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| Figure 1. The firm as a marketing system |
Air University Review, July-August 1968
In an earlier issue of Air University Review, I defined logistics as the creation and sustained support of combat forces and weapons.1 How this task is accomplished was explained in terms of three kinds of logistics: strategic logistics—determining the structure required to accomplish national objectives; support logistics—acquiring the assets needed for the structure; and operational logistics—distributing and applying those assets in direct support of the combat forces and weapons. I pointed to possible organizational problems within the Department of Defense, particularly within the Air Force, as reflections of our general misunderstanding of logistics.
There is no easy way to resolve organizational problems, especially in an organization with the massive size and complexity of the Air Force logistic operation. Further, it is hardly possible to analyze Air Force logistics if a suitable framework for the analysis is not available. However, such a framework does exist in the theory and management of systems, which is the modern approach to management of formal organizations.2 The purpose of this article is to propose a system concept that might serve as a suitable framework for analysis and possible improvement of Air Force logistics.
the
system management concept
We in the Air Force tend to think of systems in terms of weapon systems or
command and control systems, and when we think of managing such systems, the
system program director or system support manager comes to mind. These,
however, are rather special examples of the system management concept. Johnson,
Kast, and Rosenzweig of the
This definition is significant in that an array indicates interrelated functions, that the system has a purpose, and that inputs to the system must be acted upon according to a plan. In that way the authors explain their definition. It follows that to manage according to this concept the manager must see his organization as a system of interrelated and interfunctioning parts. The system reacts to its inputs in a manner calculated to enable it to accomplish its objective or objectives.
The human body is a system, but it is also composed of subsystems, like the
nervous system and the digestive system. So, too, can organizations be thought
of as systems composed of subsystems.
However, organizations rarely function as smoothly as does the human body, so
management must consider “the means for interrelating and coordinating these
various subsystems.”4
We can distinguish between closed physical systems and open living systems.
An open system, like the human body, lives by exchanging materials with its
environment. It imports, converts, and exports materials in order to live. On
the other hand, closed physical systems are self-sufficient and need not
exchange materials with their environment in order to live. 5
In traditional organization theory, organizations have generally been thought of as closed physical systems. It has been assumed that problems which the organization encountered would be solved with reference to the internal or hierarchical structure. Essentially, traditional theory has not considered inputs from and outputs to the organization’s environment to be significant except as they affected the internal structure of the organization. The relationship which the organization has with its environment, for the most part, has been ignored.
Those who specialize in logistics have long been aware of the impact of such inputs as national objectives, the state of the economy, and capabilities of the defense industry. They are especially aware of the output demands made by their customers, the using commands. If our present logistic structure is based upon traditional theory, then it is the gross impact of these inputs and outputs, these environmental forces, which is creating the current demand for a better concept of logistics management. The better concept may well be system management.
The Air Force is not alone with this problem. Private industry is experiencing similar difficulties but apparently has discovered a solution through viewing the firm as a marketing system. Admittedly, this viewpoint is new, but it appears to be successful. In the past, civilian management has borrowed ideas from the military to solve its problems. Perhaps the Air Force can reciprocate by applying the marketing-system concept to the management of logistics. The concept is certainly worthy of our consideration.
the
firm as a marketing system
Not too long ago the average American firm was oriented to either sales or production; marketing was not considered to be a major function. In fact, the American Marketing Association defined marketing as “those activities which direct the flow of goods and services from production to consumption.”6
Thomas A. Staudt and Donald A. Taylor of the Marketing Department of Michigan State University were not satisfied with this definition. Their empirical research in the business world convinced them that the firm is an integrated production-marketing system. They say that:
. . . for managerial purposes, there is no other appropriate way to conceive of a firm except as a market entity. . . we recognize the firm as a means-end system. It has resources and it seeks market ends. In fact, we can think of the firm as a target-seeking mechanism, continuously striving to adapt and adjust itself to the attainment of its end purposes.7
Their managerial concept reads quite well, but to thoroughly understand it, further illumination is required. A system model of the firm shows the firm as a marketing system (Figure 1).8 The model can be understood by starting at the upper left with corporate objectives. These objectives are affected by external inputs from the firm’s environment: for example, government regulations, investor demand, and social pressures. The corporate objectives are also affected by the firm’s marketing objectives and marketing knowledge, which might be expressed as sales volume, profit, or some other criteria such as percent of market. Of course, marketing objectives affect the internal operation of the entire system. They, combined with corporate objectives and market knowledge, enable the firm to select a market.
