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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The Department of Defense (DOD) manages about 4.9 million secondary inventory items, such as spare parts, with a reported value of $91.7 billion as of September 2015. Effective and efficient supply chain management is critical for supporting the readiness and capabilities of the force and for helping to ensure that DOD avoids 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 experienced high levels of inventory that were in excess of requirements and weaknesses in accurately forecasting the demand for inventory items.
  • Materiel distribution. DOD has faced challenges in delivering supplies and equipment, including not meeting delivery standards and timelines for cargo shipments as well as not maintaining complete delivery data for 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.
We added supply chain management to the High-Risk List in 1990. Between our February 2015 and February 2017 high-risk updates, DOD has made progress in addressing all three dimensions of its supply chain management: inventory management, materiel distribution, and asset visibility. In particular, we removed inventory management from the supply chain management high-risk area due to the substantial progress made in addressing weaknesses. Additional actions continue to be needed to address the high-risk nature of material distribution and asset visibility. In a December 2016 letter from the Under Secretary of Defense for Acquisition, Technology, and Logistics to the Chairman of the Committee on Oversight and Government Reform, U.S. House of Representatives, the department generally agreed with our assessment of progress made and outlined ongoing and planned actions to address the remaining issues.
 
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Podcasts

2015 Update to GAO's High Risk ListWednesday, February 11, 2015
  • portrait of Zina Merritt
    • Zina Merritt
    • Director, Defense Capabilities and Management
    • merrittz@gao.gov
    • (202) 512-5257