There are occasions when a journalist finds himself in the presence of what feels like a truly epoch sea change. Recently in Philadelphia, at the Council of Logistics Management meetings, I got a glimpse into the future of world trade and manufacturing.

Curiously, this change is emanating from the Pentagon, which makes sense when you consider that such things as the Internet, high speed chips, and satellite positioning came to the civilian market from the military.

In this case, however, it's not specific technology transfer, but rather a quantum process leap that embraces the entire supply chain.

What's being put in place at the Pentagon is an amped-up, highly articulated, aggressively resourced version of the much talked about 'Sense and Respond' logistics.

The military and the rest of the world's biggest manufacturers started out with 'mass based logistics' (warehouses full of back-up inventory) and then shifted some twenty years ago to 'just in time' in the wake of the success of Japan, Inc. (minimal on-site inventory, daily delivery of supplies). Today, they are entering the first phases of the next stage, Performance Based Logistics (PBL), in which they contract with vendors not for specific materials but rather the satisfaction of a need.

"The government will not own spare parts," explains James D. Hall, a senior official in the Office of the Under Secretary of Defense for Acquisition, Technology and Logistics, "but pay for secure levels of availability." Simply put, this means that whereas the DoD might have once requisitioned, say, ten thousand lawn mowers, under PBL they'll contract to have the grass cut and leave the vendor to decide how (scythes? goats?).

Performance Based Logistics is being driven partly by the need to lop costs off the DoD balance sheet ("more people pulling triggers, fewer people turning wrenches"). And partly to implement 21st century military tactics that emphasizes flexibility and seeks to push more decisions and speedier chain of command down to the battlefield level.

Seeking to manage the world's most complicated supply chain to provide multiple options in real time under the duress of battle makes this endeavor awesome. It puts the supply chain in the center of the organization. Whole sets of organizational competencies must now revolve around an adaptative supply chain. That means new approaches to metrics (instead of 'days of supply' the imperative measures become speed, quality of effects, dynamic network of support), risk management (can demand be filled? should demand be filled?), reinvigorated systems operations (any action has to trigger ripples through the entire supply chain), internal operations (multiple DoD silos must be broken down).

Iraq constitutes the new system's baptismal trial under fire ("The next supply chain issue will be transmissions, since Humvees weren't created to carry the weight of armor.").

In matters of IT-enhanced systems innovations, it typically takes 18 to 24 months for the civilian sector to catch up with the military. So, you can be sure that WORLD TRADE is going to be carefully monitoring the migration of adaptative Sense and Respond supply chain management over the next several years to see how it migrates into the marketplace.