Wednesday, September 18, 2013

Chaos as Strategy Part II

Comment: There are some thoughts that managing chaos in an organization and scientific chaos theory are entirely separate disciplines. They are not as all chaotic systems exhibit the same characteristic behavior of structure and order under chaos theory.  Whether  a chaotic system is an organizational system or a natural system both are systems in which fundamental chaos principles apply. Therefore, a basic understanding of chaos theory at some level is necessary. There also needs to be discernment between chaos and complexity.  Once these are understood then management practices, techniques, and tactics will be better understood.  This post focuses on Chaos and Complexity before dovetailing into using chaos as a strategy. 

Chaos and Complexity

The natural universe is consistent in scientific laws, principles, and behaviors. There is nothing different in outer space than found right here on planet Earth. There may be different arrangements and discoveries not possible in gravity or under an atmosphere but the the science remains unchanged.  Human intrigue is such that when strolling through the universe, somewhere, a complex object is stumbled upon. Out of curiosity an investigation is launched to discover the order behind the complexity. After the order is understood which may or may not be chaotic, then a discussion of origins may ensue. The concern in this discussion is with complexity and order. Matters of origin  are relegated to theologies, philosophies, and cosmologies which is for another discussion. Let us begin looking at chaos then complexity.

Many people associate chaos with randomness or random events. Randomness is the absence of order, structure, and patterns.  Nothing under randomness can be repeatable as that would establish order, structure, and a pattern. Rand Corporation labored at this problem and developed a set of pseudo random numbers in which the pattern is pushed so far out that the set is considered random for most practical purposes (Rand Corporation, 1955, p ix). Irrational numbers are ordered having mathematical formulas that describe them. They are not random but simply cannot be expressed as a decimal; ie Pi, Euler's number, The Golden Ratio, the square root of 2, etc...  Chaos Theory outright denies any notion of randomness. John Hubbard, an American mathematician, remarks that everything is highly structured, ordered, and that randomness is a red herring. The idea of randomness is just a reflex (Gleick, 1987, p. 239).  An underlying premise of Chaos Theory is that all systems are perfectly ordered. That means that all systems are structured such that the system can be mathematically and algorithmically modeled or formulated.  Even naturalistic beauty is mathematically structured using the the Gold Ratio. Chaos mechanics rely on fractal mathematics which do not predict system outcomes but instead model the system behavior such as circulating fluids or the bifuricating growth of a tree.  Hence, chaos practice involves applied system behaviors.  

Complexity is not chaos but chaos can arise from complexity. Complexity alludes to a system of intricate linear and/or nonlinear linkages between elements of an object or components under study or observation.  Non-chaotic systems are said to be deterministic and/or linear.  This means all the parameters are known and any instance or state can be computed with a very high degree of confidence. For example, tides, sunrise, sunset, moon phases, and even temperature. Classic Newtonian physics is a deterministic approach to science despite the vast majority of this universe is not deterministic but can be modeled using chaos practices.  Thus, complexity and order are descriptive qualities of an object or system. Whereas, chaos is a behavioral quality. 

A formal definition of chaos seems to allude the field. Hao Bia-Lin, a Chinese physicists, calls chaos a kind of order without periodicity. John Hubbard, a mathematician, does not like the term chaos as that implies randomness. To Hubbard, the field of study sent a message that nature can produce edifices of complexity without randomness by following rules and having limits (Gleick, 1987, p. 306). For example, a system that is bounded by the performance of a mathematical formula that describes the system's behavior.  Perhaps the best non-mathematical and non-scientific explanation of Chaos is something that has observable behavior or structures that are definitive but the outcomes remain a surprise. For example, everyone knows what a tree looks like and can point a tree out quickly. However, no one can determine the direction branches will grow that shape the tree. The tree could be lopsided or grow out sideways then bend upward. The exact appearance or outcomes remain a mystery but we know its behavior will branch out, grow leaves with specific shapes and patterns, grow toward the sun, and spread roots. Likewise, we know what swirling water looks like and the jagged edge of a shoreline formed from undulating water. We know what a wave looks like as well as well a mountain range. All of these systems and things are identifiable and can be described mathematically. This goes to the extreme that in movies, computers algorithmically and mathematically paint scenes and animate creatures from dinosaurs to transformers. This brings us to another point biological or animated systems.

The naturalistic elements of biological systems demonstrate the same chaos behaviors as inanimate systems. However, there is a spirited element to most biological systems.  For example, what is sexy to one human may not be sexy to another. Humans have an appreciation for love, aesthetics, comedy, theologies, and other intangibles that distinguish between the science and the art. The science of beauty is known as the Gold Ratio. Beauty in the science case of the Golden Ratio relates to harmony and unity.  The art of beauty is in the mind's eye of the beholder commonly referred to as perception.  Dr Donald Knuth, Professor Emeritus in the art of computer programming at Stanford, explains that aesthetics, art, and beauty are self-evident and couples this with his emotion state (Knuth, 2001,  p 93).  Perceptions introduce surprise and surprise is the closest to randomness in natural systems since that is where human currently reside - amidst the natural. Acting on perception and surprise is called intuition. Intuition is a quantum leap in knowledge based on missing information, a point I will return to later in these posts.

According to Donald Norman, the author of Emotional Design, the visceral, behavioral, and reflective are very different dimensions that are interwoven through out any design (Norman, 2004, p 6). Norman pulls together systematic behavior, the visceral or beauty, and the reflective or intuition into a single focus of design.  If chaos can be harnessed by humans in the movies, engineering, and science then the same can be achieved in practical application for business. Hence, a strategy leveraging chaos. 

In the next post, I will expand on emotional design as coupled to organizational design and chaos.

References:

Caterinicchia, D. (2002). FCW the business of federal technology: Culture trumps technology. Resourced from http://fcw.com/articles/2002/11/03/culture-trumps-technology.aspx on 15Sep2013.

Gleick, J. (1987). Chaos: making a new science. Penguin Books. United States.

Knuth, D. (2001). Things a computer scientist rarely talks about. CSLI Publications: Stanford, CA.

Liotta, P. (2002).  Chaos as strategy. Parameters, Summer 2002, pp. 47-56.

Norman, D. (2004). Emotional design: why we love or hate everyday things. Basic Books: New York.

Rand corporation. (1955). A million random digits.  The Free Press: Illinois. 

Sunday, September 15, 2013

Chaos as Strategy Part I B

Comment: During my military service I worked in a crisis action center and the information management officer, IMO. The current operations group commander directed that we find ways to compress decision cycle times in order to meet the emergent threat conditions at that time. In a quick study of the situation and methods to apply in the project, I resourced a series of articles in support of the adaptive and transformational organization. This is another article that was used to support the view.  We did not want to buy a nifty thing or system. We needed first to adjust our thinking then purchase things in support of our new way of thinking. We changed the culture first.  The article highlights some of the cultural problems as the leadership, not realizing that they need to change their thinking first, make complaints that are from a cold war era thinking and not a transformational thought.  Transformational thinking is break though thinking, paradigm shifts in thought that involve surprise, revelations, and epiphanies. 

Culture Trumps Technology
By Dan Caterinicchia

As the Defense Department continues to fight the war on terrorism, the military services are also in the middle of another battle: moving from Cold War-era tactics and systems to the newest technologies they can buy and field.

But as DOD's ongoing transformation changes everything from battlefield strategies to business processes, the services and civilian leadership must overcome the challenges of cultural change, acquisition reform and defining what transformation really means.

Marine Corps Gen. Peter Pace, vice chairman of the Joint Chiefs of Staff, said it is hard to define transformation, "but I know it when I see it." He added that not having a definition "doesn't mean we can't facilitate it."

"If the only thing we changed is our mind-set, and we didn't buy any new toys, we've come a long way," Pace said. "We have begun to do the homework that allows us to identify the forks in the road that we can take toward transformation. In the budget process, we can allocate resources to take us to that fork...[and] by that time we can develop a process to know what to buy."

Jack Spencer, a defense analyst with the Heritage Foundation, a Washington, D.C., think tank, said the armed services are trying to transform after a decade of little procurement and are trying to "do more with [fewer people], and do more with aging equipment."

Gen. James Jones, commandant of the Marine Corps, credited the Army's chief of staff, Gen. Eric Shinseki, with first using the term "transformation" and making it a high-profile issue. Jones defined transformation in two ways: a new capability that the department couldn't do before, or making a current system or process exponentially better than before, like turning a bomb into a "smart bomb."

Speaking on a panel of DOD leaders at last month's Institute for Foreign Policy Analysis-Fletcher national security conference in Washington, D.C., Jones said the evolution and use of the Global Positioning System was an example of a new capability. "God forbid we run up against someone who could ever jam it.... We'd be in big trouble."

