DLA begins rollout of modernization system

The Defense Logistics Agency recently rolled out the first release of its $500 million modernization program, designed to improve business practices and replace aging legacy systems with commercial off-the-shelf (COTS) products.

The Business Systems Modernization (BSM) program — the cornerstone of the agency's transformation initiative — is designed to help the agency better support military readiness through rapid access to logistics information. It uses a COTS system for supply chain management. DLA provides worldwide combat logistics support for the Pentagon.

DLA's first limited fielding, or "concept demonstration," began processing customer orders for selected items using BSM's tools and re-engineered practices Aug. 1, said David Falvey, program executive officer for DLA.

The items ordered represent a cross section of DLA's product lines, and the agency is monitoring internal user reactions to the new system on a daily basis as it brings all of its 4.5 million products into the BSM system by 2005, Falvey said (see box).

DLA wants to prove that the system works with a limited number of people and items, he said, adding that all three of DLA's major distribution centers — in Columbus, Ohio; Philadelphia; and Richmond, Va. — are involved. "We can prove in the technology, prove in the business practices and then roll it out," he said.

DLA and its systems integrator partner, Accenture, have stayed on schedule and within budget to field the first release, Falvey said. American Management Systems Inc., SAP America Inc. and Manugistics Group Inc. also are involved in BSM.

The biggest challenge has been convincing thousands of DLA employees that a new way of doing business is necessary, Falvey said.

"It's not so much about the technology, because we know COTS works and is configurable and can be tailored and applied to the companies" doing business with DLA, he said. "It's the change management and culture management areas."

Eric Stange, partner and leader of Accenture's worldwide defense business, said the company has a five-stage "commitment-to-change" spectrum that it encourages clients to undertake. The stages are unaware, aware, understanding, buy-in and, finally, commitment.

"The goal when implementing a solution is to have two-thirds of the user base at the buy-in stage," Stange said. To accomplish that, Accenture uses a three-part process: sponsorship, where leaders make it known that they support the system; communications, to educate users; and change readiness, which includes surveys of users.

"Having this proof is going to help people come to grips with it a lot better than before," he said. "They will have peers within DLA to talk to about what's different, what's better and why. I don't think there's a replacement for that."

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First steps

The Defense Logistics Agency began processing orders Aug. 1 under its Business Systems Modernization program.

The initial release includes:

* 390 users and 100 supervisors — about 4 percent of the targeted user population.

* 170,000 line items out of a possible 4.5 million — also about 4 percent.

* 80 percent functionality.

Release 2 is scheduled for late 2003 and will include 1,000 users, 1 million line items and full functionality.