Defense Logistics:

Improvements Needed to Accurately Assess the Performance of DOD's Materiel Distribution Pipeline

GAO-15-226: Published: Feb 26, 2015. Publicly Released: Feb 26, 2015.

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What GAO Found

To measure the performance of its global distribution pipeline, the Department of Defense (DOD) has established three metrics:(1) logistics response time—number of days between the time a customer submits an order and receives it, (2) customer wait time—number of days between the time a maintenance unit, a subset of customers, submits an order and receives it, and (3) time-definite delivery—a measure of the probability (e.g., 85 percent) that a customer will receive an order within an established logistics response time. However, these metrics do not provide decision makers with a complete representation of performance across the entire global distribution pipeline. DOD's definitions of its metrics and guidance for using them do not address cost, although DOD officials stated that cost is included in metrics used to assess other aspects of the supply chain, and the Marine Corps has not established a customer wait time metric. Further, although joint doctrine has set efficient and effective distribution “from the factory to the foxhole” as a priority, these metrics do not always include performance for the final destination. Unless DOD's guidance is revised to ensure the three distribution performance metrics include cost information for decision making and the Marine Corps establishes a customer wait time metric, and DOD incorporates metric performance to the final destination, it will be difficult for DOD to achieve a comprehensive view of the performance of its entire global distribution pipeline.

DOD may not have sufficiently reliable data to accurately determine the extent to which it has met the standards it has established for distribution performance, because it has not developed policy for requiring regular comprehensive assessments to be conducted of its distribution data-collection and reporting processes. Several DOD organizations indicated that they had not conducted this type of review that would be consistent with standards for internal control in the federal government. Specifically, the Air Force indicated that it had not conducted a risk assessment of its data, a part of assessing data reliability. Officials GAO spoke with from U.S. Transportation Command (TRANSCOM), the services, and other DOD components described a number of potential inaccuracies, such as delivery dates recorded after deliveries were actually made, in the data TRANSCOM uses to evaluate distribution performance. Without a policy requiring regular comprehensive data-reliability assessments, DOD lacks reasonable assurance that organizations will conduct such assessments and that data will be sufficiently reliable to effectively measure DOD's performance in distribution.

Although DOD has taken several actions to address gaps in its distribution performance, including conducting performance reviews, and holding workshops to assess problems and develop solutions, these efforts focus on specific areas of distribution, and DOD has not developed a comprehensive corrective action plan for the entire distribution pipeline that identifies the scope and root causes of capability gaps and other problems, solutions, and actions to be taken. In July 2011, GAO recommended DOD develop such a corrective action plan. DOD did not concur, citing several ongoing efforts. However, these efforts do not address gaps across all distribution operations. Thus, implementing GAO's prior recommendation would help identify root causes of and solutions to distribution challenges and better position DOD to address distribution performance.

Why GAO Did This Study

DOD operates a complex, multibillion-dollar distribution system for delivering supplies and equipment to U.S. forces globally. DOD's goal in operating this global distribution pipeline is to deliver the right item to the right place at the right time, at the right cost. GAO has reported on weaknesses in DOD's distribution performance and has identified management of DOD's entire supply chain as a high-risk area.

This review assesses the extent to which DOD (1) has established metrics for its distribution performance, (2) is able to accurately measure its performance against distribution standards, and (3) has taken actions to identify causes and develop solutions for any gaps in distribution. GAO analyzed DOD's distribution metrics, DOD's responses to data-reliability questionnaires, and corrective actions, and interviewed DOD officials.

What GAO Recommends

GAO recommends that DOD (1) revise guidance to ensure its metrics incorporate cost, (2) revise guidance to ensure the Marine Corps establishes a customer wait time metric, (3) incorporate performance information from the final destination, and (4) develop policy requiring data-reliability assessments. DOD concurred with the second and fourth recommendations and partially concurred with the first, stating that there would be no value to affix cost to time-definite delivery. DOD did not concur with the third recommendation, stating that data to the final destination should not be incorporated into DOD's performance metrics. GAO continues to believe the recommendations are valid, as discussed in the report.

