Commercial acumen – the missing link in the training of ADF logisticians: Part Two

By Carney Elias.

In an earlier post, I argued that Defence must become better at developing commercial acumen in logisticians. This assertion was made on the basis of my experiences within the Australian Army. In keeping with the fundamental principles of education and training used across Defence, to develop the commercial acumen of logisticians we must aim to provide theoretical instruction and the opportunity for practical application. The theoretical instruction should be an overview; a broad exposure to subjects such as procurement, contract management, commercial logistics practices, and factors that drive commercial business. This should be the starting point that gives all logisticians a basic understanding, and is subsequently built upon throughout the suite of logistic officer courses.

In this second part of my exploration of how logisticians train to develop commercial acumen, I will propose several improvements to existing programs. In the case of my own Service, Army, it will bring us closer to the level of education received by logisticians in the other Services of the Australian Defence Force (ADF). Furthermore, it will ensure that every Army logistician has a basic understanding of the private sector and how best to interact with commercial agencies.

Before progressing into options for developing commercial acumen as a general skill amongst logisticians, it is important to emphasise that training for specific roles (such as the courses offered by joint logistics agencies as described in my previous post) must continue. Furthermore, the requirement to complete relevant courses prior to taking up certain postings in these organisations must be formalised and facilitated. It serves neither the joint organisation or the individual being posted to it well if people are underprepared, with their training conducted in an uncoordinated manner. We mandate pre-requisite training for personnel deploying on operations, yet trivialise the same requirements for training and education when we post junior officers into roles that require them to deal with complex contracts or commercial agencies from day one.

The responsibility for the conduct of these courses does not lie within the Services in most cases. However, the Services must recognise the value of these courses and the associated postings to the professional attributes of the junior officer and the organisation. Furthermore, the Services must begin to prioritise postings to joint logistics agencies early in a logisticians carer as a way of preparing staff for the senior-most appointments. Anecdotal evidence that I have gathered suggests that this is a view shared by a growing number of middle-senior ranking officers.

To enable the practical application of this knowledge, we must look outward and establish greater connections with industry[1]. We must develop partnerships with commercial organisations; those that support Defence through existing long term contracts, and those which provide more ad hoc support such as equipment manufacturers, suppliers and maintenance organisations[2].

We must develop a formalised program that enables logisticians to dip into the commercial world throughout their career. Regularity is required for two key reasons. Firstly, it ensures that one-off experiences are not wasted. Secondly, it enables logisticians to remain abreast of changes and developments in the commercial sector. Outplacements and secondments do not need to remove logisticians from Army for extended periods of time. If these are a regular part of an officer’s development, then shorter durations can be as valuable as a longer one-off taken sometime during an officer’s career.

Further analysis is required to determine exactly what a formalised system of regular industry placements should look like. However, a key feature of the system must be that it provides opportunities for all logisticians in contrast to programs which view such opportunities as a career-development or scholarship opportunity. The ability for officers to understand the pressure that commercial organisations face to make a profit for their shareholders, and how that drives the way they interact with Defence is something that I do not believe can be developed effectively in any other way.

The final critical point to make on the development of commercial acumen in logisticians is that this is not just a problem for the Services. As I have already identified, the jobs that require the most commercial acumen in logisticians are not within Service logistics units; rather, they are in the joint domain and at the strategic level of Defence. The Defence Logistics Enterprise Strategy issued by the ADF’s Commander Joint Logistics Command clearly articulates the vision that all logisticians within all aspects of Defence must have a greater level of industry engagement.

Each of the three Services should provide theoretical instruction tailored to their specific needs. This training would complement the industry placements described above by ensuring military logisticians are in a better position to learn the right lessons from commercial experience. Joint coordination will provide the greatest level of efficiency and oversight, but the three Services must retain a level of ownership of the system to ensure that implementation is supported for all logisticians.

Naturally there are those that oppose these views. There are many who feel that Army’s system of training and development of its officers (including the logistics training continuum, the all-Corps training continuum, and the practice of regular and diverse postings) provides a robust, resilient officer capable of meeting the challenges of any position they are likely to be posted to[3]. This is not an uncommon view, and there is an element of truth in it. But it is also a view which prevents the logistic community from proactively and positively adapting the profession as the contemporary logistic environment changes:

The archaic practices of trial by fire and on-the-job training are no longer acceptable for professional development of combat arms officers in the areas of aviation, infantry, artillery, and armo[u]r, nor should they be acceptable for officers who provide the supplies and material the combat occupations use to accomplish national objectives.[4]

If we continue to ignore the relevance of commercial acumen to the military logistician, they will struggle to contribute meaningfully in Joint logistic roles and to compete for more senior roles within these Joint organisations. This will inevitably lead to the degradation of Defence’s logistic capabilities.

