Exceptional Release Presents:
LOG Insights During a Pandemic
By Lt. Gen. Warren Berry
Deputy Chief of Staff for Logistics, Engineering and Force Protection, Headquarters U.S. Air Force
I usually carry my daily calendar inside the front cover of my note taker. The one posted in there right now is 19 March 2020, the last day we had a regular presence in the Pentagon as a result of COVID-19. By my math, this makes today Day 60 of living with a pandemic and driving on through a virus that will likely change us forever. So I thought I’d take this opportunity to give you a quick snapshot on how our sustainment enterprise is faring, and what we’ve learned over these last 60 days.
As you might imagine, there is undeniably disruption in our sustainment enterprise. You’ve all seen the reports of commercial airports largely silent, and passenger carriers reducing operations by up to 90%. We’ve seen hundreds of vendors cease operations, most temporarily, but certainly with some shuttering their businesses permanently. The organic industrial base hasn’t been immune to disruption, either, with slowing production based on delayed vendor deliveries and workforce availability. On the whole, though, you might be surprised to hear that our supply chain and sustainment enterprise remain healthy, despite what some of our adversaries might think or hope. Let’s look at each of those [distribution, supply chain, and depot maintenance] a bit closer to explain why.
While the distribution system has seen dramatic changes to its operations, it has essentially scaled to demand. Commercial passenger airlines have idled well over 50% of their fleets, and load factors have reduced to about 10%. Cargo carriers have seen less drastic impacts with a 19% reduction in demand, largely caused by less transoceanic traffic. Rail volumes are at 10-year lows, while truck traffic is down about 50% from last year. In response, your AF stopped some routine leveling actions to ensure critical supplies don’t get frustrated in a low-capacity market at the moment. But all of this capacity reduction is directly tied to demand. While we’re all personally ordering more on-line, it doesn’t completely make up for the bigger losses of high volume and high cube loads (coal, vehicles, etc.).
Some of this downturn will be helped by the restart of our Global Force Management moves; more help will come when a DoD stop movement order expires, and states begin to “open.” This industry also benefited from over $58 billion in loans, grants, and aid to workers through the CARES Act. Since this industry is meeting current demand, the impact on the DoD has been low, although we will pay higher prices than pre-COVID. Even today, the CRAF carriers remain 100% subscribed to the program, able to meet all wide-body equivalents that DoD would require in a crisis. But the longer this goes on, the more risk this industry will incur, and the more probable that “idle” capacity will become “lost” capacity. It bears watching, but for now, our distribution system is functioning as well as can be expected.
The supply chain presents an even more interesting case study. We’ve seen over 500 companies curtail or cease operations, with 65% of those still not fully operational. That’s a big number, but it also requires some context. That represents only about 3% of our vendor base and accounts for less than 1% of our annual requisitions. Despite these vendor disruptions, we’ve actually seen our sustainment readiness indicators improve. Materiel availability, the measure of parts on shelves, rose almost 4% in the last 60 days. Supply rates have improved across multiple fleets, and aircraft availability is up nearly 10%. So, what’s going on?
First, we’ve seen a decrease in demand across most weapon systems. Flying hours are down about 25%, almost identical to the decreased orders in fuel. The supply chain, long primed for a higher level of consumption, is lagging the operational tempo slow down and, as a result, is pushing more parts to the field without a corresponding demand. Lower flying hours also gives our maintainers some time and space to fix aircraft, work on delayed discrepancies, and bring fleets to a healthier state. Second, we should also acknowledge that the supply chain worked as intended. That is, for cases where we had vendor disruptions, we had adequate peacetime operating stock on the shelf and safety stock built into the system. The “shock absorbers” designed to handle supply chain perturbations worked as intended.
Now, the supply chain isn’t all rosy. Much like the distribution system, the longer we see disruptions, the more risk the system will have to absorb. We also know that not all suppliers are created equal. Disruptions in already fragile supply chains can be catastrophic, and we all know we have our fair share of diminishing manufacturing sources with older weapon systems. Additionally, challenges with second-, third- and fourth-tier vendors can have ripple effects across fleets, and we often lack the visibility we need to understand when those vendors will be at risk. That said, our cohorts in AQ are making Herculean strides to keep the industrial base on solid footing using several levers, including the Defense Production Act, in order to keep supply chain risk low.
Finally, a word or two about our organic industrial base: our depots are national treasures, directly tied to readiness in the field through major repair and overhaul, commodity repair and production, engine overhauls, software development, and more. Between vendor disruptions providing supplies to the repair lines to workforce availability given the COVID threat, our depots had to slow production. KC-135, C-130, B-52 and B-1 lines, along with egress and paint shops, were hardest hit. But credit these great Americans, because we never had to close a depot, and they found new ways of getting after the business of repair and overhaul that is allowing them to “Return to Full Capacity.” It will take us several months to recover some lost production and the resulting revenue, but our Air Logistics Complexes are postured to continue delivering for you, the warfighter.
Let me close with two observations. Some of you might be impressed with the data we were able to share. Fair enough. But none of it was easy to find or readily available. The Coronavirus has laid bare, again, our need for a single, authoritative Logistics Common Operating Picture, or LOG COP/C2. Fusing operational and business intelligence, from multiple systems across multiple stovepipes, is a basic necessity for us moving forward. Adding the ability to lay machine learning and artificial intelligence on top of that fused data will give us predictive capabilities that will allow us to maintain persistent logistics in the face of any adversary, be it a pandemic virus or a nation-state. It will be the key to conducting logistics under attack. The silver lining is that we are moving forward and developing a minimum viable product this month…but we have much more to do and much further to go.
Second, let me applaud all you are doing, even in the face of this virus. While flying hours are down, your optempo isn’t. You are “mission essential,” and you’ve all found ways to keep the mission going in the safest way possible to protect yourselves, your families and your fellow Airmen. It’s because of you that no one casts a sideways glance toward the United States and wonders if this might be a time to test our resolve. There is no weakness here. You ensure we remain ready for whatever our Nation calls on us to do. For that, you have our profound thanks and respect.
Keep ‘em flying, stay safe, and we’ve got your back!