Visibility Part 2: A Centralized Approach keeps the Navy's Supply Chain Reliable and Efficient

 

Visibility Part 2: A Centralized Approach keeps the Navy's Supply Chain Reliable and Efficient

Wednesday, May 18th, 2011 - 14:39
Wednesday, May 18, 2011 - 14:38
The U.S. Navy recently implemented a hub-based system, giving users a single, centralized point of entry of access for multiple Department of Defense (DoD) systems in real time.

Now that we’ve gone over the unique nature of the 21st century, federal government supply chain functions and the major challenges, we’ll describe the idea of the supply chain hub and how it has assisted the U.S. Navy. The notion of a “hub” may sound counterintuitive, as we’ve just discussed how supply chains are sprawling networks that span organizations and continents. In actuality, however, a hub system helps organizations visualize and manage the various tentacles of their supply chain without disrupting individual branch activities.

So, what is this supply chain hub, exactly?

The “strict” definition is that the hub is an approach that manages complex networks of distributed partners, be it suppliers, different branches within an organization, or multiple organizations with overlapping supply chains. This central management makes it easier for organizations to have start-to-finish visibility of the supply chain—not just where items are—but supply chain processes and events, as well.

Consider, for example, that the U.S. Navy has hundreds of disparate supply chains across various geographies and departments. Some of these supply chains may serve submarines with limited surface contact; others may serve aircraft carriers in combat zones, while other supply chains may provide basic supplies to domestic facilities. Each of these branches has a different set of circumstances and urgencies. Even organizational and cultural differences amongst various branches can affect how goods are documented or how items are tracked. Even more so, data formats and Information Technology (IT) systems may differ. This is what makes supply chain management in the public sector so unique.

In response to these challenges, the U.S. Navy recently implemented a hub-based system, giving users a single, centralized point of entry of access for multiple Department of Defense (DoD) systems in real time. The hub supports around 8,000 transactions per month, serving onshore and offshore activities. The system provides technical screening, inventory management, requisitioning, retrograde tracking, trouble tickets, requisition status, and ship status. In sum, the hub acts as bridge between the Navy Enterprise Resource Planning (ERP) system and a variety of other sources of information from sites around the globe.

As a result of this hub system, the Navy recouped the following cost savings:

  • Shutdown six regional supply logistics systems, with savings of $2 million per year
  • Shutdown of the Serial Tracking System with savings of $500,000 per year

When compared to the older system, the hub-based solution provides: 

  • A $0.52 cost per transaction, down from $3.00 per transaction
  • CRM Issue Management cost of $0.71 down from $8.65 per transaction
  • Serial Number Tracking cost of $0.37, down from $17.00 per transaction

This new, “centralized traffic cop” does not require that different branches and suppliers change their current system. The beauty of the hub is that it is agnostic, flexible, and secure. The overseeing organization—in this case, the Navy—is able to manage who can view what, relative to the network.

In the next post we’ll elaborate more on the supply chain hub and how it tackles some of the challenges we brought up in the first post. Then we’ll conclude with a discussion of how organizations can implement the hub in a phased manner. In the meantime, has this blog raised any eyebrows? Do you think a hub based system would work for your supply chain?

 

 

 


 

John Simone

Mr. John Simone is an IBM Certified Executive I/T Architect. Mr. Simone has over 36 years experience in the Software Engineering industry. He has served roles as an IT Architect, Director of Development, and Chief Technology Officer. He is currently the CTO of IBM's Public Sector Supply Chain Practice. He has been involved in both the technical and business aspects of the information technology sector as an innovator and decision maker.

Mr. Simone has experience as a Software Engineer, IT Architect, Software Engineering Development Manager and Corporate Executive for several well-known technology firms. Mr. Simone has managed and developed projects for major corporations in the aerospace, insurance, automotive, government and retail sectors. He has modeled business processes and designed solutions for various business domains and technologies including Online Transaction Processing, Commerce, Procurement, Product Life Cycle, Supply Chain, and Business Intelligence. Mr. Simone is a winner of the IBM 2009 Technical Achievement Award.

John Simone (simonej@us.ibm.com)

 


 

Photo by auntiep, some right reserved.