Copy 3 3 DEPARTMENT OF THE ARMY FIELD MANUAL LOGISTICS SUPPLY MANAGEMENT pROPERTY OF T.'E QUARTER,j&STT-l LIBRkR~y QIUARTER4ASTE-R sCHOOCL QUARTEBpMASTER TRAII-G COIlaGTD FORT LEV,. YA., HEADQUARTERS, DEPARTMENT OF, THE ARMY AUGUST 1958 AGO 10018A-July * FM 38-1 FIELD MANUAL HEADQUARTERS, DEPARTMENT OF THE ARMY No. 38-1 WASHINGTON 25, D. C., 11 August 1958 LOGISTICS SUPPLY MANAGEMENT Paragraph Page PART I. INTRODUCTION TO SUPPLY CHAPTER 1. ARMY SUPPLY SYSTEM A. Introduction .____________________________…___________________________------ - 6 B. Meaning of Supply Management Purpose of Army Supply ------------------__________________________________ 1 6 World at Mid-Century - _____________--------------------------------------- - 2 7 Supply Management ________---------------------------------------- - 3 8 C. Problems of Supply Management Introduction ____________________________ …________ _. .. 1 .............-------.8 Magnitude of the Supply System ____________________-____----------------------- 2 9 Diversity of Items …___________________________________……__________________---- 3 10 Absence of Profit Motive __________________________________…__________--------- 4 12 Absence of Competition--_____________________________------------------------- 5 13 Factors of Change--__________________________________------------------------ 6 14 Conclusion …______________________________……___________________________------ 7 15 CHAPTER 2. ORGANIZATION FOR ARMY SUPPLY A. Introduction ……_________________…….__________……_____________________ _-------- - _ 17 B. Supply Management at National Policy Level Introduction ____________________________…_____________--------------------- -- 1 17 The President …_______________________________……______ _..-------------------… 2 17 The National Security Council _______________________________------------------ 3 18 The Congress ________________________________________------------------------- 4 19 The Public -__________________________________------------------------------- 5 20 C. Supply Management at Department of Defense Level _________________________------ 20 D. Supply Management at Department of the Army Level The Secretary of the Army--_________________________________--__-------------- 1 21 The Under Secretary of the Army -__________________________________----------- 2 21 The Assistant Secretaries of the Army ____________________________----_--------- 3 21 The Chief of Staff--____________________________________----------------------- 4 21 Deputy Chief of Staff for Logistics_______________________________-------------- 5 21 Technical Services …_________________________.______--- ------------------------ 6 22 Continental Army Command …_________________________________……______-------- 7 29 Troop Units__-------------------------------------- 8 30 Implication of Atomic Warfare--_________________________________------------- - 9 30 E. Conclusion --_________-----------------. 30 PART II. MANAGEMENT OF ARMY SUPPLY CHAPTER 3. STORAGE, DISTRIBUTION, AND CONTROL OF STOCKS A. Supply System and Its Customers Introduction ____________________________…_______________________________----- 1 32 Customers of the Supply System--__________________________________------------ 2 32 Operating Organization of the Distribution System ___-- ________________---- ___--- 3 36 * This manual supersedes FM 38-1, 27 August 1954. AGO 10018A 1 Paragraph Page B. Management Planning for Distribution System Distribution Pattern ._________________________________________________________1 38 Storage Capacity of Distribution System--_____________________- - -________. ..----2 44 Flow of Requisitions Through Supply System____________ __---------------------- 3 47 C. Supply Management at Depot Introduction ____________________________ ….. 1 51 Management of Action Documentsat Depot_______________--- _______________---.-- 2 51 Transportation Management at Depot___ ___-- ____.----------------------------- 3 53 Storage Management at Depot _______________________--___-----------_--------- 4 55 D. Supply Management at Inventory Control Point Functions of Inventory Control …_________________________________……_ . ....------1 58 Tools for Control of Stocks--__________________________________--------------- - - 2 58 Control Actions to Meet Immediate Demand --______________-________------------ 3 59 Management of Stock Control Activities--______________________________------- - - 4 60 Controlling Stock Levels--__________________________________------------------- 5 70 Modern Army Supply System __________________________________---------------- 6 73 Single Manager Concept--_________________________________-------------------- 7 73 Interservice Supply Support ---- -- --- --- ._________________________________-----8 74 E. Commodity Control and Delegation of Supply Responsibility Principles for Distribution Management …______________________________……_____ _- 1 75 Undivided Supply Responsibility __________________________--------------------- 2 75 Delegation of Supply Responsibility---__________________________- --.