SMART Transportation Solution: moving navy material today and tomorrow - Evaluation

The first ERP delivery is in Transportation. SMART Transportation Solution (STS) became fully operational Dec. 1, 2001. We now use STS to optimize transportation on five FOB Origin contracts and expect to add more vendors as contracts are awarded and renewed.

The SMART Transportation Solution optimizes transportation decisions such as method of shipment, selection of transportation carrier, and overall costs to meet the Required Delivery Date (RDD) and satisfy the requisition requirement. The STS significantly automates the addressing and labeling aspect of the shipping process for commercial vendors by providing access to the Cargo Routing Information File and incorporating a military shipping label production capability. In many cases STS makes it advantageous for the government to act as the "shipper" on direct vendor shipments, vice including transportation as part of the initial procurement contract. The SMART Transportation Solution is truly a "solution" in that it effectively facilitates the efficient shipment of Navy material to activities located around the world providing enhanced visibility of that material to managers and to customers while capturing and making available transportation related data for better resource planning across the entire enterprise.

Sounds great right? You bet it is! Sounds pretty complicated right? It is, but only in the design; it is not a complicated system to use. The STS has been in development and testing for some time. It works and this is how:

The SMART Transportation Solution receives electronic requisition data from the Defense Automatic Addressing System Center (DAASC). STS uses this information to populate a Web-based order fulfillment module enabling vendors to update requisitions sent for processing via the Internet, with package-specific shipping information. Once the vendor has provided the package weight and dimensional information, the shipment is automatically "optimized" by using a software program that selects a commercial carrier such as FedEx, DHL, etc., that will satisfy the customer's RDD and requisition priority. Shipping documentation, including a Military Shipping Label (MSL), is automatically generated for the vendor and is available to print via the Internet. The SMART Transportation Solution provides near real-time shipping status and captures transaction data throughout the transportation process, which is used within the Enterprise Resource Planning architecture.

A typical STS shipment follows the process flow in Figure 1.

[FIGURE 1 OMITTED]

(1) A customer submits a requisition for material.

(2) DAASC determines that the requisitioned material is managed by the Naval Inventory Control Point (NAVICP) and electronically forwards the requisition to NAVICP.

(3) NAVICP determines that the National Stock Number or Part Number is for PBL material and refers the requisition back to DAASC for routing to the PBL vendor.

(4) DAASC sends either a MILSTRIP or a EDI transaction to the PBL vendor and makes a copy to send to the NetWorks Procurement Module of the SMART Transportation Solution.

(5) The PBL vendor logs into the NetWorks Procurement Module via the World Wide Web when the material is ready to ship and updates the requisition information received from DAASC with the vendor's ship from location, and the weight, height, length, and width of the shipping package. The lighting bolt represents vendor performance information derived by comparing the requisition receipt date and time in Step #4 with the date and time that the vendor logs into the NetWorks Procurement Module when the order is ready to ship in Step #5.

(6) Confirmed "Orders" are electronically passed from the NetWorks Procurement Module to the NetWorks Transport Module for transportation optimization.

(7) The Cargo Routing Information File (CRIF) is passed daily to the NetWorks Transport Module providing the latest cargo routing information for mobile activities.

(8) After NetWorks Transport has optimized the orders received from NetWorks Procurement, complete shipping solutions are electronically sent to the Global Freight Management-Electronic Transportation Acquisition (GFM-ETA) Shipping System to create the shipping documentation.

(9) If a shipment is headed overseas, NetWorks Transport also creates an Advanced Transportation Control Movement Document (ATCMD), which is sent to the Financial Air Clearance Transportation System (FACTS) for input into the Air Mobility Command's GATES system.

(10) The PBL vendor reviews the order status in the NetWorks Procurement Module to determine if confirmed orders have been scheduled in the GFM-ETA system.

(11) The PBL vendor clicks on the GFM link in the NetWorks Procurement Module and logs into GFM-ETA to print the shipping documentation.

(12) Once the shipment is completed in GFM-ETA, GFM-ETA will pass financial data to PowerTrack for carrier bill paying purposes and shipment status to the Global Transportation Network (GTN) for customer tracking.

(13) The transportation carrier passes In-transit shipping status messages to GTN thru DAASC.

(14) DAASC passes a copy of the Intransit shipping status messages to NetWorks Procurement for In-transit alerting and carrier performance monitoring.

The STS shipping process might appear extremely complicated but its complexity applies only to the number of external systems with which it communicates not the actual shipping process. A vendor using STS has fewer data entry requirements and faster shipment processing times than compared to most any other method of moving material for the government. The benefits of using the SMART Transportation Solution include:

Reduction in Transportation Costs. Government contracts written as FOB Destination have shipping costs included as part of the purchase price of the material. By using the SMART Transportation Solution (STS), the responsibility for shipping the material shifts from the vendor to the government, thus reducing the cost of material. By centrally consolidating and optimizing the transportation of purchases, overall transport costs are reduced. The end benefits are faster, cheaper transport, traceable shipments, and lower retail customer prices. Although it might appear that transferring transportation costs from the vendor to the government would negate any cost savings, it is the transfer of shipping responsibility that enables the government to reduce the overall cost of the material. By leveraging the combined shipping volume of the Department of Defense, the SMART Transportation Solution is able to utilize government contracted shipping rates with commercial carriers such as FedEx, DHL, and others, as well as using AMC airlift, all of which are structured for significantly better rates than those available to most vendors as commercial customers.