An equally erroneous view is that we should leave the commercial focus to the civilians and make military logisticians focus on the provision of CSS in the battlespace. Again, there are merits to this argument, but it ignores the fact that virtually all ADF operations over the last twenty years have required logisticians to seek support from industry, including in the battlespace. In most cases the management burden of these contracted solutions fell to ADF logisticians who had had little previous experience in contracting.

We must recognise that the time for a lazy attitude to developing commercial acumen in the ADF’s logisticians is over. This attitude sees us send junior officers into positions where they are responsible for managing contracts and engaging with commercial organisations without the skills they need to thrive in these roles. The Services have abrogated responsibility for developing commercial acumen to joint and strategic organisations and they have limited ability to influence the content and requirements of the training accordingly. Furthermore, the ADF expends funds for officers to obtain university qualifications that are not optimised towards improving the ADF’s logistic performance or the development of commercial acumen in its logisticians. In most cases these courses are largely little more than a personal opportunity.

The future of logistics, even on the battlefield, will be more integrated with civilian service providers and supply chains delivering supplies right to the foxhole. Joint organisations have long understood this, and the Services must recognise the value of intentionally placing its logisticians in these organisations as a means of gaining exposure to these developments and the commercial organisations leading them. Recognising that not all logisticians will work in these organisations, we must provide a broad theoretical overview and regular outplacements and secondments in industry to all logisticians to develop and maintain relevant and current commercial acumen. These practices are vital now to develop professional logisticians with sound and relevant commercial acumen, capable of engaging commercial organisations effectively and in doing so obtain the best possible outcomes for Defence.

Carney Elias is a serving Australian Army officer posted to the Australian Army School of Ordnance. She currently commands the Administrative Services Wing.

[1] A recurrent theme in the ADF’s First Principles Review and JLC Future Concepts

[2] The US Army Department of Acquisition has been using a similar model for several years now (Radican 2013).

[3] I suspect that over the years this view has contributed to the removal of elements that have previously formed parts of the suite of Army logistic officer courses such as simple procurement, site visits to commercial logistic organisations, and a civilian-provided supply chain management package.

[4] Mauldin, Randall M. 2005. Development of the Joint Logistician. JFQ, 25-29. Accessed May 17, 2016.

Commercial acumen – the missing link in the training of ADF logisticians: Part One

By Carney Elias.

[T]he procurement process itself is a weapon of war no less significant than the guns, the airplanes, and the rockets turned out by the arsenals of democracy.’

I.B. Holley[1]

The 2015 edition of the Macquarie Dictionary defines acumen as quickness of perception; mental acuteness; keen insight and commercial as ‘being engaged in commerce; capable of returning a profit’. Essentially, commercial acumen means having a deep understanding of how the private sector impacts Defence business. It is a vital component of the business of military logisticians as much of their work requires them to interact with, and manage services provided by, commercial organisations. Commercial acumen is vital for all logistics officers at all stages of their career, but is especially necessary in the senior appointments where logistics is intertwined with the activities of the commercial sector.  This means that understanding commercial procurement methods, how contracts work, and how to interact with contractors should form a part of every logisticians training and education.

The importance of commercial acumen has been recognised in Defence for many years. It is a subject I have found specifically relevant to my own service as an Army logistics officer in the Australian Defence Force (ADF). Fundamentally, the role of the Army logistician is to provide Combat Service Support (CSS) to organisations on the battlefield. Increasingly, this cannot be achieved without contracted support at a variety of points along the supply chain. This is recognised in employment requirements, such as the Combat Service Support Officer Employment Specification[2]. Among other tasks, this manual recognises that the CSS Captain is required to ‘establish, maintain, monitor, review and complete administrative contractual arrangements,’ and to ‘monitor the performance of CSS contracts in support of force elements’. Alternatively, the CSS Major is required to ‘liaise with external agencies,’ and to, ‘manage complex contracts’. While these tasks are general skills required in numerous appointments, they are especially relevant to appointments within the joint logistics environment and at the operational and strategic levels of Defence.

