Key Issues > DOD Supply Chain Management - High Risk Issue
defense icon, source: [West Covina, California] Progressive Management, 2008

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.

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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.

This High Risk Report is updated every two years, at the start of each new Congress. For more information on this High Risk Issue, see What We Found and What Remains to Be Done.

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2015 Update to GAO's High Risk ListWednesday, February 11, 2015
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    • Zina Merritt
    • Director, Defense Capabilities and Management
    • merrittz@gao.gov
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