chain Risk Management
through best practice sharing and collaboration around specific objectives such as supplier
relationships, risk metrics, and risk methodology”
“Driving thought leadership and best practices”
No industry-standard metrics exist for measuring supply chain risk, including supply chain resiliency. Cisco is working with leading companies in an effort to develop
standard metrics and best practices.
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SCRLC Members
• Cisco
• Toyota
• Boeing
• FedEx
• P&G
• Nokia
• Jabil
• Zurich
• tsmc
• Bank of America
• Department of Homeland Security
• Stanford University
• Michigan Ross School of Business
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About RAND
• RAND: A private, non-profit research institution founded in 1947 by the Air Force to preserve the war effort of scholars
• Mission: Helping to improve policy and decision-making through research and analysis
• Values: Quality, objectivity, independence
• Strengths– Multi-disciplinary teams
– Large, complex problems
– Number crunching
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Principal Research Areas
• Providing practical solutions to complex problems
• Supporting evaluation and implementation
• Enhancing policy debates• Training future policy
analysts• Improving knowledge
and analytic methods
• Providing practical solutions to complex problems
• Supporting evaluation and implementation
• Enhancing policy debates• Training future policy
analysts• Improving knowledge
and analytic methods
CivilJustice
EducationSubstanceAbuse
U.S.NationalSecurity
Energyand
Environment
Health andHealth Care
Transportationand
Infrastructure
InternationalAffairs
Scienceand
Technology
Populationand
Aging
Terrorismand
HomelandSecurity
Childrenand
Adolescents
PublicSafety
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Research Areas Related to Supply Chain Risk
• Providing practical solutions to complex problems
• Supporting evaluation and implementation
• Enhancing policy debates• Training future policy
analysts• Improving knowledge
and analytic methods
• Providing practical solutions to complex problems
• Supporting evaluation and implementation
• Enhancing policy debates• Training future policy
analysts• Improving knowledge
and analytic methods
CivilJustice
EducationSubstanceAbuse
U.S.NationalSecurity
Energyand
Environment
Health andHealth Care
Transportationand
Infrastructure
InternationalAffairs
Scienceand
Technology
Populationand
Aging
Terrorismand
HomelandSecurity
Childrenand
Adolescents
PublicSafety
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A Matrix Organization Supports DisciplinaryAffiliations and Cross-RAND Research
• Behavioral and Social Sciences
• Economics and Statistics
• International and Security Policy
• Management Sciences
• Policy Sciences
• Technology and Applied Science
Research Staff Management
Board of Trustees
President and Chief Executive OfficerExecutive Vice President
RAND-Qatar Policy Institute
RANDHealth
PardeeRAND
Graduate School
RANDProject
AIRFORCE
RAND National Security Research
DivisionNational Defense Research Institute
RANDInstitute for Civil Justice
ArmyResearch DivisionRAND
Arroyo Center
RANDEducation
RAND Europe
RAND Labor
andPopulation
RAND Infrastructure,
Safety, andEnvironment
RAND Gulf States Policy
Institute
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RAND's Training Programs AreIntegral to Our Research
• Military Fellows
• Graduate student summer associates program
• Pre-and post-doctoral programs
• Professional development programs for minority scholars
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Where:RAND's Presence is Increasingly Global
Where:RAND's Presence is Increasingly Global
MoscowMoscow
Langley AFBLangley AFBWashington DCWashington DC
Santa MonicaSanta Monica
Headquarters
Other offices
Field sites
CambridgeCambridge
DohaDoha
PittsburghPittsburghJacksonJackson
New OrleansNew Orleans
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RAND Conducts DoD Supply Chain Researchas Part of Broad Research Programs (1 of 2)
• Arroyo Center– Strategy, Doctrine, & Resources – Force Development & Technology – Logistics – Manpower & Training
• Project AIR FORCE– Aerospace Force Development – Manpower, Personnel and Training – Resource Management – Strategy and Doctrine
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RAND Conducts DoD Supply Chain Researchas Part of Broad Research Programs (2 of 2)
• National Security Research Division (also includes non-DoD research outside of NDRI)
– National Defense Research Institute (NDRI): OSD, Joint Staff, Combatant Commands, the defense agencies, and the Navy
– Research Centers• International Security and Defense Policy • Acquisition and Technology Policy • Forces and Resources Policy • Intelligence Policy
– International Programs: Asia-Pacific, Middle East, Russia and Eurasia, Long-Range Global Policy
– Programs: Maritime, Military Health, Counterterrorism
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DoD Has Large, Complex Supply Chain Challenges
• Breadth of goods purchased– Boots, bullets, fuel, food, weapons
• Many different types of weapons– Guns, trucks, tanks, helicopters, missiles, fighters, bombers, tankers,
unmanned aerial vehicles
• Broad range of technology– Very old, low technology to very new, high technology
• Highly variable/sporadic parts and repair demands
• Customers deploy and move
• Supply chain a target in contingencies
• Changing geopolitical environment
• Political constraints on funding, purchasing, outsourcing, reallocating resources