Choices, Changes & Opportunities: Corporate Lessons from the Afghan R4D Exit
(click to view full)
The US Army’s Retrograde, Reset, Redeployment, Redistribution, and Disposal (R4D or “Afghan retrograde”) is a huge effort, moving an estimated $17 billion of good out of country at a cost of around $6 billion. Some of its successes, and failings, offer lessons that apply much further down the chain of service, and in the commercial world.
R4D Lessons: Options are Your Friend. Speed? Not Always.
US Army Materiel Command has general oversight of the Afghan retrograde. Once decisions are made regarding disposal, reset, etc., and the required preparation is complete, that equipment has to ship out of country to another location, be it a new unit in theater, a base in the USA, a servicing depot abroad, or wherever. That shipment is the responsibility of USTRANSCOM’s Military Surface Deployment and Distribution Command (SDCC), which is responsible for moving about 87% of all Army cargo in and out.
Each movement involves multiple steps, and each step has a variation associated with it, so planning around “average” times will lead to poor performance (q.v. Goldratt’s Theory of Constraints).
The original “Velocity Volume Distribution Retrograde” (V2DR) incorporated that insight and others, but among its strengths was a key weakness.
V2DR’s core concept involves the balancing of velocity, volume, and cost. One of its key strengths involves the up-front acknowledgement that speed isn’t the ideal in every case, and must be openly balanced against the cost of that transportation mode. Traveling through Pakistan (PAKGLOC, Ground Lines of Control) to the sea is generally the cheapest route. The “Northern Distribution Network” (NDN) routes through Russia by rail to the Baltic ports, or trucks through “the stans” to Turkey or Germany, but it can only be used for non-sensitive cargo. NDN costs about 3-4x as much as the Pakistani route, but it can use commercial providers, and it’s still cheaper than air transport. Once in the USA, V2DR looks to aggregate the equipment at stateside ports and move it by rail, in order to control costs.
On the other hand, V2DR was developed with what is, in retrospect, a deeply flawed assumption: that lines of supply through Pakistan and the Northern Distribution Network would remain open.
Unfortunately, the Pakistani route ended up being closed for more than a year, from late 2011 to early 2013. The Pakistani government shut down American cargo lines linking Karachi to Kabul after a Nov 26/11 NATO airstrike accidentally killed more than 20 Pakistani soldiers. That spiked costs, because the NDN options are more expensive, and many items had to be moved by air because of their military sensitivity. It also forced the US Army to put more effort into developing and nurturing those alternatives.
Fortunately, the system they had built within the organization and beyond was robust and flexible enough to adapt. Even so, it wasn’t a painless process. Nor was it costless. While the PAKGLOC was closed, commercial providers contracted by USTRANSCOM’s SDCC reportedly moved more cargo out of Afghanistan by air than the US Air Force did.
The Corporate Imperative: Same Game, New Players
(click to view full)
These same kinds of dynamics are also playing out at private companies, which discover that declining budgets and concepts like Performance Based Logistics (PBL) are forcing them to rethink their own supply and performance chains in areas like like maintenance and support services, or look to cut costs in their manufacturing operations.
In all of these cases, it’s about managing supply nodes, networks, and options. Decisions like the physical locations of key infrastructure or transit points, making intelligent trades between speed and cost when necessary, and planning for contingencies are often the key to realizing the promise of manufacturing or support savings.
One military example involves the Javelin LCCS contract, which has been running as a Performance-Based Logistics contract for a number of years now.
The Lockheed Martin and Raytheon partnership was given more responsibility under PBL, and changed incentives played a role in the program’s successful implementation and improvements. At its core, however, Javelin LCCS changed the configuration of the performance chain. Instead of multiple depots, they consolidated into one. Placement was considered carefully, and LAX (Los Angeles International Airport) was chosen as the depot location. Finally, Lockheed Martin convinced the military to switch from USAF transport that was subject to competing priority lists and uncertain routes, and allow a commercial logistics provider (DHL, in this case) to transport Javelin missile CLU control units that were classified munitions.
Instead of many depots, one. Instead of uncertain pick-up times and routes, certain pick-up and certain routes. Defense Industry Daily will be covering this story in more depth down the road, but it’s a good illustration of profound changes driven by performance chain design.
All of this is nothing new to the commercial world. Integrated logistics firms like UPS also have their own large fleet of aircraft, ground vehicles, and associated infrastructure. To offer some sense of scale, UPS’ fleet involves 528 aircraft and over 96,000 vehicles – numbers that exceed the size of many militaries. At that scale, organizing the distribution infrastructure and arranging fleet maintenance are as necessary to a profitable bottom line as customer-facing systems like item tracking. For UPS, their importance isn’t a change.
For Managing Director John Brennan of UPS’ Government Sector Enterprise Accounts practice, what’s changing is that these days, some UPS customers don’t ship any goods. The internal logistics expertise that firms like UPS have built up to manage their own internal challenges and customer promises is being made available to customers as a semi-independent service.
This manifests itself in interesting ways within the defense industry. The Afghan “R4D” is just a large example of a process that’s necessary to any significant operation, and so UPS reports inquiries from some of its customers along “what if” lines. “What if” a certain set of goods and material needed to be moved into a given country or theater? How might that be done? UPS’ customer usually isn’t the military, it’s firms that help the military plan and execute such contingencies, and benefit from expert assistance in preparing their proposals.
Opportunities in an Uncertain Future
The V2DR concept’s rough shock during the Afghan Retrograde is just an unusually visible lesson. Pakistan’s borders were closed to the retrograde for over a year, with profound consequences. It’s a lesson that’s apt to be repeated at different scales.
In a dangerous world marked by receding American power and no clear global successor, disruptions and disorder can be expected more frequently. In a world where emerging economies are growing their share of global trade, more and more firms will also find themselves dealing with challenging logistics, even under “normal” circumstances. Which means that supply-chain resilience and the cultivation of options will become critical to militaries and to commercial firms alike. Coping with a less predictable world will require new logistics skills for some firms, and the options are simple: build them in-house, rely on expert assistance, adopt some combination of the 2 – or leave yourself both exposed to more risk, and denied key competitive benefits.
As the game changes, opportunities arise for new service players, who can leverage deep expertise to expand their traditional roles.
Opportunities also arise for well-trained military personnel, drilled in resilience and contingency planning as a matter of habit. This isn’t as common in the civilian world, which is why logistics-focused companies like Amazon and UPS consider military personnel to be a good fit, and are making a point of looking for military veterans to join their ranks.
In one’s career, as for many companies, it’s often a good thing to have multiple options.
Additional Readings
- Army AL&T Magazine (Oct-Dec 2013) – Afghanistan R4D Issue. The entire issue is devoted to thi subject, offering a variety of perspectives regarding the challenges and how they’re being faced. “Parallel Equations” adds an interesting perspective from Amazon.com SVP and logistics leader Jeffrey A. Wilke.
- UPS Compass magazine (August 2013) – ‘Joining Forces,’ UPS style. UPS commits to hiring 25,000 veterans over the next five years.
- Gannett’s Army Times (Aug 10/12) – Supply route closure impedes Afghan withdrawal. Especially useful because it has a map of the retrograde routes.