The CSS Officer Employment Specification and the Directorate of Officer Career Management  (DOCM) Corps Models Guidance (DOCM 2015) are unequivocal in describing the importance of commercial acumen in joint appointments and those at the strategic level of Defence. These include positions within the national logistics enterprise in Joint Logistics Command (JLC), and in the acquisition domain within the Capability Acquisition and Sustainment Group (CASG). CSS officers typically undertake these postings from the rank of Captain onwards, and are exposed to:

‘ ….. fourth line and national support base logistics, including contract management, tendering and fleet management …coordination of national and operational support base logistics, notably the design and implementation of logistics support chains … provisioning and contract management. The JLC also coordinates the operations of the joint logistics business units around the national support base, providing the interface between defence logistics and civilian industry.’

It is quite clear that as an institution we recognise the need to develop commercial acumen. However, I believe that we currently don’t do it well enough. In order to explain why I think this is the case I will first consider what training currently exists within my own Service, Army, and how this compares to training opportunities in Navy and Air Force, and within joint organisations. In a later post, I will propose a method of training that will develop commercial acumen as it applies to the ADF and will explain why elements of the proposed model should be applied jointly across the three services. While this post has an Australian focus, I am sure some of the questions it poses are relevant to situations in other militaries.

My own experience leads me to believe that Defence does the barest minimum to provide its logisticians with commercial acumen. I consider this in contrast to my actual employment; I have been involved with contracts and with commercial providers at every rank from Lieutenant to Major, in almost every posting, both within Australian and deployed on operations. But is this just my experience? My own observation, and accounts from others indicate that many Army logisticians are exposed to contracts and civilian agencies in many roles meaning I am not an isolated example. With this in mind, it is understandable to ask whether individual training is adequately meeting this requirement?

Across the suite of mandatory Army logistic courses delivered by the Army School of Logistic Operations (ASLO), there is almost no content focused on developing commercial acumen. From the current course training programs, it can be seen that there is no commercial acumen instruction on the Logistic Officer Basic Course attended by Lieutenants, two hours (0.1% of the total course duration) on the Logistic Officer Intermediate Course attended by senior Lieutenants and Captains, and approximately three hours (2.5% of the total course duration) on the Logistic Officer Advanced Course attended by senior Captains and junior Majors.

There are a range of other training opportunities which are available to Army logisticians throughout their career, but none are compulsory nor are they robust enough to make up for a noticeable training deficit. Online training and a number of courses offered in Defence may ensure a baseline competency is obtained by students, but such training merely scratches the surface. Long term schooling opportunities are available to give logisticians an opportunity to obtain a civilian university qualification. In the past these opportunities were available through a range of civilian universities and in most cases were an excellent source of exposure to commercial acumen in the logistics space. Army logisticians were given the opportunity to study a broad range of topics including business subjects, alongside civilians from a range of industries, both local and international.

More recently these opportunities have been reduced so that they are now almost exclusively delivered by a single provider, the University of New South Wales (UNSW), Canberra, at the Australian Defence Force Academy (ADFA). Attendance on these courses is heavily dominated by military personnel and civilian members of the Department of Defence, and many of the courses are delivered remotely. While some of the subjects still target some aspects of financial and business literacy, the depth that comes from studying with people from a range of industries has been lost[3].

The Capability and Technology Management College (CTMC) program is also delivered by UNSW, Canberra. It is purely focused on a military audience, both logisticians and other officers, and aims to provide training in the specific skill sets required to operate in the acquisition and sustainment fields within Defence.  The course has a heavy focus on the Systems Engineering and Project Management disciplines, and the limitations of this course in developing commercial acumen are similar to those of the other courses currently offered by UNSW, Canberra, previously discussed.

In terms of the acquisition domain, CASG provides training courses through the Capability Acquisition and Sustainment (CAS) Institute which are aligned to a variety of ‘job families’ of which Procurement and Contract Management is one. Of note, one of the courses offered by the Institute is a Business Acumen course. While the CAS Institute courses are open to all Defence staff there is little attendance on them from staff not currently working within CASG, and places are allocated to those with a critical skill need for their current job first (CASG 2015).

JLC has also developed its own training, including online courses aimed at providing exposure to Joint logistics[4], with a heavy focus on logistics support to operations. The Operational Contract Management Course (OCMC) specifically focuses on equipping logisticians and finance managers to manage contracts in a deployed setting. This course is mandatory for people deploying into specific roles on operations such as financial management roles and JLC Liaison Officers who double as the in-theatre contract managers.