------------ 3 77 Conclusion …______________________________……___________________________------ 4 82 CHAPTER 4. REQUIREMENTS PLANNING A. Introduction ____________________________-.---- 89 B. Logistics Planning Analysis -__________.______-___________.______________- _--- _ 90 C. Planning, Programming and Budget Cycle Planning--________________________________----------------------------------- 1 90 Programming -. ____--___________________________________. 2 91 Budget Cycle -_________________________________________________________----- 3 9.5 D. Supply Management Introduction ____________________________…_____________--------------------- -- 1 98 Materiel Programming--_____________________________------------------------- 2 98 Transition …______________________________……_______________________ _ . ..------3 100 Five-Year Materiel Program--_________________________________--------------- - 4 100 E. Principal Item Planning Importance of Principal Items__ ____.______________...____---------------------. 1 100 Selection of Principal Items …___________________________________……_________ _--- 2 100 Control of Principal Items Requirements--________________________ _-------------- 3 100 Peacetime Requirements Planning for Principal Items ____________________---------- 4 101 Estimation of Current and Future Demand--_________________________________---- 5 101 Determining Current and Future Assets--_______________________________ _------- 6 103 Projecting Peacetime Supply Status--____________ ________________---------------- 7 105 Relationship of Principal to Secondary Item Requirements _________________________. 8 105 F. Mobilization Requirements Planning Introduction ____________________________…_______________________________----- 1 106 Computation of Mobilization Requirements ______________________________________ 2 106 M-Day Materiel Requirement -- ---------------- ._____________________________--3 107 Building Mobilization Reserve Stocks--__________________________________-------- 4 107 Mobilization Reserve Requirements for Minor Secondary Items and Repair Parts ____. 5 108 G. Planning to Meet Future Demand for Secondary Items-Repair Parts Introduction ____________________________…_______________________________----- 1 109 Major Secondary Items ___________________________________-----------_________ 2 109 Minor Secondary Items ___________________________________-------------------- 3 109 Repair Parts ___________--------------------------------------------------- - 4 109 General Characteristics _________________________…_______ _.-…-…-.-------------- 5 109 2 AGO 10018A Paragraph Page G. Planning to Meet Future Demand for Secondary Items-Repair Parts-Continued Minor Secondary Items and Repair Parts Requirements_______--------------------- 6 113 Steps in Determining Secondary Item Requirements -________-______--_.-_____---_ 7 113 Establishment of Gross and Net Requirements _____-__-____----------------------- 8 113 Graphic Presentation …____________________________…_______________________.--- 9 113 The Intangibles _____________________________-- .----- ----------------------- 10 114 Detailed Examination of Factors in Planning to Meet Future Demands ________------- 11 114 CHAPTER 5. CONTRIBUTION OF PROCUREMENT TO SUPPLY MANAGEMENT A. Procurement and Supply Management General …_________________________________…__________------------------------ 1 124 Dynamic Inventory Control ________________-------__------- 2 124 Procurement Pricing …________________________________……________________ _ .....- 3 124 B. Methods of Procurement _____________________________------ --- -- - ------------- General _____________________________________________________________________ 1 125 Procurement by Formal Advertising __________----------------------------------------- 2 126 Procurement by Negotiation ________________----------------------------------- 3 126 C. Scheduling Procurement and Production to Meet Demands Procurement Lead Time …_____________________________……-------……-----_-------- 1 128 Delivery, Scheduling, and Destinations _______--------------------------- --------- 2 130 D. Flexible Procurement Introduction ____________________________ …_________ _. .................--------1 132 Open End Contracts ____--__-------------------------------------------------- 2 132 Call Contracts----__--- ________.---------------------------------------------- 3' 132 Variations On Open End and Call Contracts ___------___--------------------------------- 4 132 E. Contract Administration