Enhanced Supply Chain Management. Information is the key to effective supply chain management, and the SMART Transportation Solution provides Naval Supply Systems Command with a significantly enhanced capability to obtain and manage supply and transportation information. Has the vendor shipped the material yet? Did the material get to where it was going? How long did it take for the customer to receive the material? Can improvements be made in Customer Wait Time? How much will a reduction of one day in the transportation pipeline cost? The STS can provide answers to these questions and many others. Decisions affecting the transportation link within the supply chain can now be implemented by changing a business rule within the STS without necessitating modifications to existing contracts. A "What-If" analysis regarding stock placement can be run using actual transportation cost averages and historical destination data. The SMART Transportation Solution will give NAVSUP better visibility of expenditures against the Service Wide Transportation (SWT) budget and a more accurate foundation for projecting future budget expenditures.

Improved Vendor Shipping Process. Many current vendor shipping processes are manual in nature and lack uniformity in the production of shipping documentation. Further, there is no guarantee that the vendor's choice of carrier will be one that is capable of providing In-Transit Visibility (ITV) to the Global Transportation Network (GTN), thus making shipment tracking difficult. The SMART Transportation Solution solves these problems, while simultaneously improving the vendor's shipping processes for Navy material. The STS automates the "look-up" of activity addresses, including ships and mobile units, in much the same manner as the Defense Logistics Agency's (DLA) Distributed Standard System (DSS) does for DLA requisitions. The vendor no longer has to search to obtain address information in order to ship an order; that information is pushed to the vendor on the supplied shipping documentation. In addition, the STS is electronically linked to the GFM-ETA system so that initial shipment information is passed to GTN for In-Transit Visibility. The SMART Transportation Solution takes ITV one step further by receiving a copy of the Electronic Data Interchange (EDI) 214 (carrier transportation status) transactions from the transportation carrier, thus providing both ITV and e-mail alerts of potential shipping problems to system users.

Vendor and Carrier Performance Measurement. Utilizing the SMART Transportation Solution, each transaction is tagged with a date and time stamp every time any action is taken in conjunction with that transaction. For example, the date and time is captured when the requisition is received from DAAS, and another date and time is captured when the vendor updates the order information via the Internet. The difference between the DAAS time stamp and the vendor's update to NetWorks Procurement allows the contracting officer to capture vendor performance data. This performance data will enable the vendor to review contract compliance and give the contracting officer the ability to properly reward outstanding performance. Carrier performance can also be reviewed and monitored by virtue of the STS's recording of ITV information. Each time the carrier touches the shipment, a date and time stamp is created that will be automatically compared to the carrier's contract, and an alert message generated if the carrier fails to meet the requirements of the contract. In addition, the STS considers past carrier performance when making a carrier selection decision, so poor performing carriers will not continue to adversely affect the Navy's supply chain.

Standardization. Currently there is little standardization in shipping documentation between vendors, resulting in frustrated shipments and additional work for the government. However, the SMART Transportation Solution standardizes the documentation for all shipments, reducing the likelihood of misrouted freight and making it easier for the Navy to process material entering the Defense Transportation System (DTS). In view of the fact that the STS is a centralized tool, making changes in shipping documentation to reflect new DTS regulations now will mean making one change vice numerous changes to existing contracts.

NAVSUP is committed to providing quality supplies and services to its customers worldwide. NAVSUP's ability to accomplish its mission is being enhanced through major new technological developments and initiatives, such as the ERP Project. The SMART Transportation Solution is an integral part of the supply chain management initiatives that encompass NAVSUP's ERP effort. The deployment of the STS is a significant step forward and provides a ready, resourceful, and responsive tool to better enable NAVSUP to manage the Navy's supply chain.

Testing the Ability of COTS

The Naval Supply Systems Command and Naval Air Systems Command joint Enterprise Resource Planning (ERP) Project, the Supply Maintenance Aviation Reengineering Team (SMART) Project, is testing the ability of Commercial-Off-the-Shelf (COTS) ERP systems to operate in the Navy environment. The SMART Project encompasses Supply Chain, Finance, and Maintenance management focusing on the E-2C Hawkeye Airborne Early Warning aircraft and the LM-2500 marine gas turbine engine. A significant facet of the SMART Project is the SMART Transportation Solution (STS), which was developed by the Naval Transportation Support Center to optimize transportation functions within the supply chain.

LCDR Paul Park's previous assignments include Business Financial Manager for NAVAIR PEO CU, Director of Subsistence Defense Depot Norfolk, Virginia, Supply Officer USS Moinester (FFT 1097); and Division Officer USS Virginia (CGN 38). He is a certified Project Management Professional, and received his M.B.A. and M. S. degree in Acquisition and Contracting from the Florida Institute of Technology.

Lieutenant Commander Paul T. Park, SC, USN
Project Officer, NAVTRANS Smart Transportation Solution

COPYRIGHT 2002 U.S. Department of the Navy, Supply Systems Command
COPYRIGHT 2003 Gale Group