The OCMC and the CAS Institute’s Business Acumen courses are the best examples of commercial acumen development available to Army logisticians. However, they are niche courses, run sporadically for a very limited number of people. Neither course is mandatory for logisticians. And in the case of OCMC, experience has shown that it is too little too late; you cannot develop commercial acumen overnight.

Opportunities exist within the Services to conduct outplacements and secondments within commercial organisations. For example, in Army these are governed under a number of schemes including the Chief of Army Scholarship program. In most cases, the onus for organising these outplacements rests with the individual or their chain of command, and while they provide invaluable experiences to members that serve to benefit Army, they can come at significant administrative, financial and capability costs to the member’s unit. They also tend to be offered at more senior levels (e.g. Lieutenant Colonel). Despite the limitations on their use, including the competitive nature by which the scholarships are awarded, they do provide a very effective vehicle for developing commercial acumen in Army logisticians. Outplacements and secondments are, in my opinion, a vital component of any program designed to develop commercial acumen in the logistic leaders of the future.

With the exception of the Army logistic officer courses, the training opportunities already discussed are also available to both Navy and Air Force logisticians. So what follows is a brief assessment of the service specific logistics training provided by Navy and Air Force.

The Royal Australian Navy takes a more holistic approach to training, particularly at the junior level. They incorporate residential courses with time at sea and use a Capability Evidence Journal to ensure that their logisticians have been exposed to the full range of logistic tasks. They also carry out more financial management tasks at all levels, and tend to have more exposure at junior levels to contracts and external agencies. For this reason, Navy training contains a significantly larger amount of content that could be considered to develop commercial acumen. During their Basic Maritime Logistics Officer Course they undertake a total of 13 days (20% of the course duration) of training in procurement, contract management and financial management. During their Maritime Logistics Officer Application Course the total time spent on contracting and procurement is approximately 16 days (30% of the course duration). The theoretical learning is then applied practically during their time at sea which leads to greater levels of commercial acumen, but only as it applies to sustaining a ship at sea.

The structure of logistics officer training within the Royal Australian Air Force is more closely aligned to that of Army, with three logistic-specific courses conducted throughout the logistician’s career. The Logistic Officer Initial Course contains a three-day finance and procurement module and site visits to two commercial logistics organisations. These elements comprise approximately five days (or 14% of the course duration). The Logistics Officer Executive Course contains a one day contract management package which comprises approximately 7% of the total course duration.

The final Air Force course is a one-week symposium conducted in conjunction with Navy logisticians at the senior Squadron Leader / junior Wing Commander level. The course is aimed at giving logistic officers an opportunity to engage in an exchange of ideas about strategic issues within the Defence logistics space. The content varies from course to course based on which senior officers are selected to present to the course. However, the intent is to develop strategic thinking rather than commercial acumen. This may set up the naval logistician for dealing with contractors and external agencies, however their training is very narrow and not without its limitations.

The development of commercial acumen in ADF logisticians has been a long-stated goal in the training of logistics officers. However, I do not believe we develop commercial acumen in our logisticians as well as we might. Furthermore, the training is inconsistent across the three Services. Each Service in the ADF offers different proportions of their basic training for logistic officers to developing this important skill, and joint offerings are presently too limited to be as effective as hoped. In my next post, I will outline a way in which these concerns can be addressed, and a program of commercial acumen might be developed by training institutions in the future.

Carney Elias is a serving Australian Army officer posted to the Australian Army School of Ordnance. She currently commands the Administrative Services Wing.

[1] Frisbee, Sean M, and Scott Reynolds. 2014. Critical Thinking – A missing ingredient in DoD’s Acquisition (Education) System. Defense Acquisition Technology and Logistics (AT&L), Oct: 17-21.

[2] This paper focuses solely on the development of commercial acumen in logistics officers. Employment specifications are contained within the Manual of Army Employments – Combat Service Support Officer Employment Specification, available for ADF members through official means

[3] These comments are primarily based on personal experience: Master of Business (Logistics Management) from RMIT in 2006-2009; Master of Engineering Science (Data Communication and Analysis) from UNSW, Canberra, in 2015.

[4] Introductory Module on Logistics in Defence, Logistics Support to Capability, Support to Operations, and Coalition Logistics Education Package.