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| Figure 1. The firm as a marketing system |
Market selection is a critical component of the market system. For example, an electronics firm may choose to produce components only or to produce finished units of equipment. If its choice is the former, then its product offerings may be limited and specialized, as in the production of transistors. On the other hand, the firm may choose to offer a line of components which might include resistors, capacitors, inductors, and so forth. What the system may offer is affected by inputs from the rest of the firm, such as manufacturing capability or new discoveries from the research department. Thus, we see the interrelationships between three components in the system array: market selection, product offerings, and rest-of-firm. An important point to remember is that the rest-of-firm, shown in Figure 1 as a rectangle, is environmental to the marketing system. It provides inputs and consequently acts as a constraint upon the system.
The next step in the system is to develop marketing strategies. We consider four strategies in this model. First, the product strategy reflects the mix of product offerings. Let us assume that the firm’s strategy is to offer an integrated line of electronic components. Second, the distribution strategy considers not only transportation but also alternatives in warehousing, wholesaling, retailing, and direct selling to customers. We might assume that the electronics firm chooses to direct sell only to industrial customers, will centrally warehouse its products, and will use air transportation to fill orders expeditiously.
The third strategy, communications, provides product information to persons within the system as well as to customers. However, the strategy primarily involves choosing an appropriate mix of advertising messages and the media through which they may be carried to potential customers. Based upon the other strategies, the electronics firm would probably limit its advertising to trade and professional journals.
Fourth, the services strategy for this electronics firm would probably involve pricing and guarantees as well as engineering assistance to customers using the products. The quality of its products would determine the range of alternatives which the company might enjoy for this strategy.
Finally, in the market the firm receives inputs from still other
environmental forces, a form of exchange for the firm’s outputs. The forces
(shown in the model) may take the form of quality improvement demands from
customers, or of competitive actions by other firms, or, conceivably, of
changing customer tastes. Of supreme importance to the market system is the
intelligence network that feeds this information back to the firm in the form
of market knowledge. Without feedback, the system would be incomplete and
unable to react to its inputs in a manner designed to achieve its objectives.9
With this very brief view of the marketing model in mind, let us apply the same concept of system management to Air Force logistics. If the firm can be thought of, from a managerial viewpoint, as a marketing system, then perhaps the Air Force can similarly be considered as a logistic system.
the
Air Force as a logistic system
There is a rational basis for this consideration. The current Air Force mission is to provide trained and equipped combat forces to the unified commands.l0 Therefore, our overall mission is primarily logistical, and it provides the basic justification for viewing the Air Force as a logistic system. A model of the logistic system designed to accomplish that purpose is shown in Figure 2.11 Certainly, there are basic similarities between the models in Figures 1 and 2, but there are significant differences as well.
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| Figure 2. The Air Force as a logistic system |
We shall investigate these relationships in the same way we analyzed the first model, by starting with objectives. As with corporate objectives, national objectives are also affected by environmental inputs. Foreign policy, military intelligence, and economic constraints are shown, but there may be many others which from time to time will affect national objectives. Both operational and logistic objectives are based upon national objectives.