Even though both of his examples were technological, Jones said transformation is not just about technology. "It's a process, not an end state, and the reality is you never get there."

Navy Adm. William Fallon, vice chief of naval operations, agreed and said that to successfully execute DOD's transformation, "the greatest challenge is cultural change."

Gen. John Jumper, Air Force chief of staff, said the most fertile ground for sowing cultural change is in developing a concept of operations that uses technology to create an asymmetric advantage, while eliminating the stand-alone information systems within and among the military services.

DOD leaders agreed that the acquisition process had to become faster and more flexible. Jumper said the Air Force was putting system testers, operators and developers in the same room to work on projects to streamline the process. Jones said acquisition laws should be changed to include the service chiefs, who are currently precluded from participating in the process.

Gen. John Keane, Army vice chief of staff, said that the service has firsthand experience in pushing the acquisition envelope because of its goal of having the first Objective Force unit fielded by 2008 and operational by 2010. The Objective Force is a plan to develop advanced information technology tools, vehicles and weaponry to make the Army's armored forces better able to survive an all-out fight.

Keane said the Army was aware of the risks associated with the aggressive timeline, "but if you don't push [the] acquisition system around, you won't get it."

Loren Thompson, chief operating officer at the Lexington Institute, an Arlington, Va., think tank, said the Bush administration's military reform efforts have been "moderately successful, but they will probably fall far short of the overblown rhetoric associated with 'transformation.'"

Thompson said there are four basic problems with the administration's approach to military transformation:
  • No clear goals have been established.
  • Pentagon managers lack an effective management model.
  • Key policy-makers do not appear to understand the limitations of the technologies they favor.
  • They have not formulated a political strategy for eliciting support from Congress and the military services.
"The administration's transformation efforts have accelerated service efforts to change, but also created confusion and resentment by undercutting long- overdue modernization plans," he said. "If the administration decides to further cut the Air Force's F/A-22 Raptor fighter or the Army's RAH-66 Comanche helicopter — which are genuinely transformational systems — then history will remember this moment as a destructive detour rather than a constructive turning point in military preparedness."

References:

Caterinicchia, D. (2002). FCW the business of federal technology: Culture trumps technology. Resourced from http://fcw.com/articles/2002/11/03/culture-trumps-technology.aspx on 15Sep2013.

Friday, September 13, 2013

Chaos As Strategy Part I A

Comment: This was an article I leveraged in thinking about managing organizations, decision making, and other aspects of the rapid and dynamic culture that has emerged.  The advent of widespread logistics and information systems has accelerated time-to-market, temporal based profit models, and the general tempo of operations.  Time is compressing and there needs to be a meaningful managerial response to this acceleration.  This article is one of the sources for a coming post pulling together several concepts. I thought this article, though dated, had some interesting points.  

Note in the article that decision making and organizational latency is being exploited. Ground circumstances are such that decision paralysis and slow learning in the organization yield to exploitive opportunities. These performance issues are found in all organizations; public, private, military, and governmental.  Managing chaos means reducing organizational latencies and compressing decision cycle times.  In the private sector, emerging markets, disruptive technologies, and obsolescence are leveraged to defeat competition and gain market share. Thus, either utilizing chaos as strategy or managing chaos as a strategy puts a company on the competitive edge. Project managers should respond to high turn or compressed project schedules with a fist full of tactics, techniques, and procedures to be discussed in the next postings. 

Chaos as Strategy
by
P. H. Loitta

“A ghost is stalking the corridors of general staffs and defense departments all over the ‘developed’ world—the fear of military impotence, even irrelevance." Martin Van Crevel The Transformation of War

In theory, at least, the US national security decisionmaking process is rational. During this process, the decisionmaker establishes the desired goals of policy and develops a strategy for employing often-scarce resources to achieve these goals. This rational calculus seeks to balance both ends and means.

But this rational decisionmaking process is also vulnerable, and the “chaos strategist” will target this vulnerability in challenging America. To plan a strategy of direct engagement with American military forces, as Iraq learned in Desert Storm and the Taliban did in Afghanistan, is lunacy. The chaos strategist, by contrast, must manipulate the scenario to his best advantage while striving to prevent the introduction of American military force.

Adversaries who do not practice a similar process of decisionmaking— balancing resources and constraints, means and ends—will increasingly look for innovative ways to “attack” without attacking directly the brick wall of American military predominance. The chaos strategist thus targets the American national security decisionmaking process and, potentially, the American people, rather than American military force, in order to prevail. Such a strategist seeks to induce decision paralysis.

In a strategy of chaos, the key objective will be to convince American political leaders that no clear solution, end-state, or political objective (other than the cessation of chaos) exists in the strategist’s sphere of dominance—and that sphere of dominance may be at home or abroad. Chaos strategy, employed by all warring parties in the former Yugoslavia and by Saddam Hussein in Iraq, serves to initially discourage yet may ultimately provoke American intervention. Yet future adversaries will almost certainly use the leverage of chaos as a strategy for gain.

In the ongoing war on terrorism, however, the practice of chaos strategy by non-state actors, rather than by the leaders of recognized nation-states, may only complicate the security calculus for the United States and its allies. On the one hand, we will practice preemption against those who seek to harm our vital interests and our way of life. Military forces will increasingly be in the business of shooting archers, and not just catching arrows. That is to say that we cannot just wait for chaos provocations to occur before we react.

On the other hand, non-state chaos strategists may soon recognize our overwhelming preemption capability, and strive to shift from being “archers” to disappear as quickly as possible. The most effective non-state adversaries that we will face will likely display some of the following characteristics: the facility to operate effectively as a lateral (and noncentralized) network, the ability to learn, the capacity to anticipate, and the capability to “self-organize” or reconstitute after they have been struck.

Non-state actors, in particular (whether or not they are sponsored by “nation-states” or by easily targetable organizations), can accomplish vanishing acts with far greater ease than adversarial leaders of problematic states. The implications are important as we assess new challenges in the war on terrorism. Moreover, we should seriously question if we are asking the right questions about military transformation in the post-11 September security environment. After all, we are not the only ones asking “What went wrong?”

In the case of the September 2001 attacks on New York and Washington, a feasible chaos strategy was meant to induce not only fear but also a sense of extreme vulnerability in the American homeland. As such, the United States entered a new security era in which attacks by non-state actors on the homeland proved possible and US citizens, their way of life, and the specific liberties that they had been accustomed to were now vulnerable and at risk.

Admittedly, the attacks on 11 September represented an intelligence and interagency failure on a colossal scale; fortunately, the same intelligence network was able to track and prove the case against Osama bin Laden and al Qaeda with relative speed. Yet the vulnerability and transparency of the American system led military planners and former CIA officers to proclaim that, regarding the attacks themselves, “We couldn’t do this. . . . I have never seen an operation go that smoothly.”

In the future, chaos strategists may well seek gain through attacks that cause the excessive deaths of innocents and provoke further cultural/religious/ ethnic fault lines both among contending adversaries and potential allies. Despite all claims to the contrary, it is not yet clear that the United States is capable of shifting from a style of warfare that might be described as the American way of war—essentially, the annihilation of an enemy—to a style of warfare that requires far more intense “closework.” In simple terms, are we planning for the wars we want to fight rather than for the wars we will have to fight?

In 1998, Secretary of Defense William Cohen, in reference to the future planning and the “transformation” of the American military, declared on several occasions, “We’re not looking for a fair fight.” Indeed, neither is the chaos strategist.

How Chaos Strategy Might Work

Any adversary that risks American military force engagement must employ a method that exploits the social dimensions of strategy to offset the disadvantages in the technical dimension.2 Such an adversary would be wisest to target the process of decisionmaking within the policy (social dimension) sector rather than, as a first step, planning how to engage military force (the technical dimension) once the employment decision has been made. Seeking to wreak havoc to his strategic advantage in his sphere of influence, the chaos strategist must avoid treading into the arena of “vital” American interests. He works best in the shadows, behind the curtain, off stage.

In retrospect, with regard to the September 2001 attacks in the United States, the assailants made a crucial error. The attacks did affect vital national interests, the resulting American will to accept military casualties in response appeared to be high, and all roads—rightly or wrongly—almost immediately led to Kabul.

The normal response to an enemy’s attack is to attack, of course, in kind and with a like ferocity. In conventional war, this has always been the symmetrical reaction. While admittedly all warfare tends toward asymmetry, in which one seeks to exploit the weakness of the opponent and to rely on his own strengths, the notion of rough force parity between opponents has shifted remarkably in the post-Cold War era. An opponent who can match the capabilities of US armed forces does not exist, and will not appear for the near future.

