Overview of RAND

1
Overview of RANDs Supply Chain Management
Research

• Supply Chain Risk Leadership Council
• Nancy Moore and Elvira Loredo
• October 8, 2008

2
Outline

• Overview of RAND
• DoDs supply chain challenges
• RANDs supply chain research

3
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.
• Mission
• To help improve policy and decision-making
  through research and analysis
• Core values
• Quality and objectivity
• Vision
• To 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 Analysis
Research person years
600
500
National security
400
300
Domestic and international
200
100
0
1940s
1950s
1960s
1970s
1980s
1990s
2000s
Project RAND formed by USAAF at Douglas Aircraft
First non-USAF study
RAND Graduate School established
Project RAND becomes Project AIR FORCE FFRDC
RAND Europe andScience and Technology Policy
Institute formed
RAND-Qatar Policy Institute opened
RAND Gulf States Policy Institute opened
The RAND Corporation formed
Domestic Research Division formed
First work for OSD, civil agencies
Army and OSD FFRDCs formed
First sustained work in private sector
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Our Research Is TypicallyCharacterized by . . .

• 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

• Issues that involve
• Competing objectives and perspectives
• Intersection of public/ private interests
• "Messy" data, major uncertainties
• Implications for the future

RAND strives to build long-term relationships
with its clients
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RAND's Key Resource Is Its 737 MemberProfessional
Research Staff
Degree Discipline
Degree Level
No degree 1
None 1
Other 1
Arts and letters
Social sciences
Behavioral sciences
5
8
Political science and international relations
11
Bachelors 11
12
Business and law
Masters 30
11
Policy analysis
8
Computer sciences
3
3
Doctorate 57
Physical sciences
12
9
Math, operations research, statistics
Economics
7
10
Life sciences
Engineering
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RANDs 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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All RAND Department of Defense Research Is
Conducted by FFRDCs

• Congress est. 36 Federally Funded Research and
  Development Centers
• Long-term contracts to
• ensure independence
• encourage long-term engagement on key issues

• 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
IDA
CNA
NDRI
PAF
Arroyo Center
Engineering Technology Development
Studies Analysis
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Outline

• Overview of RAND
• DoDs supply chain challenges
• RANDs supply chain research

11
A Significant Portion of DoDs Budget Goes to
External Providers
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
(Constant FY 2008 Dollars)
(Nominal Then-Year Dollars)
100
90
80
70
60
50
Percent
40
30
20
10
0
Source OUSD(Comptroller), National Defense
Budget Estimates for FY 2009, March 2008, Tables
6-1 and 6-2 http//www.dod.mil/comptroller/defbud
get/fy2009/fy2009_greenbook.pdf NOTE Data in
Constant FY2008 Dollars.
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DoD Purchases, Operates, Repairs, Modernizes, and
Overhauls Weapons - It Does Not Make Them
Goods and services
Supply Base
Customers
Weapon Systems
Enterprise
Air Force Army Navy Marine Corps Central
Command Pacific Command
Manufacturing
Assemblies, Sub-components, Parts
Products
Purchasing
Logistics
Avionics
Supply Chain
Returns
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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
• DoDs supply chain challenges
• RANDs supply chain research

16
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
  Armys 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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Purchasing and Supply Management (PSM) Research

• 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

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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 DoDs 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
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,
1999 Pioneered spend analyses in AF and DoD
Gained senior leadership support
2005 Briefed Gen Carlson, AFMC/CC, Commanders
Conference on Leading Successful Change
2004 Briefed Gen Martin, AFMC/CC - directed
PSCM implementation across AFMC Commodity
Councils, Supplier Relationship Management (SRM)
established
2001 Began support of F100 PSM Pilot
2001 Briefed Dr. Roche, SAF, Gen Ryan, CSAF
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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

• Zurich
• tsmc
• Bank of America
• Department of Homeland Security
• Stanford University
• Michigan Ross School of Business

• Cisco
• Toyota
• Boeing
• FedEx
• PG
• Nokia
• Jabil

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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
Children and Adolescents
Transportation and Infrastructure
Terrorism and Homeland Security
CivilJustice
Substance Abuse

• Providing practical solutions to complex problems
• Supporting evaluation and implementation
• Enhancing policy debates
• Training future policy analysts
• Improving knowledgeand analytic methods

Education
Scienceand Technology
Energy and Environment
Public Safety
Health and Health Care
PopulationandAging
International Affairs
U.S. National Security
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Research Areas Related to Supply Chain Risk
Children and Adolescents
Transportation and Infrastructure
Terrorism and Homeland Security
CivilJustice
Substance Abuse

• Providing practical solutions to complex problems
• Supporting evaluation and implementation
• Enhancing policy debates
• Training future policy analysts
• Improving knowledgeand analytic methods

Education
Scienceand Technology
Energy and Environment
Public Safety
Health and Health Care
PopulationandAging
International Affairs
U.S. National Security
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A Matrix Organization Supports DisciplinaryAffili
ations and Cross-RAND Research
Board of Trustees
President and Chief Executive Officer Executive
Vice President
Research Staff Management
RAND-Qatar Policy Institute

• Behavioral and Social Sciences
• Economics and Statistics
• International and Security Policy
• Management Sciences
• Policy Sciences
• Technology and Applied Science

RAND Infrastructure, Safety, and Environment
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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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WhereRAND's Presence is Increasingly Global
Moscow
Pittsburgh
Jackson
Cambridge
Washington DC
Langley AFB
Doha
Santa Monica
New 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

32
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