¶ … Transitioning of the Defense Transportation System Toward Complementing Best Practices in Supply Chain Management Efficiently and Securely Distribution managers need to appreciate that management of defense supply chains is a rapidly-growing global phenomenon, with an overlap existing in management levels; right from the strategic national-level stakeholders to lower sustainment units at the activity levels. Strategic distribution changes have the potential of immensely impacting tactical implications. This paper aims to help address a few important precepts required for globally receptive logistics decisions. Distribution and material managers ought to review and internalize defense supply chains early on in the course of their career. The process of distribution is complex. Thus, material distribution management must include electronically sustainable supply-chain information systems for realizing true synchronization. After all, defense transport systems are CAS's (Complex Adaptive Systems) integrating comprehensive, dynamic components, and aim at discussing complex supply-network systems together with their co-evolutionary, dynamic processes. A CAS is an array of smaller structures that are then arranged into a greater and more complex system. This allows the greater whole to be more adaptive and able to help survive changes. The CAS approach is capable of providing hints for understanding the co-evolution of supply network and its dynamic nature, as the approach incorporates built-in systems therein and their complexity. The overall contribution of this paper will be towards strengthening the theoretical argument of research works that have dealt with CAS and other supply chain subjects. Analyzing broader levels such as supply chain systems can be useful, since supply networks' evolutionary active nature may be considered similar to CASs. One can highlight the fact that it is necessary for practitioners to consider the complicated logic surrounding the management of supply networks.

In this context, System Dynamics, 'reverse logistics', and feedback mechanisms may prove quite useful. Further, the deployment of such tools has become easier due to advances in the computer aided simulation facilities that can now explore interaction and outcomes of each system on the other. This would not only help evolution to adapt to dynamic forces affecting logistics globally, but also aid swifter decision- making to support smoother operation at the execution levels.

Transitioning of the Defense Transportation System

Table of Contents

1. Introduction 1

1.1 Problem statement 1

2. Literature Review 2

3. Discussion of the problem 4

4. Discussion of new solution(s) to the problem 9

4.1 Stimulation of mechanisms promoting interactions 9

4.2 Encouraging autonomy within networks 9

4.3 Understanding the fact that learning is dependent on autonomy and interaction levels 10

4.4 Recognizing edge of chaos or creative space 10

4.5 Development of capabilities for influencing positive emergent effects 10

5. Conclusion 11

6. References 13

1. Introduction

The security and conflict situation in the Middle East has always been omnipresent. However, the last twenty years or so has been no different. Whether it be the decade-plus wars and conflicts in Iraq and Afghanistan, multiple overthrows in Egypt, the toppling of Gadhafi in Libya, the current civil war in Syria or the rise of ISIS in Syria and Iraq, the totality of all of these has given novel institutional, ethical, and political challenges. Therefore, states face external threats necessitating national security production and preservation (SIPRI, 2012). Subsequent tasks include war fighting, nonessential evacuation plans, peacekeeping and peace enforcement, as well as humanitarian tasks like disaster relief and humanitarian aid. According to German constitutional law (Article 87 a Grundgesetz (GG)), this complex range of responsibilities is mandatory upon militaries, and may be considered a service obligation in the purview of defense portfolios (Essig, Mohr & Tandler, 2014). Since armed forces come under public sector organizations, national governments finance them.

European Defense Agency's estimations revealed that, in the year 2009, the EU's (European Union's) 26 member nations spent 194 billion Euros in total on defense; this amount represents a large share of EU national budgets. 16.77% (i.e., 32.53 billion Euros) of these 194 billion Euros was devoted to defense procurement. In view of this colossal expenditure towards national security maintenance, national armies are, for many years now, facing increased pressures to reduce expenses (SIPRI, 2011; Essig et al., 2014), as well as to utilize resources efficiently.

Towards simultaneously safeguarding operational effectiveness and ensuring efficiency, defense forces must focus on their respective core competencies, whilst employing contemporary forms of financing and cooperation. The above trend is manifested through realization of a number of PPPs (private-public partnerships) or Public Finance programs, which have grown in number in the past few years (Hartley, 2002). The market for defense equipment, as has been mentioned previously, has considerable potential. In spite of relevant cost-cutting potential, militaries lack suitable management...