As a result, technology and new operational concepts argue the need for American military forces to move toward the capacity to induce response paralysis on the part of adversaries. Indeed, concepts and beliefs embedded in Joint Vision 2020, “Network-Centric Warfare,” “Parallel Warfare,” and the “Global Strike Force” all rely on overwhelming technological capability to paralyze any adversary’s response. And every adversary we have faced since the end of the Cold War has been unable to fight back; most often they simply have had to hunker down and take the hit.

Such force application is emblematic of two not necessarily contradictory ideas: first, the notion popular among mid- and senior-level military officers that the military strategist can get inside the enemy’s decision cycle (often called “the loop”), cut him off, and kill him; second, the use of technology and American reliance (some would call an obsession) on firepower allow for high enemy damages and low friendly casualties. Edward Luttwak has partially popularized this second idea with what he terms “Post-Heroic Warfare.”

Phillip S. Meilinger has suggested that warfare can be considered of four types: exhaustion, attrition, annihilation, and paralysis.4 The conflict in Southeast Asia, a protracted war from which America sought to extricate itself after three decades of involvement with no lasting goals achieved, is an example of warfare of exhaustion; Operation Allied Force in Kosovo and Operation Enduring Freedom in Afghanistan—through coalition employment of high-intensity strikes, high-technology weapons, precise targeting, and the integration of special operations forces with indigenous forces to support and help direct firepower—are examples of warfare of paralysis.

Yet the opposing chaos strategist is fully aware of America’s asymmetric, unmatched power predominance. His correct “target,” as it were, is the “social dimension” of the national-level policy decisionmaking process as well as perhaps the population itself. In essence, the strategist attacks what we value most. The shift in chaos strategy is not subtle, but it is crucial that we recognize the shift. In the future, successful chaos strategists may target us where we are most vulnerable and will work to avoid presenting themselves as any direct threat. Non-state actors, in particular, will find this strategy shift far easier to accomplish than state-led chaos strategists such as Somalia’s Mohamed Farah Aidid, Serbia’s Slobodan Milosevic, or Iraq’s Saddam Hussein.

Moreover, since our military forces are not sized and structured as a counter-value force, the chaos strategist will increasingly recognize that new vulnerabilities will present themselves through targets and methods such as these:

Critical infrastructure degradation or collapse, to include not only physical systems and structures, but also contamination of food supplies or resources in ways difficult or impossible to detect. The spread of infectious disease that cannot be controlled, whether or not through the use of biological agents. Intrastate as well as inter-ethnic conflict in failed or failing states. Environmental stress, resource scarcity, and depletion. The trafficking of drugs, small arms, and inhumane weapons, often coupled with conflicts that are claimed as insurgencies. Cyber-war. Terrorism.

All these elements provide breeding grounds for future warfare. These nightmare zones present targets of opportunity. Moreover, while none of these aspects is necessarily new, the capacity to induce chaos is greater today than ever before. We know, for example, that the Soviets experimented with strategic biological weapons, such as smallpox that could be delivered with ICBMs. Six Soviet weapon experts recognized, however, that smallpox could be released far more secretively on enemy territory; thus, in an age of globalization where disease knows no borders, chaos strategists recognize this advantage as well. Further, the capacity and power of modern laptop computers is roughly equivalent to the entire computational power that the US Defense Department had in the mid-1960s.

In the past, state-led chaos strategists have at least partially achieved their objectives even in the face of US military force. As a result, Somalia was a failure; Iraq remains “unsolved”; Bosnia-Herzegovina is ethnically cleansed and, like Gaul before it, is divided in three parts; Kosovo is an international protectorate but still part of Yugoslavia; and Afghanistan’s viability as a future state stands in question.

But the chaos strategist wants to avoid force engagement. Even when force is introduced and troops are stationed on the ground, as in Bosnia or in Saudi Arabia, he wants to prolong ambiguity. Above all, the desired outcome remains decision paralysis.

Most American defense planners naturally consider military predominance to be a major strength. But, ironically, there is an inherent weakness in it. The immense advantages of American firepower, technology, and forces available require clear and distinct application of means to reach ends. The Weinberger and Powell defense doctrines, which mandate clear definitions of political goals and American interests prior to intervention, worked in Desert Storm because they fit Desert Storm. These same defense doctrines would have prevented American intervention in Southeast Asia and they did prevent, up to a point, American intervention in Bosnia.

In American warfighter terminology, deception and surprise are standard checklist items in thinking about war. But American intelligence assets—in terms of technology and capabilities the most superior in history—fall short when it comes to the unclear art of human intelligence and human unpredictability. In truth, despite all our progress with conventional and unconventional war since the American experience in Southeast Asia, there still rings an identifiable empathy with how the debacle of Somalia was, in some respects, not different from the debacle of Vietnam: “If only [they] would just come out . . . and fight like men, we’d cream them.”9 Such comments make the chaos strategist beam with pleasure.

One Asian expert has provided a description of war in the ideal type as having three distinct phases: engagement, chaos, and chopping of heads (jiaofeng, luan, zhan). The master of this “intellectual” approach to warfare, of course, is Sun Tzu, who employs jiaofeng, luan, and zhan through instantaneous, differential shock-wave application. This same authority refers to von Clausewitz’s theory of warfare victory as an “engineering” approach, with equally distinct phases: battle, campaign, and warfare termination—all occurring in cumulative, integral stages.10 Thus, when American warfighters speak of “cutting off and killing” an enemy, they mean “to chop heads” in the metaphorical sense; when the chaotic warfighter speaks of zhan, or its linguistic equivalent in a different culture, he is being literal. The chaos strategist and the chaos warfighter prefer the removal of the enemy in the purest form. In former Yugoslavia, this was manifested as ethnic cleansing.

Ultimately, the best guarantee of success comes when the chaos strategist has brought chaos to his enemy without battlefield engagement. As L’i Ching, remarking on Sun Tzu’s own warfare practices, noted: “From antiquity, the number of cases in which a chaotic army [that is, with chaos induced among its ranks] brought victory [to the enemy] can never be fully recorded.”11 That, of course, is precisely what new operational concepts and employment sought to produce in crushing the Taliban and al Qaeda forces in 2001—through a network of unmanned aircraft that led to increased battlefield awareness, special operations forces used as forward spotters, motivated indigenous forces, precision major fires delivered by various means, and rapid maneuver to cause the enemy to break. This led to battlefield success, though not necessarily to strategic victory.

The Taliban and al Qaeda made a classic mistake in Afghanistan: they were stupid enough to fight back. They apparently had forgotten the lessons of chaos, or never learned them. The true chaos strategist would have looked for ways to never engage American military force directly or would have employed methods that our emerging style of warfare is not able to handle well.

In reality, our strategy and force planning processes are laborious, methodical, and infinitely complex because they are planned for and fought with extraordinary precision and detail. The strategic theory that plans for force application as a paralysis of response does so because it wants—according to American strategic culture—fast, precise, and overwhelming conflict resolution. Such strategy and theory seek to eliminate chaos in order not to directly confront chaos.

Both the Weinberger and Powell doctrines reflect this American tradition. Vietnam did not fit this tradition; neither does Bosnia, Somalia, Iraq, Afghanistan, or many other plausible future war scenarios. The paradigm for many future battlegrounds, however, will draw on ambiguity and chaos rather than on American battlefield predominance.

Nearly four decades ago, Roger Trinquier claimed in Modern Warfare: A French View of Counterinsurgency that modern war is an interlocking system of political, economic, psychological, and military actions and conflicts. Trinquier argued that armies tend to fight traditional warfare, and that in modern war they are doomed to failure despite overwhelming firepower.

Admittedly, with the advent of network warfare and remarkable advances in military technology, Trinquier’s gloomy prophecy may not be as set in stone as some once believed. At the same time, in view of the incredible American military successes since the end of the Cold War, one might reasonably ask why we are pushing so hard and fast toward military transformation when there are clear and present vulnerabilities that transformation does not affect, yet which the chaos strategist will likely target.

Adapting to Chaos

In a speech at The Citadel on 11 December 2001, President Bush said: “We have to think differently. The enemy who appeared on September 11th seeks to evade our strength and constantly searches for our weaknesses. So America is required once again to change the way our military thinks and fights.” The next day, John Pike, Director of GlobalSecurity.org, was quoted in the Los Angeles Times as observing, “Militaries change because they lose wars or win them with difficulty. They do not change when they win wars without hardly even trying.”