Notice that operations and logistics overlap in the determination of military strategy. This has not always been true. In previous wars, logistic objectives have preceded operations objectives because of the necessity for first building up a logistic base. Historian James A. Huston states:
To the question of whether there can be a strategic decision distinct from a logistical decision the answer must be no, for virtually all considerations entering into the major decisions of war are logistical. Logic would suggest-and military planners would prefer to believe-that logistic plans stem from strategic plans; that first there must be strategic decisions and plans, with logistic plans drawn as a consequence of them to provide support at the right place and the right time. World War II turned out to be somewhat the reverse of this logical sequence of events. . . high-level strategic decisions generally were based on logistical limitations more than on any other consideration.12
However, that situation has changed over time. By maintaining large forces in a combat-ready status, our nation has enabled the military to maintain an effective and ready logistic base. Now, at the highest decision-making levels, operational and logistical objectives can be accomplished concurrently, for the most part, through military strategy. This part of the model illustrates what was earlier described as strategic logistics.
Of course, logistic objectives affect logistic requirements and the logistic substrategies which are derived from military grand strategy. Asset requirements are transmitted to the logistic base which is external to the Air Force system. The base is primarily the national economy, represented for the most part by defense industry, but it also includes other sources such as the Defense Supply Agency, the Army, and the Navy. As in the marketing model, this model reacts to inputs from the base, like new technology, and to limitations from the base, like production capacity. The base is an environmental force which provides inputs to the logistic system.
The five logistic substrategies shown in the model can be thought of separately or in combination. For example, the several strategies are interrelated in the weapon system management concept. Logistic requirements are the essence of what was earlier described as support logistics. It follows that the logistic strategies bridge the gap to operational logistics, which can generally be regarded as organic to the using commands. Let us turn now to a brief analysis of those strategies.
First, the supply strategy determines what is provided to the customer and the form it takes. Alternative choices of strategy range from individual item control, as with mechanic’s tools, to furnishing a unit with thirty days’ supply of rations, fuel, and munitions. Another choice might be the design of an item so that it can be repaired and returned to use, versus making it expendable or “throw away” at time of first failure. Another is the use of automatic or “push” resupply versus “pull” supply in response to requisitions. A number of these choices might be combined to form a supply strategy.
Second, in development of the services strategy to accomplish logistic system objectives, a basic decision concerns where equipment is repaired-in the using organization, the depot, or a contractor’s facility. One alternative would be partial use of all three. Another is to send contractor or depot teams to the using organization to render assistance on site. Finally, we could contract all services to a civilian agency. This has been done several times on a temporary basis when the Air Force lacked the needed skills. Again, the size and complexity of the logistic system would necessitate a mix of these alternatives to form a services strategy which will meet system requirements.
Third, the distribution strategy involves the delivery of logistic assets to the using commands. However, this strategy involves more, much more, than the apparent choice between air and surface transportation. The distribution network involves the depot, the wholesaler, and base supply, the retailer. Decisions about the number of depots and their locations are interlocked with decisions regarding transportation systems. Finally, the entire depot-base supply network can be bypassed through direct shipment of supplies from the contractor to the using organization. Here, again, a mix of these alternatives would be developed so that the system could meet the varied demands of its market, the using commands.
Fourth, the personnel strategy poses significant and difficult decisions. It is dependent upon other strategies. For example, a “throw away” supply strategy simplifies training down to the removal and replacement of components. But sophisticated equipment that must be repaired by personnel of the operational logistics function organic to the using command demands sophisticated training. Another decision to be made is the choice between military and civilian personnel in certain jobs. In sum, all these decisions, and probably others, to meet the quantitative and qualitative personnel requirements for logistics, would dictate the training program. Another part of personnel strategy is personnel service in the form of recreation facilities for leisure-time activities. Finally, medical services, hospitalization, and care and evacuation of the wounded in combat are an important part of the overall personnel strategy. All of these, and many more, are personnel functions that would be mixed into a logistic strategy to meet system needs.
Fifth, the communications strategy is an essential part of the logistic system. Definite similarities exist between the other logistic substrategies and those seen in the marketing model. In communications, the similarity is quite limited because the logistics market, the using commands, hardly needs to be convinced to use the product. However, much remains to be communicated to the customer regarding the product. Technical orders, manuals, and other forms of communication are used to tell the customer how to use and service his equipment in order to derive the best benefit from it. Another part of this strategy is the communication of supply status to the using commands as is now being done by computer. Occasionally, more informal methods, such as newsletters, are used to “advertise” available logistic services and to discuss mutual problems. Finally, in addition to computer networks, other sophisticated communications systems may be built to ensure the continuous flow of logistic information between support and operational logistics, especially in periods of military crisis. As with the preceding strategies, all the chosen alternatives are combined to form a communications strategy.
