THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Sunday, June 16, 1996 TAG: 9606150414
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SERIES: The Military goes into Business
SOURCE: BY MYLENE MANGALINDAN, STAFF WRITER
LENGTH: 123 lines
Total quality. Measurements. Accountability.
These terms aren't just being bandied about in American corporations.
They're part of the U.S. Navy's arsenal.
The Navy is trying to shake its image as a huge, wasteful monolith.
Gone are the huge troop sizes and the budgets that financed them.
The Navy and other military services are being held more accountable for the fewer dollars they control. And just like any corporation, the pressure is on to be cost efficient.
Although not every action or detail can be held to the same level of private-sector scrutiny, the Navy is seeking some very practical applications to what it does, say those closely monitoring the change. The service is watching its actions more carefully and redefining not only how it works, but how it views itself.
It's not surprising, then, that Admiral William J. Flanagan, commander of the Atlantic Fleet, views himself as a chief executive officer.
``It's almost as if I'm running a holding company,'' he said in a recent interview. ``What I've got is an air commander, a surface commander, a submarine commander and a shore commander and these are different subsidiaries, if you will, within this corporation.''
``They take on a different appearance based on what they do,'' Flanagan continued. ``We all work on the same product line. The outcome is generated in the same direction. But the process to get there - some are quite different.''
Flanagan runs his staff like any corporate executive. His staff has tasks and reports that it must complete and is held accountable for at meetings. They also insist on quantitive measurements.
``If you can't measure it, you can't manage it,'' Flanagan is fond of saying.
This sounds just like ``total quality management,'' the term tossed around in corporate boardrooms to describe the way business people monitor their production and how they work. TQM was conceived so that strategic goals could be met by measuring the steps leading to their outcome.
The Navy's version is called ``total quality leadership,'' And the service has been exploring it since 1986.
Regardless of what it's called, it comes down to the same thing, said Erik Pages, deputy vice president of the Business Executives for National Security, a Washington-based think tank.
``It's a question of smart business practices, running the military like you would a business,'' Pages said.
The primary challenge in implementing these smarter, more efficient and cost-saving practices is transforming the military into a corporate culture, where controlling costs is a top priority, he said.
``The core mission is the national security of the United States,'' Pages said of the military. ``Everything was followed with a newer, more `gee-whiz,' more effective weapons systems.
``Well, we can't do that any more. We're in a situation where managers in these programs have to say, `I've got to do more with what I've got.' That's difficult for government. That's always been done in the private sector.''
Counting costs comes naturally in companies where accountants check the bottom line quarterly, if not monthly. The Navy has started to do the same thing - identifying its ``products'' so it can determine how much they cost.
For example, an aircraft carrier in the Suez Canal protecting American interests in the Middle East may be one of the Navy's products. By identifying that aircraft carrier on a six-month deployment as a product, the Navy can figure out what it costs. Once it knows what it costs, the Navy can control expenses because it has a basis from which to monitor the carrier's progress.
At the Norfolk Naval Base, TQL is being used to monitor maintenance operations differently. Instead of staffing three control centers to oversee similar jobs in different locations, the Navy is trying to centralize those functions. It is trying to staff one oversight group in a main regional center.
``If you didn't do something to consolidate or realign the maintenance structure directly, you'd end up with excess capability or capacity,'' said Rear Adm. Arthur Clark, director of fleet maintenance for the Atlantic Fleet. ``The carrying cost of maintaining that would add to our cost and reduce the amount of maintenance that we could bring to the forces afloat.''
The Navy has been streamlining maintenance functions in the region over the past three years, Clark said. They're moving from 30 to 40 sites toward one major facility and three satellites, he said.
``Through consolidation, there are some benefits, through economies of scale. Through the bigger picture . . . you have a better system,'' said Chip Stilwell, a former Navy pilot and head of Stilwell & Associates, a consultant firm that helps companies with strategic planning and metrics.
The federal government thinks there are merits to total quality management, enough so that it is requiring the practice. The Government Performance and Results Act of 1994 mandates that every government agency must be capable of measuring its outcome, not just its output.
An agency's output refers to production, measurements of how many reports it wrote, what laws it passed. But an agency's outcome addresses the significance of the agency's actions and more qualitative results, like whether monitoring an industry through particular laws has made it safer.
However, there are drawbacks to TQM in the Navy: There's no framework for the military to account for money ``saved'' through more efficient processes.
If money in the Navy budget isn't used because it was saved through fewer expenses, it may disappear in the next fiscal year's budget. The Defense Department may appropriate less money because it thought that program didn't need as much.
``The problem is how they code money in the DoD,'' Pages said. ``Because of these accounting procedures, the incentive for you to save money doesn't exist.''
Other problems may arise with measurements themselves.
TQM for the sake of counting things isn't worthwhile, Stilwell warned.
``You need to measure the right numbers,'' he said. ``They might not be measuring anything that has to do with process.'' If it doesn't affect the process it might not be important or quantifiable.
Many agree that total quality management in the military is nowhere close to completion.
``This is a moving story,'' U.S. Rep. Owen Pickett said. ``It will continue to change.''
``TQM isn't something you can install one morning and be through with it. It's a growing concept,'' he said. ``If you're doing it right you should be re-examining it all the time to make your organization better. I'm convinced they will continue moving.''
The Navy, like the rest of the military services, needs to be mindful of what it should be changing and what it should keep.
About 60 percent of the defense budget goes to infrastructure and support expenses, Pages said.
``We ought to outsource finances and support functions. The one thing you're not going to outsource is infantry or ships. That's the core business.
``The maintenance, the support, the commissaries - if we can squeeze savings out of there, there'll be more money to do the combat end of things.''
KEYWORDS: TOTAL QUALITY MANAGEMENT U.S. NAVY by CNB