Yet this is not the first time in history that we have recognized our vulnerability, as well as questioned our ability to deal with that vulnerability. In the spring of 1946, scientist J. Robert Oppenheimer, who had directed the atomic bomb project, was asked in closed congressional testimony whether it would be possible to smuggle elements of such a bomb into New York and then blow it up. “Of course,” replied Oppenheimer, “and people could destroy New York.” When allegedly a nervous Senator then asked how such a weapon smuggled in a crate or suitcase could be detected, Oppenheimer simply answered, “With a screwdriver.”14 The document that eventually came out of that testimony, known as the “Screwdriver Report,” remains classified to this day. In essence, though, there seems to have been a recognition six decades back that although there was no direct threat at the time, we were clearly vulnerable to chaos attack.

While this article does not suggest that chaos strategists will inevitably defeat the United States, such strategists can—and often do—bedevil the national security decisionmaking process. Used with the right measures of surprise and undetectability, a chaos strategy could disrupt and possibly destroy the Clausewitzian trinity. In this scenario the people’s faith in government could be erased and the third leg of the trinity, that of the commander and the army, could do little or nothing to prevent that destruction.

In truth, chaos strategists cannot defeat the United States or its allies in any traditional sense. We will be targeted, however, where the symbols of our strength reside. Although the Word Trade Center was not an irreplaceable node in terms of economic power, and even with the astounding resiliency that the United States displayed in recovering from the 11 September attacks, the total cost of lost worldwide economic growth and decreased equity value as a result of them could exceed one trillion dollars.

Even as the United States has the capacity to bring massive firepower on the battlefield—along with an increasingly sophisticated network of intelligence systems, information architecture, unmanned systems, and joint and combined force operations—we should expect to see chaos strategies come into play in future engagements. Too exclusive an emphasis on technological solutions in warfare—and in determining political outcomes—may well prove problematic. Although a cliché, it remains true that we must prepare for the warfare we may find it necessary to fight, and not plan for the wars we want to fight.

Every single military engagement since the end of the Cold War suggests that we have dispatched our adversaries with ease on battlefields and in direct engagements. This would seem to be an argument against rapid transformation of the armed forces. Why bother, after all, to change the military when no one else can stand up to it? Increased battlefield awareness, the likely increased future use of special operations forces and indigenous forces, precision major fires delivered by various means, and rapid maneuver to cause the enemy to break, as well as what one observer has called the phenomenon of “marines turned soldiers,” has fundamentally altered how we fight.

In truth, we have proven so successful in our post-Cold War military improvements that the likely increased costs for transformation envisioned by the Bush Administration may well prove unnecessary and too expensive. Transformation skeptics, such as the Brooking Institution’s Michael O’Hanlon, counterargue that the US military is already innovating at an acceptable rate—in what O’Hanlon terms a process of “ambitious incrementalism”—and simply does not need to radically accelerate the pace of technological advance.

But the arguments which suggest that constrained resources and the dictates of the political economy are what most constrain transformation seem to miss the mark completely. What may well be lacking is the need to recognize “closework.” As Larry K. Smith phrases it:

Overwhelming force implies, almost by definition, a lack of precision. That won’t work now. What we’re going to need is a much greater emphasis on the concentrated application of street smarts. I call these sorts of operations “closework.” They are extremely precise missions that are used when the results are absolutely crucial. They demand the very highest standards of intelligence, of training, of preparation, of timing and execution. We haven’t been particularly good at this in the past.

Closework also suggests that urban warfare and often brutal forms of engagement will be likely in the future. Rather than relying more on distance warfare and precision engagement, we may fundamentally turn in a new direction. If it is true, for example, that one of two people on the face of the earth will live in urban environments and one of two people will live in “water-stressed” areas at some point within the next two decades, then the complexity of intersecting forces can bring about profound and often vicious consequences. These consequences might include—but certainly not be limited to—critical infrastructure collapse, the outbreak of infectious disease that cannot be controlled, and intrastate as well as inter-ethnic conflict related to resource scarcities (such as water) and environmental stress. We may well be entering into chaos.

We can expect to enter also into some debate about how best to meet the challenges of future chaos. Admittedly, there is a danger of overestimating one’s real or potential enemy; there is a greater danger of not recognizing one’s enemy at all. But there is a need to consider alternative ways to deal with future war. As General Eric Shinseki, Army Chief of Staff, admonished his own service and those who did not want to consider alternatives, “If you dislike change, you’re going to dislike irrelevance even more.”

The arguments for transformation—and its relevance to protecting the vital interests of the nation—should reasonably have only just begun. To suggest that we actually understand the challenges of the future and can adapt our armed forces with relative ease is a flawed assumption. To the contrary, the science of complexity, future uncertainty, and understanding what specific changes to make in protecting our vulnerabilities should all prove central to what should be one of the most vigorous debates in our nation’s history.

Policymakers and decisionmakers will need to adapt to counter future “chaos strategies,” where our adversary’s essential aim is to achieve victory through avoiding defeat. Potential, though plausible, national security responses include the increased use of covert actions, as well as special forces, in place of more traditional wartime forces and resources. In the end, it does not matter much if future chaos attacks will be illogical or disjointed. Chaos—and its intended effects—will prove more significant than a cohesive strategy that viably links means to ends. As an adage in India claims, one way to kill a tiger is to distract it from so many different sides that it tries to run in every direction at once.

Will we adapt to chaos as strategy? That remains to be answered in the war that is still to come.

Notes

1. “September 11, 2001,” The New Yorker, 24 September 2001, pp. 60, 64.

2. Andrew F. Krepinevich, Jr., “Major Regional Conflicts: The Streetfighter Scenario,” The Bottom-Up Review: An Assessment (Washington: Defense Budget Project, February 1994), part V, p. 42.

3. Luttwak might also argue that the significance of “Post-Heroic Warfare” lies in a “careful, purposeful patience” in the application of predominant American and American-led military force, as well as a return to the “casualty-avoiding methods of eighteenth century warfare”—nominally based on ancient Roman economically conscious war. Edward N. Luttwak, “Toward Post-Heroic Warfare,” Foreign Affairs, 74 (May-June 1995), 109-22. Economic embargoes and sanctions against adversary states may also prove more worthwhile than the traditional battlefield engagements that characterized previous wars. If so, they remain unpopular instruments of power (in contrast to the swift application of the military instrument) for policymakers. Economic sanctions against Serbia, for example, brought the Milosevic regime to its knees; at one point during the last war in Bosnia-Herzegovina, by some estimates, inflation ran as high as 28 billion percent. The regime, nonetheless, stayed in place (as did the two regimes of Iraq and Iran under the policy of “dual containment” despite attempted economic isolation). Further, the individual prosperity of the average Serb plummeted while the vitality of Mafia elements, black market smuggling, and “sanction busting” practices soared. One other aspect of economic sanctions points to American selectivity: the May 1997 embargo against the military dictatorship of Myanmar (Burma) proved less than effective because other nations, particularly ASEAN nations, continue to invest there. The standards applied by the United States as justification for sanctions against Myanmar could also have been applied against China—which did not and will not be “punished” with economic sanctions. Myanmar does not represent a vital national interest for the United States; China does.

4. See “Air Targeting Strategies: An Overview,” in Airpower Confronts an Unstable World, ed. Richard P. Hallion (Washington: Brassey’s, 1997), pp. 51-80.

5. By the use of “counter-value” as a possible military role, I am broadly referring to nuclear weapon targeting theories that refer to counter-force targets (hardened military systems and forces) and counter-value targets (that is, what we value most—our cities, our population, and our way of life). The US military is not sized and structured as a counter-value entity; as such, we can expect to see organizational resistance to military forces playing the “home game” vice the “away game” in future engagements.

6. For an in-depth examination of the Soviet biological weapons program, one of the best available sources is Ken Alibek’s Biohazard (New York: Random House, 1999).

7. Thomas Homer-Dixon, “The Rise of Complex Terrorism,” Foreign Policy, No. 128 (January/February 2002), p. 54.

8. One of the best critiques of the Weinberger doctrine, with examples of its applicability to various interventions, can be found in Michael I. Handel, Masters of War: Classical Strategic Thought (2d ed.; London: Frank Cass, 1996), pp. 185-203.

9. Remarks made by a frustrated military officer to journalists; drawn from a January 1996 lecture by Professor William J. Duicker, Pennsylvania State University.

10. Based on lecture notes and drawn from discussions with Professor Arthur Waldron, the University of Pennsylvania. The “engineering” approach bears remarkable similarity with the thought process and implementation of the Bottom-Up Review as well as the 1997 and 2001 Quadrennial Defense Reviews.

11. The Seven Military Classics of Ancient China, trans. and commentary by Ralph D. Sawyer, with Mei-chün Sawyer (Boulder, Colo.: Westview Press, 1993), p. 333.