The alternatives chosen by decision-makers are mixed to form a substrategy. Then, the substrategies are mixed to form logistic strategy.13 The system concept in the model enables one to proceed in analysis from objectives to substrategy or in the opposite direction with equal ease. These strategies can never remain static. They must adjust as the system adjusts to act upon new inputs.
If we consider the substrategies as system outputs, then they are conditioned by inputs to the system which take the form of logistics knowledge. This knowledge has to be derived from the Air Force market, the using commands. The knowledge is constrained and conditioned by forces which are pressing upon the using commands; these forces are, primarily, the assigned missions. Logistics knowledge, gathered by information systems like the Maintenance Data Collection system and the Unsatisfactory Report system, or gathered from statements of operational requirements and similar sources, completes the system. Logistics knowledge acts as a feedback to confirm or modify existing logistics objectives or to create new ones.
system
management for logistics
Undoubtedly there is room for improvement in the logistics model. Nevertheless, it is the concept which supports both models that is of immense value. Management should view the Air Force as a logistic system, an open, living system which interacts with its environment. This managerial concept provides the framework for organizational analysis and design.
Organization creates the array of components, the people, facilities, and
functions necessary to accomplish objectives according to plan. It would enable
the Air Force, when viewed as a logistic system, to improve its focus on the
logistic requirements of the using commands. According to Staudt and Taylor, this concept “involves the
structuring of planning-, decision-, and control points to insure that those
responsible for market [logistic] results have the requisite tools and
resources to fulfill that responsibility.”14
The potential involved in this managerial approach to logistics seems
extremely valuable. This logistic system concept, borrowed from marketing,
could prove to be the most successful management innovation that the Air Force
has ever adopted.
Arizona State University
Notes
1. Graham W. Rider, “Logistics—The
Bridge,”
2. Rocco Carzo, Jr., and John N. Yanouzas, Formal Organization, A Systems Approach (Homewood, Illinois: Richard D. Irwin, Inc., and The Dorsey Press, 1967), pp. 527-35.
3. Richard A. Johnson,
4. Ibid., p. 56.
5. A. K. Rice, The
6. Thomas A. Staudt and Donald A. Taylor, A Managerial Introduction to Marketing (Englewood Cliffs, New Jersey: Prentice-Hall, Inc., 1965), p. 10.
7. Ibid., p. 542.
8. The entire discussion of the marketing model is based on a lecture by
Professor George Downing given to a Doctoral Seminar on Marketing at
9. Johnson, et al., pp. 61-62.
10. U.S. Government, Public Law 253, 80th Congress, National Security Act of 1947, as amended.
11. Figure 2 has been derived from Professor Downing’s model of the firm as a marketing system, but I assume full responsibility for the design of this adaptation.
12. James A. Huston, The Sinews of War: Army Logistics 1775-1953, Vol. II of the Army Historical Series, ed. Stetson Conn, Office of the Chief of Military History, U.S. Army (Washington, D.C.: Government Printing Office, 1966), p. 424.
13. Martin L. Bell, Marketing Concepts and Strategy (Boston: Houghton Mifflin Company, 1966), pp. 345-54. It is this reference which gave the writer the idea of applying the mix, composed of chosen alternative courses of action and of strategy composed of mixes, to logistics management. This book is recommended to any reader who wishes to probe more deeply into the concept proposed in this article.
14. Staudt and Taylor, p. 505.
Major Graham W. Rider (USMA; M.S.,
Air Force Institute of Technology) is a doctoral student,
Disclaimer
The conclusions and opinions expressed in this
document are those of the author cultivated in the freedom of expression,
academic environment of
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