DOD Supply Chain Management - High Risk Issue
Effective and efficient DOD supply chain management is critical for supporting the readiness and capabilities of the force and for DOD to avoid spending resources on unneeded inventory.
This key issue page is related to an area on GAO’s 2017 High Risk Update and will be updated shortly. In the meantime, visit the related High Risk area for the newest information.
As stated in GAO's 2015 High Risk report, as of September 2013, Department of Defense (DOD) managed more than 5 million secondary inventory items, such as spare parts, with a reported value of approximately $98 billion. Effective and efficient supply chain management is critical for supporting the readiness and capabilities of the force and for DOD to avoid spending resources on unneeded inventory that could be better applied to other defense and national priorities. However, DOD has experienced weaknesses in the management of its supply chain, particularly in the following areas:
- Inventory management. DOD's inventory management practices and procedures have been ineffective and inefficient. DOD has had high levels of inventory that were excess to requirements and weaknesses in accurately forecasting the demand for inventory items.
- Materiel distribution. DOD also has faced challenges in delivering supplies and equipment, including unmet delivery standards and time lines for cargo shipments as well as incomplete delivery data for many surface shipments.
- Asset visibility. DOD has had weaknesses in maintaining visibility of supplies, such as problems with inadequate radio-frequency identification information to track all cargo movements.
GAO added this area to the High Risk List in 1990, and in 2015, reported that DOD had made progress in addressing all three dimensions of its supply chain management areas—inventory management, materiel distribution, and asset visibility—but still faced challenges such as instituting a means to comprehensively monitor distribution performance.
GAO-16-450: Published: Jun 9, 2016. Publicly Released: Jun 9, 2016.
The military services have, to varying degrees, transferred retail supply, storage, and distribution functions at their depot-level industrial sites to the Defense Logistics Agency (DLA) and achieved some efficiencies, but have not fully assessed the costs and benefits of transferring more retail functions to DLA at Army and Marine Corps depots and Navy shipyards. Specifically, Air Force Air Logis...
GAO-16-88: Published: Dec 22, 2015. Publicly Released: Dec 22, 2015.
The Department of Defense's (DOD's) 2014 Strategy for Improving DOD Asset Visibility ( Strategy) and accompanying implementation plans fully address 6 of the 11 statutory elements required by the Fiscal Year 2014 National Defense Authorization Act (NDAA) and partially address the remaining 5. For example, the Strategy fully addressed asset visibility goals and objectives, and roles and responsibil...
GAO-15-350: Published: Apr 20, 2015. Publicly Released: Apr 20, 2015.
The Navy and Air Force reported meeting the Department of Defense's (DOD) goal of reducing on-hand excess inventory (i.e., items categorized for potential reuse or disposal) to 10 percent of the total value of inventory, but the Army had not met the goal, as of March 2014. Reporting issues hinder full visibility of on-hand excess inventory and progress against DOD's goal. For example,the Army's ca...
GAO-15-148: Published: Jan 27, 2015. Publicly Released: Jan 27, 2015.
In January 2014, the Department of Defense (DOD) issued its Strategy for Improving DOD Asset Visibility (Strategy) and supporting execution plans (SEP), which included five of the seven key elements of a comprehensive strategic plan and partially included the other two elements. For example, the Strategy fully includes a comprehensive mission statement; a problem definition, scope, and methodology...
GAO-14-495: Published: Jun 19, 2014. Publicly Released: Jun 19, 2014.
The Defense Logistics Agency (DLA) developed and met goals for reducing on-hand inventory and on-order excess inventory (i.e., already purchased items that may be excess due to subsequent changes in the services' requirements) and has made progress towards its goals for reducing backorders (shortages of spare parts), but challenges remain. DLA disposed of $4 billion in items for a net reduction of...