GAO: DOD Time Frame Challenges Supply Chain Implementation

July 18, 2007 // Published as a news service by IHS

The recent update to the U.S. Department of Defense (DOD) supply chain management plan shows that the DOD made progress developing and implementing its supply chain management improvement initiatives.

However, the long-term time frames for many of these initiatives present challenges to the department in sustaining progress toward completing their implementation, according to a report from the U.S. Government Accountability Office (GAO).

The DOD is staying on track for implementing its initiatives, although there have been delays in meeting certain milestones.

The plan also lacks outcome-focused performance measures for many individual initiatives and the three focus areas, limiting the DOD's ability to fully demonstrate the results achieved through its plan.

Increasing the DOD's focus on outcomes will enable stakeholders to track the interim and long-term success of its initiatives and help the DOD determine if it is meeting its goals of more effective and efficient supply chain management, said the report.

The GAO's work identified problems related to the three focus areas in the DOD's plan.

In the requirements area, the military services are experiencing difficulties estimating acquisition lead times to acquire spare parts for equipment and weapon systems, hindering their ability to efficiently and effectively maintain spare parts inventories for military equipment.

Challenges in the asset visibility area include lack of interoperability among information technology systems, problems with container management and inconsistent application of radio frequency identification (RFID) technology, which make it difficult to obtain timely and accurate information on assets in theater.

In the materiel distribution area, challenges remain in coordinating and consolidating distribution and supply support within a theater, said the report.

Improving defense business operations is integral to resolving supply chain management problems, said the report. Progress in the DOD's overall approach to business transformation is needed to confront problems in other high-risk areas including supply chain management.

Because of the complexity of business transformation, the GAO said that the DOD needs a chief management officer with significant authority, experience and a term that would provide sustained leadership and the time to integrate the DOD's overall business transformation efforts. The GAO's work, pending legislation and other recent studies indicate a consensus that the status quo is no longer acceptable.

The GAO's recent review of joint theater logistics raises concerns about whether the DOD can effectively implement this initiative without reexamining fundamental aspects of the department's logistics governance and strategy, said the report.

In this respect, joint theater logistics may serve as a microcosm of some of the challenges the DOD faces in resolving supply chain management problems. Moreover, the GAO recommended in that report that the DOD align its approach to joint theater logistics with ongoing actions the department is taking to reform its logistics governance and develop its logistics strategy.

Several recent studies of DOD logistics systems recommended changes to the DOD's organizational structure for providing joint logistics and supply support to military operations, according to the report.

The availability of spare parts and other critical items provided through the DOD supply chains affects the readiness and capabilities of U.S. military forces.

Since 1990, the GAO designated the DOD supply chain management as a high-risk area. In 2005, the DOD developed a plan aimed at addressing supply chain problems and having the GAO remove this high-risk designation. The DOD's plan focuses on three areas: requirements forecasting, asset visibility and materiel distribution.

The GAO was asked to provide its views on:

1. The DOD's progress in developing and implementing the initiatives in its plan.
2. The results of recent work relating to the three focus areas covered by the plan.
3. The integration of supply chain management with efforts to improve defense business operations.

The GAO also addressed broader issues of logistics governance and strategic planning. This testimony was based on prior GAO reports and analysis.

To determine whether to retain the high-risk designation for supply chain management, the GAO considered factors such as whether the DOD made substantial progress implementing improvement initiatives; established a program to validate the effectiveness of the initiatives; and completed a comprehensive, integrated strategy.

Source: U.S. Government Accountability Office (GAO).