12. Roger Trinquier, Modern Warfare: A French View of Counterinsurgency (New York: Praeger, 1964).

13. Quoted in Ronald Brownstein, “Success in Afghanistan Clouds Military Transformation Plan,” Los Angeles Times, 12 December 2001, internet, http://ebird.dtic.mil/Dec2001/e20011212success.htm, accessed 12 December 2001.

14. Reported in Kai Bird and Martin Sherwin, “The First Line Against Terrorism,” The Washington Post, 12 December 2001, internet, http://ebird.dtic.mil/Dec2001/e20011212line.htm, accessed 12 December 2001.

15. Clausewitz described war as a “remarkable trinity” composed of “primordial violence, hatred, and enmity” (the realm of the people); “chance and probability within which the creative spirit is free to roam” (the realm of the commander and his army); and the “element of subordination, as an instrument of policy, which makes [war] subject to reason alone” (the realm of the government).

16. Homer-Dixon, p. 58.

17. Mackubin Thomas Owens, “Marines Turned Soldiers: The Corps vs. the Army,” National Review Online, internet, http://www.nationalreview.com, accessed 10 December 2001.

18. Ronald Brownstein, “Success in Afghanistan Clouds Military Transformation Plan,” Los Angeles Times, 12 December 2001, internet, http://ebird.dtic.mil/Dec2001/e20011212success.htm, accessed 12 December 2001.

19. Quoted in Joe Klein, “Closework,” The New Yorker, 1 October 2001, p. 45.

20. Quoted in Owens.

P. H. Liotta holds the Jerome E. Levy Chair of Economic Geography and National Security at the US Naval War College. He has lived in and traveled extensively throughout the former Soviet Union, Europe, and the Balkan peninsula, as well as Central and South Asia (including Iran). His recent books include Dismembering the State: The Death of Yugoslavia and Why It Matters and The Wolf at the Door: Translations from the Macedonian of Bogomil Gjuzel. This is his fourth article in Parameters.

References:

Liotta, P. (2002).  Chaos as strategy. Parameters, Summer 2002, pp. 47-56.

Sunday, July 14, 2013

Personal Data Storage

This post is a departure from beaten track as we will discuss Redundant Arrays of Independent Disks; RAIDs. Having reliable data storage is essential to a personal data storage plan.  Many folks may chuckle at the thought of a personal data storage plan but there are good reasons for having one - especially if you have lost data in the past.  If you store large volumes of digital information such as tax records, medical records, vehicle documents, digital music, movies, photo collections, graphics, and libraries of source code or articles then a storage data plan is essential to reduce the risk of loss. Loss can occur due to disk drive failures, accidental deletions, or hardware controller failures that wipe drives.  Online services offer affordable subscription plans to back up your PC or store data in a cloud but you risk the loss of privacy when using these services. Having local, portable, and reliable data storage is the best approach and a personal data management plan is the centerpiece of the effort. 

Such a plan should be designed around two points. First, there should be a portable detachable and reliable independent disk drive system. Second, there should be a backup system. We will focus on the first point in this post. 

Figure 1: Completed RAID
After a lot of research, I settled on a barebones SANS Disk Raid TR4UT+(B) model, Figure 1. The device has a maximum capacity of 16 TBs and supports up to USB 3.0 and has an option to operate from a controller card improving data transfer raters over USB 3.0.  Fault tolerance methods of cloning, numerous RAID levels, and JBOD are supported as well.  Thus, the unit is well poised for a long term durable use.  

Since the device is barebones, I had to find drives that are compatible. Fortunately, the device was compatible with 11 different drives ranging from 500MB up to 4TBs across three vendors.  I had to figure out what characteristics mattered and determine which of the drives were optimal for my needs. The approach I used was a spreadsheet matrix, Figure 2. The illustrated matrix is a shortened form and did not consider the 4TB drive as it was cost prohibitive from the start as were several of the other drives. The 3 TB drive was used to breakout or create a spread for the other options. I computed the coefficient of performance, CP, then averaged them for the overall performance. In the end, I selected the Hitachi UltraStar 1TB in this example and purchased 4 of them. They are a high end server drive that are quiet and can sustain high data transfer rates for long periods of time. 

Figure 2: Decision Matrix for Drive Selection and Purchase

Figure 3: Installed Drives 
After selection, purchasing, and installation of the drives, Figure 3, RAID 5 was selected for the drive configuration. RAID 5 permitted hot swappable drives should one fail and provided more disk space than the other RAID modes. RAID 5 is a cost effective mode providing good performance and redundancy. Although, writes are a little slow. 

The final part of the process was to initialize and format the drives. File Allocation Tables, FAT and FAT32 are not viable options as they provide little recovery support.  New Technology File System, NTFS, improves reliability and security among other features. However, there is an emergent file system GUID Partition Table, GPT, which improves upon NTFS and breaks through older limitations. Current versions of Mac OS and MS Windows support this file system on a read and write level. Therefore, in a forward looking expectation of future movement towards this file system, the RAID was initialized then formatted with GPT. The formatting process was slow and took a long time. 

In the end, the RAID unit was accessible by both Windows and the MacBook Pro. All the data and personal information on disparate USB drives, memory sticks, and the local machines were consolidated to the RAID device. For the first time all my music, movies, professional files, and personal data were in one place with the strongest protection. The final cost was less than $650. The cost can be kept down if you shop around for the components: Amazon. It took about 8 hours of direct effort. Although the formatting and files transfers occurred as I did other things. 

While I will still use my memory sticks and a 1 TB portable USB drive with my notebooks, the RAID is the primary storage device. It can be moved relatively easily if I change locations and/or swap it between computers if necessary. The device can also be installed as a serverless network drive and hung off of a wireless router. I prefer not to use it in that manner as the risk of exposure or loss of privacy slightly increases.

Overall, the system is quiet and has a low power drain while in operation with heightened data protection. I encourage others to rethink how they are storing their data and invest in a solid reliable solution.  As the solid state drive come into increasing use, the traditional silver oxide platter drives will drop in price dramatically.  This will enable more folks to build drive arrays like mine at lower costs then convert them later to the solid state systems as those prices drop. 

Sunday, June 30, 2013

Risk Management in Supply Chain

This is a series on Supply Chain Basics looking at the discipline from the Society of Operations Management perspective. Supply chain is also essential to project management as PMs are typically trained in world class contracting. For example, my Masters program had several courses involving contracting and the Defense Acquisition Workforce Improvement Act, DAWIA, certification highlights the combination of project management and supply chain. In this post, we will explore Risk Management Strategy adding some additional support as well.

Risk Management in Supply Chain

The very nature of business is undertaking acceptable risk. Thus, all investments have risk including investing in a supply chain design. There are many dangers or risk events that lie in wait for business enterprises that usually result in disruptions and legal actions. Redundancies and contingency plans could go a long way towards stabilizing the operations and reducing potential risk.

PMI's approach to risk is very methodological involving categories, risk registers and risk impact matrices. Like PMI, APICs approaches risk  in a similar manner having its own terminology, categories, and tradeoffs.  Like PMI, APICs views risk as having either positive or negative outcomes.

APICS defines risk management as the process of identifying risk, analyzing exposures to risk, and how to best handle those exposures.  In supply chains, risk management is a complex end-to-end concern having risk resulting from increased dependence on critical resources, transport capability, globalization, and other considerations.

The Supply-Chain Council (SCC) defines supply chain risk management as the systematic identification, assessment, and quantification of potential supply chain disruptions with the objective to control exposure to risk or reduce its negative impact on supply chains performance.

Like PMI, the APICS risk management strategy seeks to mitigate, reduce, or eliminate risk. Risk managers must examine the chain to map the entire chain understanding interdependencies; identify failure points; create risk awareness in the chain; and devise contingency solutions for risk events.

Supply risk categories factors according to APICS include external, environmental, technical, and organizational as the same with PMI and the Global Association of Risk Professionals. The risk profile is influenced by the risk factors and the organizations tolerance for risk.

Risk Level = Probability of Occurrence x Magnitude of Loss

Technically, there is a tradeoff between risk and gain. In some cases, the risk is so low or unlikely that the organization accepts the risk. In other cases, the organization may value the risk and seek compensation in the event of positive risk.  Risk avoidance is often difficult but APICS defines it as eliminating risk or to protect objectives from risks impacts. Organizations tend to characterize themselves as either risk-tolerant (usually commoditized goods) or risk-adverse (usually goods that have a probability of lawsuits, death, or monetary loss).   The SCC points out the risk must have a term and a  perspective that defines scope. 

Risk prevention involves a risk response plan and planning. The plan is a document that is similar to the PMI's risk register. Planning is the process of developing the plan. Overall risk prevention involves assessing, balancing costs, contingency plans, and risk sharing.