However, considering militaries' specifics, one cannot vouch for non-reflected application of existing management tools concentrating on business supply chains (Essig et al., 2014). Therefore, this paper's key aim is bridging this theoretical gap in performance and outcomes by creating a suitable management tool to utilize in supply chains for defense transport, thus enabling militaries to successfully guide long-term links that are dominant in the marketplace for defense equipment. To serve this purpose, an exposure-capacity-portfolio is selected, which permits thorough defense supply chain analysis as well as offers suitable recommendations with regard to what strategic action can be taken.
2. Literature Review

Melnyk and coworkers (2010) believe a successful SCM system ought to comprise of at least one of these strategic outcomes: cost, responsiveness, resilience, security, innovation, and sustainability. Investments made by companies are initiated by the outcomes desired. These outcomes are employed in a majority of supply chains at multiple levels. Supply chains of defense organizations are unique compared to other general organizations, and their primary outcomes are generally centered on responsiveness, or the supply chain's ability and capacity of effectively reacting to alterations in customer location, product mix, and demand. This effectually maps defense units' main objective -- readiness. Van Wassenhove and Guide (2009) write that analysis in closed loop supply chain systems employs one of the following two critical techniques:

Waste-stream compliance reduction costs or Market-driven profit maximization

These views are true to economic and regulatory realities of a majority of European nations and the U.S., respectively. Further, it has been noted that companies emphasizing solely on profits develop different supply relationships and sourcing patterns (Fleischmann et al., 2001). The above observation differs from that of companies that also abide by environmental regulatory limitations ethically.

This paper will introduce and examine a third goal of closed-loop supply chain systems, defined by military organizations. This goal demonstrates how concentrating on the readiness aspect affects the supply chain's final design. From the military perspective, the term readiness denotes an ability to satisfy national military strategy demands and fight efficiently (U.S. Department of Defense 2010). This aspect necessitates improved manpower capabilities, training, weapon systems, and sustainable equipment. This paper will address shortcomings in the current literature and the outcomes garnered from the tools that rise from the same and help to create better tools and, by extension, results when it comes to supply chain management. It is important to address the important and desired key strategic outcomes as well as the alternative strategic capabilities necessary for achieving this outcome.

Considerable data on closed-loop supply chains arises from military practices which require stocking aircraft-related items. Some are repairable on field itself whereas others have to be forwarded to the central military depot where they are either disposed or repaired (Guide and Srivastava, 1997). Sherbrooke (1968) came up with a system -- METRIC -- for maintaining an air force repair parts inventory. Subsequent research was conducted, which refined the inventor's calculations for a multiple-level echelon system enabling transshipments. Brennan and Fisher's (1986) research considered equipment cannibalization for limited spare parts acceptable under particular conditions. However, total cannibalization is not acceptable.

Presutti and Demmy's (1981) analysis of a multiple-echelon inventory model, where repair finances were limited, clearly revealed they were inspired by Air Force Logistical Command, as well. Additionally, these researches have steered closed-loop supply chain issues in private marketplaces. Bjorkman, Ostlin, and Sundin (2008) performed a broader research on policies, returns, and their effect on overall performance. Vandaele and Lieckens (2012) studied the complex supply-chain plan elements, with regard to collection, production, uncertain supply, and transportation. Unspecified, unclear, or unexpected process times result in quality decline. Issues pertaining to sourcing of manufactured parts and the related investments in repair capacity appear to receive less attention.

By utilizing Van Wassenhove and Guide's (2009) guidelines, this paper will propose an economic methodology for establishing the strategic significance of appropriate supply chain designs and incentives accompanying defense supply chains. It is an established fact that no market competition exists in the military domain. Thus, market-based incentives are irrelevant in this context. Furthermore, the armed forces are responsible for return processes. Hence, spent costs return to base, their point of origin and only then directed to production units. Moreover, armed forces form part of manufacturing processes. Radio Frequency Identification (RFID) Technology has now become a reality for numerous…