Velocity Management: An Ongoing Success Story
In 1995, in an effort to fix inefficient, unreliable, unresponsive, and expensive logistics processes, the Army undertook a Velocity Management (VM) initiative. With the help of RAND analysts, the Army streamlined its order fulfillment process to such a degree that by 2000, repair parts were being delivered in just half the time it took three years earlier. A new RAND report, Velocity Management: The Business Paradigm That Has Transformed U.S. Army Logistics, tells the story of VM's ongoing success: the motivations, methodology, and management structure behind the initiative; the process changes that led to rapid and continuous improvement; and the steps that were taken to develop and institutionalize the capabilities for achieving and sustaining process improvement.
Before VM was implemented, the Army had taken a mass-based approach to logistics, with huge stockpiles kept on-hand in supply depots "just in case." This approach was limited in responsiveness, reliability, and efficiency. The existence of massive stockpiles of supplies does not ensure that combat forces will get what they need when they need it, and mass requires a great deal of manpower and resources to manage and control. Moreover, mass-based logistics poses a tremendous cost to the warfighter in terms of footprint, risk, and mobility. Under the VM initiative, stockpiles were reduced, but delivery times and responsiveness were improved by focusing on the customer's needs -- in this case, the needs of U.S. Army bases worldwide.
VM is implemented by teams using an institutionalized process called Define-Measure-Improve. The first step, Define, identifies the customers of a process and specifies what they need from the process in terms of outputs. Whereas the Define step aims to improve knowledge about how a process is done, the second step, Measure, aims to improve knowledge about how well it is done. The third step, Improve, capitalizes on the increased expertise developed during the first two steps. Armed with a deeper understanding of the process and of customer needs, along with improved capabilities to measure performance, process experts articulate realistic but challenging goals for improvement. As performance improves, the D-M-I cycle begins again, with a remapping of the changed process, continued measurement, and additional process changes.
RAND analysts were members of Process Improvement Teams (PITs) that defined all stages of the order fulfillment process; created new ways to measure it in terms of time, quality, and cost; and suggested ways to improve the process. After witnessing marked improvements in order fulfillment, the Army applied the VM paradigm to inventory management, repair time, and financial management, each with equal success.
As VM was achieving its goals of making Army logistics faster, better, and cheaper, the next step was to assess the effects of these improvements on equipment readiness. RAND therefore developed the Equipment Downtime Analyzer (EDA), a relational database that can be used to identify the underlying causes contributing to repair times or failure rates. It also highlighted places where improvements could make the greatest difference in equipment readiness.
Under the Velocity Management paradigm, the Army continues to transform its logistics system into a strategic asset that can support new concepts for deploying and fighting. And in doing so, the institution has unexpectedly demonstrated a remarkable capability for achieving quick, dramatic, and lasting change.