Risk Management best practices are approved by the SCC to mitigated cost and disruptions. Proactive efforts could offer a competitive edge and support the SCOR model.  There are four basic areas:

  1. Formal risk management  
  2. Visibility and quantification of risk
  3. Coordinated risk management
  4. Supply chain designed for risk 
Managing and mitigating risk in the supply chain is critical to the chains success which bear direct responsibility for supply chain success in a risk-laden global network. 


Reference:

(2011). APICS Certified Supply Chain Professional Learning System. (2011 ed.). Version 2.2.

Saturday, June 29, 2013

Change, Futures, and Supply Chain Strategy

This is a series on Supply Chain Basics looking at the discipline from the Society of Operations Management perspective. Supply chain is also essential to project management as PMs are typically trained in world class contracting. For example, my Masters program had several courses involving contracting and the Defense Acquisition Workforce Improvement Act, DAWIA, certification highlights the combination of project management and supply chain. In this post, we will explore Operations and Supply Chain  Strategy adding some additional support as well.

Change, Futures, and Supply Chain Strategy

Operations generally avoid following sales too closely which tends to throw the organization into volatile production swings. Classically, operations hangs just under the sales volatility and makes upward and downward adjustments based on long term trending.  With that said there are events that cause changes to strategy:
  • Change in market conditions.
  • Change in business direction.
  • Anticipated changes in the market.
Market Condition Changes can emerge with stunning rapidity. Supply chains must adapt to a bursting bubble or long term trending with precision and accuracy. Failure to adequately identify and adjust can leave the supply chain with either massive overstock or austere shortages. Adapting may mean creating redundancy in manufacturing versus economies of scale or stronger command and control of the supply chain by external management to remove self-interest concerns in the chain. This was accomplished at the Heathrow Airport project as discussed in Project Complexity Perplexes Procurements. The project manager establish external control of the supply chain marginalizing the dominant supplier control. This increased collaboration and problem solving in the supply chain while reducing self interest and legal claims.  Supply Chain managers must avoid becoming too lean and balance customer service, flexibility, and cost.

Business Direction Changes result when companies approach the uncharted territory of new markets and products with little data or information available. Once in the new market or the product is out there the new information results in an overhaul of the supply chain or organization. A well designed supply chain can redirect goods and services to where the demand is emerging. Overstock and services in one area may be moved to areas where demand is higher preventing stock outs in one area and price reductions in another.  Whether the supply chain has centralized or decentralized management is a decision that must be considered. Nonetheless, flexibility and adaptability is at the heart of the supply chain design.

Anticipated Market Changes result when the market is volatile and advance forecasting efforts are undertaken. This is risky since all forecasts are wrong. The forecast error must be very narrow and the supply chain proactive. Innovation is the key to strategic flexibility and must occur in product, supply chain, and organizational designs.  Supply Chain qualities such as trust among partners and efficiencies can become liabilities. A lean and efficient supply chain can run until it starves itself for lack of a market.  Partners in the chain may place unwarranted trust in the nucleus firm and produce product until  the inventories are burgeoning or may follow the demand so tightly that the chain runs into the ground. 

If supply chains are to adjust to market changes in advance then they will need a different set of rules:
  • Pursue efficiencies and improve chain velocities but not at the expense of flexibility.
  • Develop multiple supply chains that are right for each product line.
  • Monitor the consumer demand at the end of each chain in which the firm is participating.
  • Monitor global trending
  • Design for maximum supply chain flexibility
Competitive Priorities and Future Direction

Winning customers is a challenge and companies have different approaches.  The post on the Art of Profitability details the ways companies attempt to make money in markets. some of the profit models map to the APICS thought.  Some of the commonly used approaches according to APICS follow:
  • Differentiate the product or service
  • Niche design of product or service
  • Low pricing of the product or service
  • Responsiveness to demand
Differentiation begins with competitive analysis which is defined by APICs as an analysis of the competitors that includes strategies, capabilities, pricing, and costs. Once the analysis is completed differentiation may occur on quality, diversity, reliability, and features.  Typical supply chain strategy involves modular design and customization capabilities, marginal inventory to avoid obsolescence, design collaboration within the supply chain.

Niche marketing is the ability to service a closely held specialized segment of the market. The market is often a luxury, age or gender specific, or geographic segment of the market. The same product may be marketed differently to the different markets and the supply chains may vary or be identical.

Low price products or services are not compatible with niche or differentiated markets. This approach is used mostly with mass marketing and commoditized products and services. Supply chains under this approach seek to reduce cost throughout the entire chain. Under this model, suppliers may have to relocate, redesign the organization, change employment practices, and adopt lean practices. APICS asserts that low price strategy should not be confused with target cost which is designing a product to meet a specific cost objective. Target cost = the planned selling price - profit margins - (market + distribution costs) = the cost to manufacture.

Responsiveness is meeting delivery expectations of the consumer. Responsiveness applies to service and goods both. Fast food patrons will become impatient in line after a few minutes while fine dining patrons expect to waiting 30 minutes or longer. Supply chains handle responsiveness several ways. Safety stock is one method to avoid outages or wait times. Multiple warehouses that serve smaller regions reduce logistical times. Third party transportation services that stratified speed of delivery services.

Overall, supply chains serve many purposes in the business by balancing all the various elements in the chain, business, and operations.  More over the supply chain operates with a temporal quality of the moment with an eye on the future. Forecasting is a primary tool used in supply chains and the entire chain needs to focus on the downstream customer demand in order to avoid the bull whip effect.  Additionally, the products and services establish the approaches that affect the supply chain design supporting the product or service. Supply chain managers need to monitor everything all the time and act whenever necessary to keep the supply chain effective and moving. 

Reference:

(2011). APICS Certified Supply Chain Professional Learning System. (2011 ed.). Version 2.2.

Wednesday, June 26, 2013

Aligning Supply Chain and Corporate Strategies

This is a series on Supply Chain Basics looking at the discipline from the Society of Operations Management perspective. Supply chain is also essential to project management as PMs are typically trained in world class contracting. For example, my Masters program had several courses involving contracting and the Defense Acquisition Workforce Improvement Act, DAWIA, certification highlights the combination of project management and supply chain. In this post, we will explore Supply Chain and Corporate Strategy adding some additional support as well.

Aligning Supply Chain and Corporate Strategies

Regardless of the supply chain design success depends on the supply chain's alignment with the corporate strategy. The  supply chain is constructed with resources such as organizations, people, processes, and information that must be aligned to the strategies.  After alignment other essential factors of the chain become a focus such as infrastructure which gives the resources the power to act synergistically in order to achieve competitive objectives under the strategies.

Strategic Planning is the process by which customer value and financial value is achieve in the following areas:
  • Organizational design
  • Supply Chain processes
  • Systems and Technology
  • People
  • Supply chain metrics
APICS has developed a decision making process that goes into aligning the corporate and supply chain strategies, Figure 1.
Figure 1: Aligning Corporate and Supply Chain Strategies. 
Source: APICS Supply Chain Fundamentals,  Module 1, p 1-78
Organizational design refers to the structural relationships in an organization between the elements. Design includes the nature and arrangement of elements to include communications, authority and responsibilities, financial management, and job descriptions.  An effective supply chain necessitates development of the organization through design in order to support the supply chain's alignment to corporate strategy. NOTE: In the leadership process post, I discuss organizational design as a function of the leadership process. 

According to APICS, there is a four stage process to organizational design.  The first stage focuses on decisions and matters related to supply and distribution on an ad hoc basis. The second stage is centered on functional lines within the business acting as stove pipes or silos of self interest. The third stage expands to cross functional teams that measure and improve business wide processes usually emerging from second stage continuous improvement efforts within functional areas. The fourth stage begins integrative operations forming supply partnerships or customer alliances.

In short, organizational design integrates all the elements and progresses from a highly functional organization to a process orientation.

Supply Chain processes have transitioned away from functional operational processes like buying, planning, etc... towards business excellence or world class operations that involve complex information exchanges and a network of relationships. Effective supply chain management means mastery of the interconnected processes.  NOTE: Complex information exchanges in the information operations realm are known as Information Exchange Requirements, IERs. IERs can be either static or dynamic.  Static IERs usually relate to stable metadata needs that rarely change. Dynamic IERs occur when the metadata needs change regularly which is more common in emergent conditions and when uncertainty is high. The task of supply chain or business analyst and systems analyst is to know what metadata is available and how to source the information in short order.

In summary, key supply chain processes are emplaced and function at a competitive velocity.

Systems and Technologies points to the information systems and software technologies that makes complex supply chain operations possible. Technologies such as barcodes, RFID tags, GPS, and global networks track goods in motion and exchange information critical to corporate and supply chain strategies. However, the systems and technologies are not without challenges that stem from poor system designs, incompatible protocols and languages, and arcane technologies still in use. Even character sets can pose huge obstacles to overcome. Perhaps the greatest challenge are humans who erect barriers and reject new technologies or technology as a whole. Managing the human aspect requires patience and training. After all, processes are designed and managed by human beings. The purpose of systems and technologies is to facilitate the supply chain information exchanges at world class competitive velocities.

Supply chain excellence is reliant upon sage implementation of systems and technologies that not only promote world class operations but also strategic alignment. In reality, the network is very real. The supply chain's infrastructure is what is really virtual as a set of cooperating entities.  NOTE: Many companies tend to develop model financial performance statements, pro forma, then seek to force fit operations and systems to that financial model. While they have some level of success at this approach, the operations and systems seem to suffer often with processes out-of-control and/or a hodge-podge of systems. Under these conditions the organizational focus transitions to constant trimming, cutting, and reduction of costs to force fit the financial models. There is often a rush to market that also leaves the operations and systems in disarray. A tale-tale sign of this kind of activity is the presence of expeditors which are often labeled tiger teams, firefighters, and project managers. Not all tiger teams and project managers are expeditors. However, a vast majority of the expeditors, if not all, are seemingly project managers today. 

APICS alludes to this combination of operations and systems in their training. They discuss bringing processes under control and aligning systems in support of the strategies. This is putting strategy-to-task. With the right designs and tools, an organization can move and adapt swiftly to emergent conditions or adjust efficiently to new financial models; without major organizational redesigns or disruptions to processes and operations that are being forced fit into financial models; without expeditor-PMs pulling together the disparate mess of hodge-podge systems and poor processes. I have highlighted an approach in my posts on adaptive organizations that leverages systems and operations in favor of emergent conditions and adapts quickly reducing organizational latencies. Operations Management Series Posts.

In conclusion, technology is sufficiently advanced to tie all the processes together into a collaborative and transparent supply chain based on common information and data.

People are the ones who effect a supply chain despite the lack of a supply chain office or clear supply chain management structure.  Supply chain management requires training and education in supply chain thinking vice functional thinking.  Supply chain duties tend to be collateral duties rather than primary duties as it is an application of thought rather than supply chain tasks.  Supply chain means leadership through out the organization and chain by having the right people, in the right positions, throughout the chain. Supply Chain managers act as diplomats, go-betweens, and inspirational leaders keeping the supply chain together and effective. Supply chain managers must be holistically oriented.

One of the challenges in supply chain talent development, especially in large organizations, are misaligned human resources practices and policies. Supply chain management and responsibility must begin with executive leadership who champion the discipline.

A supply chain professional must:
  • View the supply chain as a continuous linked process. 
  • Manage relationships among team members and between teams to coordinate different temperaments and visions
  • Understand the corporate business model and its alignment with the supply chain
  • Manage cost skillfully throughout the entire chain
  • Identify and buy or develop technologies that share information with the chain in real time.
The supply chain management is a flow that has supply chain professionals deployed having end-to-end visibility and has a velocity or tempo of operations.

Supply Chain Metrics are the ratios, generally speaking, that baseline then indicate out-of-limits performance of the objectives. There are many ways of measuring performance and since the supply chain is a flow and has a velocity many of the metrics are temporally based. ie  items per unit of time. A checklist can also provide performance information such as a T1 line is installed since a T1 transmits so many bytes per second verses a frame relay that transmits at a lower level of performance.

In short, measures are based on a relevant standard and strengths in order to assess performance then amend weaknesses.

Overall, the supply chain and corporate strategies all conform to ethics, regulations, taxes, and laws. As well as licensing and security policies.

Reference:

(2011). APICS Certified Supply Chain Professional Learning System. (2011 ed.). Version 2.2.

Tuesday, June 25, 2013

Building Supply Chain Collaboration

This is a series on Supply Chain Basics looking at the discipline from the Society of Operations Management perspective. Supply chain is also essential to project management as PMs are typically trained in world-class contracting. The Defense Acquisition Workforce Improvement Act, DAWIA, certification highlights the combination of project management and supply chain. In this post, we will explore Supply Chain collaboration adding some additional support as well.

Building Supply Chain Collaboration

Part of designing a supply chain is developing the relationships up and down the chain.  There is little hope of strategic alignment without well-developed collaboration. Partnerships depend on:
  • Auditable information and connectivity
  • Formal agreements on proper behavior as a matter of self-interest ie contracts
  • Incentive-based activity such as aligning organizational goals with collaborative objectives
  • Process-based activities that build trust based on constant communications and feedback that open up to broader trust over time
  • Leadership that has the authority to enforce/embrace relationships
  • Each organization has a focus on the entire supply chain
  • Network-wide visibility/transparency monitoring for the bullwhip effect and its impacts.
  • Sharing of knowledge and not mere data.
  • Transparency in sharing benefits and burdens of the relationships
  • The amount of value-added and commitment type by each potential partner
The Illusion of Transparency is a particularly dangerous phenomenon in relationships which causes one, the other, or both parties to assume the other party has more information than they actually do. This creates a circumstance of distrust and can be exploited for wrongful gain in negotiations. The benefits of collaboration include but are not limited to:
  • Lower costs
  • Improved quality
  • Better customer service
  • Reduced inventories
  • Rapid project results 
  • Reduced cycle and lead times
  • More effective relationships
  • Enhanced commitment to one another
Actions govern intent in building relationships and share information. Actions send the signals the undergird trust, enforcement agreements, stabilize operations, and match collaborative goals.  Division managers must place the interests of the whole above the division by making major changes in how they operate.  Those major changes are guided by a few overarching tasks that management must undertake;
  1. Designate relationship goals and assemble a plan of action to achieve them. 
  2. Define the roles of every party avoiding redundancy.  Sequential interdependence should be avoided in favor of reciprocal interdependence. The exchange of information and efforts is mutual and bidirectional for each task resulting in greater rewards. 
  3. Create policies or methods for resolving conflicts. Avoiding stiff contract negotiations is desirable for most companies who opt for relationship dialogue which is not too informal but has some guidelines. The guidelines must be sensitive to cultural differences. 
  4. Managers must remain involved following the design of the relationships as without constant attention the design will part apart. 
Barriers to Collaboration

The following constraints are predictable obstacles to achieving successful collaborations.

  • Sub-optimization: This originates when supply chains are not interconnected and results in individual chains optimizing measures not common to the overall collaboration.
  • Individual incentives that conflict with organizational goals: This is an outcome of incentives not aligned with the activities of the chain which can become counterproductive. For example, channel stuffing results from sales incentives that create too much demand which is the opposite of the bullwhip effect which creates unexpected inventory levels. 
  • Working with competitors: Treat the competition warily and at an arm's length. Collaboration among competitors is often wrought with distrust and ulterior motives. 
  • Bottlenecks caused by weak partners: Capability and capacity drive this factor.  The weakest or slowest link in the chain will limit performance. Managers must identify that link/partner and work to improve performance. This may mean wise investment in process and technology or seeking another partner who has the capability or capacity. 
  • Technology Barriers: Incompatible systems decrease the sharing of data, knowledge, and communications.  Managers must identify the incompatibility seeking to improve performance. This may mean wise investment in process and technology or seeking another partner who has the capability or capacity. 
  • Power-based relationships: Nucleus firms tend to leverage their power in a supply chain. This can result in inequitable profits/losses in the chain resulting in rebellion within the chain. This resistance can result is power shifts and retaliation throughout the chain. 
  • Underestimated Benefits: Firms in the chain can incorrectly view the collaboration as a business process re-engineering missing or rejecting the overall value of collaboration.
  • Culture Conflicts: Most often people and firms in the supply chain will view their way as the best way of rejecting out of hand the collaborative way. This is an outcome of a lack of information or information not in the supply chain. Managers must assure that alignment is being achieved through information sharing.  Many other cultural issues persist and may be difficult to overcome. 

Communication Levels and Intensity

Collaboration is almost wholly dependent on communications with various intensities of which there are four levels.

  1. Transactional with Information sharing: Medium-term contracts with single sourcing of information.
  2. Shared processes and partnerships: Longer-term contracts that share design knowledge across the network. 
  3. Linked competitive visions and strategic alliance: This is a virtual entity that works out even the highest level of strategy collaboratively. Very long term relationships. 
  4. Backward Integration (mergers and acquisitions):  This is the deepest level of trust but not without issues.  These mergers and acquisitions take a long time to meld cultures and processes. Often there is resistance and labor churn as an outcome. 

Once the level of communication is established, the collaborative intensity must be formed based on cost, quality, reliability, precision, and flexibility. These all must be balanced for each participant and are strongly influenced by four factors.

  • Strategic importance: This is the primary sourcing consideration. There are two genres of these products or services; premium or commoditized. Premium goods are of high strategic importance, internalized or closely held, and cost more. Often there are multiple sources as a backup. Whereas, commoditized goods are widely available having low strategic importance.
  • Complexity:  These are often large scale goods or services that are highly detailed requiring strategic alliances to ensure quality levels and timing of delivery. 
  • Number of Suppliers: This affects the availability of goods and services. The fewer suppliers the greater the need for strategic alliances. 
  • Uncertainty: Risk. The higher the risk the greater the need for building relationships to ensure delivery, quality, and pricing. In many markets, there is high volatility in pricing or availability. Environmental conditions can cause an entire crop to be lost or precision to be affected in the case of chip manufacturing. For example, an earthquake, flood, or volcano can bring all chip manufacturing to a halt.    

As the factors combine such as uncertainty and the number of suppliers, then the need to collaborate increases exponentially. Sometimes firms choose not to heed these factors and act at an arm's length to achieve their strategic goals and objectives. Firms make decisions about trade-offs. For example, quality checks may not yield the level of value they cost. Additionally, there may be some damage to reputation that is irrevocable and unmeasurable. As a result, companies take a swag at the issue and roll estimated cost into the pricing.

Overall, supply chain collaboration is more of an art than a science.  Supply chain managers must learn the art of balancing all the elements affecting the performance of the supply chain.  The challenge is founding the fact that the factors and elements are all dynamic and in constant flux.

Reference:

(2011). APICS Certified Supply Chain Professional Learning System. (2011 ed.). Version 2.2.

Thursday, June 20, 2013

Supply Chain Strategy

This is a series on Supply Chain Basics looking at the discipline from the Society of Operations Management perspective. Supply chain is also essential to project management as PMs are typically trained in world-class contracting. The Defense Acquisition Workforce Improvement Act, DAWIA, certification highlights the combination of project management and supply chain. In this post, we will explore Supply Chain Strategy adding some additional support as well.


Supply Chain Strategy

Adding strategy to anything suddenly increases the importance and sound grander than mere management. Strategic planning sounds considerably more sophisticated and powerful than mere planning. In the military, strategy alludes to the marshaling of resources in order to achieve an end state. One approach is effects-based operations to implementing strategy. If a corporate strategy is smartly conceived then implemented wisely, then strategy results in successful local, domestic, and global markets. 

Expeditionary warfare refers to autonomous organic units that operate globally and make use of supply chains to support operations. If the corporate strategy is similar to military strategy then the corporate supply chain becomes essential as a potent resource to success. Designing and implementing the supply chain correctly could be the edge to become more adaptive, flexible, agile, and deliver value against the competition. 

Strategy as an adjective is more exciting than a strategy as a noun. The strategic thinker stands ready to grab whatever circumstance emerges and exploit it for profit. Underperforming strategies will be dropped in a heartbeat for a higher-performing strategy. Strategic thinkers look into the future exploiting temporal elements of the market either seizing future opportunities or creating the opportunity. 

Corporate Strategy 

APICS defines strategy as the ‘How To...’ Strategy tells an organization how to function in its environment. Regardless of the strategy adopted, the supply chain must adapt and operate to further the strategic goals. Most supply chains include multiple independent companies with their own strategies and goals. This discussion is about the nucleus firm or master firm in the supply chain. All the strategies have to do two things: 
  • Serve the customer. 
  • Be Profitable for all participants in the supply chain. 
Supply strategy centers on delivering the 4P’s; The Right Product to the Right Place at the Right Price and Right Promotion. A supply chain is not about fast and cheap despite being one of the models. Instead, supply chains are about timing and place for the customer. Many stakeholders are involved in the process to include market researchers, design engineers, logisticians, and many others. The challenges increase as there are multiple customers in the supply chains as well who are both internal and external to the chain. All the strategies of the supply chain require constant attention, leadership, and according to APICS a little magic. 

Sustainability in the supply chain requires widespread cooperation internal and external to the chain achieving the "triple bottom line" as no one is an island.

Forecast Driven Strategy 

A long-standing challenge in supply chains is identifying demand which is even difficult for even the most stable demand. Demand works its way back to the raw resources used in making the product. Traditionally, forecasting is the method of determining future demand and making to stock. This approach is a push strategy having three meanings: 

  • Production: The production of goods based on a schedule planned in advance. 
  • Material Control: The issuing of materials according to a schedule or job order. 
  • Distribution: Centralized warehouse replenishment decision making at manufacturing or supply office site based on forecasts. 
Everything in the system is pushed downstream based on forecasts and the resulting schedules. As each participant in the chain makes their forecasts, errors in the forecast become amplified. This amplification of variability or demand uncertainty is called the bullwhip effect. Forecasts are deemed to be 100% incorrect being either too conservative or too liberal. The greatest risk in a push strategy is overstocking goods resulting in high inventory carrying costs or losses due to price reductions to move the excess inventory. 

Demand-Driven Strategy 

Demand-driven approaches are 'make to order' and considered a pull strategy having three meanings similar to the push strategy. 
  • Production: The production of goods based on demand or to replenish stock levels following use. 
  • Material Control: The issuing of materials according to or based on user demand or signaling. 
  • Distribution: Centralized warehouse replenishment decision making local to the warehouse or supply point. 
In a strict demand-driven supply chain there is no production schedule. Goods are produced based on demand signals. Upstream forecasting remains necessary in a demand-driven chain. The primary challenge in switching from a push to a pull strategy is reducing inventory without impacting downstream performance. The greatest risk is a stock out which is often spun by marketing as overwhelming demand due to products appeals to the end customer. Demand-driven enterprises require some major considerations: 
  • Access to demand data actuals in the entire chain. 
  • Trust and collaboration among the supply chain partners 
  • Agility
The Multiple Chain Strategy

An organization can have more than one supply chain. In fact, the supply chain can be a complex web or network of relationships. The more complex the Bill of Materials the more complex the network or supply chain.  Suppliers can range from small highly specialized service firms to giant material suppliers upstream or giant retailers downstream to individuals. Downstream goods may be sold through multiple channels; e-commerce, printed catalog, commercial wholesalers, and retailers. Regardless of the complexity and structure of the supply chain, there are two characters; Functional and Innovative products. 

Functional products have low contributions to the margin and change very little having very long life cycles with stable demand. Forecasts are generally simple and have less than 10 percent error.  These goods have long lead times and typically are made to order. These products are predictable and low cost having the performance indicators:

  • High average utilization rate in manufacturing
  • Minimal inventory with high inventory turns
  • Short lead times
  • Supplies selected for cost and quality
  • Maximum performance at a minimal cost
Innovative products have unpredictable demand, short life cycles, and a high contribution to margins in excess of 20 percent. They also have high stockout rates in excess of 10 percent and out of season markdowns above 10 percent. Forecast errors exceed 40 percent. Lead times are often low to meet market responsiveness.  Innovative products have indicators that promote responsiveness over physical efficiencies:

  • Excess or significant buffer capacities or safety stock of both stock and finished goods
  • Aggressive reduction in leads times
  • Suppliers selected for speed, flexibility, and quality
  • Modular design that postpones differentiation as long as possible
A product can have both functional and innovative solutions but the variations would have different supply chains as one size does not fit all. Information technology makes it possible to have multiple or dynamic chains accommodating the different information flows and products.

Competition with Supply Chains

The point of having a strategy is to compete in the marketplace on the terms of the market share being sought.  Competing supply chains involve the following situations:

1. Groups of Companies allied as partners in supply networks competing against other networks that are also allied.

2. Competition that is carried out between or among individual companies on the basis of the supply chain. 

3. Competition that is dominated by a channel master whose policies dominate the entire channel. 

Supply Chain Strategy can be complex with multiple chains and competition factors that could change quickly. Therefore, the supply chain must be flexible and responsive in design.  Seeking win-win scenarios may be a challenge based on the tempo of the supply chain and change.  Therefore, it is possible that suppliers, wholesalers, distributors, and others in the supply chain may need to revolve.  A channel master may need to be outside the chain rather than a dominant member in the chain. This is to facilitate cooperation. If a member inside the supply chain controls the chain then flexibility and costs controls can be thwarted or non-perform for the chain.  For example, in complex projects typically performed by governments or major corporations, the project manager may need to become the channel master setting the expectations.  I discussed this in the post Project Complexity Perplexes Procurement.

Reference:

(2011). APICS Certified Supply Chain Professional Learning System. (2011 ed.). Version 2.2.