For more information, contact Cary Russell at (202) 512-5431 or russellc@gao.gov.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: Consistent with the GAO recommendation, in September 2016, DOD issued its Materiel Distribution Improvement Plan that included the establishment of a new efficiency/cost metric called the Finished Product Logistics Cost (FPLC) that measures the discrete cost of specific distribution chain processes required to deliver specific performance outcomes. FPLC is defined in the plan as all costs incurred after the entry and initial placement of finished products into the warehousing and distribution chain, until delivery of these items to the point of acceptance the point where the responsibility of the supply system ends in the theater. We believe this action meets the intent of our recommendation.

    Recommendation: To address the limitations of existing distribution performance metrics, the Secretary of Defense should direct the Under Secretary of Defense for Acquisition, Technology and Logistics, in conjunction with TRANSCOM, to revise guidance to ensure that the three distribution performance metrics incorporate cost.

    Agency Affected: Department of Defense

  2. Status: Open

    Comments: In September 2016, the Marine Corps had established a Customer Wait Time (CWT) standard and developed CWT metrics that are in alignment with DOD policy. These changes were to be incorporated into Marine Corps policy through their normal Service procedures. As of September 2017, we are unaware of any actions taken to implement this recommendation.

    Recommendation: To address the limitations of existing distribution performance metrics, the Secretary of Defense should direct the Under Secretary of Defense for Acquisition, Technology and Logistics, in conjunction with TRANSCOM, to revise guidance to ensure that a customer wait time standard is established and used for the Marine Corps.

    Agency Affected: Department of Defense

  3. Status: Closed - Not Implemented

    Comments: The Assistant Secretary of Defense (Logistics and Materiel Readiness) (ASD[L&MR]) did not concur with the recommendation and cited its previous response to a similar recommendation in the October 2011 report, GAO-12-138, stated that the DoD Warfighter Support: DOD Has Made Progress, but Supply and Distribution Challenges Remain in Afghanistan, stating that the Distribution Process Owner''s (e.g., TRANSCOM''s) authority and oversight extend to the point of need, not the point of employment. The Assistant Secretary also stated that this distinction is made in DoD guidance, doctrine, and policy [Joint Logistics (Distribution) Joint Integrating Concept (JLD(D) JIC) and DODI 5158.06], and that the responsibility for the last tactical mile resides with the geographic combatant commander in the operational area. However, as stated in our report, we continue to believe that incorporating available information at the tactical level into DOD's distribution metrics would help allow DOD to more accurately and comprehensively measure distribution performance across the entire distribution pipeline.

    Recommendation: To address the limitations of existing distribution performance metrics and to begin gaining visibility over the last tactical mile, the Secretary of Defense should direct the Under Secretary of Defense for Acquisition, Technology and Logistics and TRANSCOM, in collaboration with the geographic combatant commands, to incorporate available distribution performance information at the last tactical mile level into the three key distribution metrics of logistics response time, time-definite delivery, and customer wait time.

    Agency Affected: Department of Defense

  4. Status: Closed - Implemented

    Comments: Consistent with the GAO recommendation, in September 2016, DOD issued its Materiel Distribution Improvement Plan that included a process for improving data quality to include identifying gaps between DOD-level data quality and internal control policies and those established at the federal government level, updating existing DOD data quality policies to close these gaps and ensure compliance with federal standards and guidelines, and calling for military services and DOD agencies to analyze gaps between their policies and guidance and DOD-level policies. The plan also established the Data Quality Compliance metric that aims to provide DOD stakeholders with a clear picture of how well the data elements supporting the distribution performance metrics are complying with the data quality standards developed by DOD. We believe these actions meet the intent of our recommendation.

    Recommendation: To ensure the reliability of DOD's distribution performance data, the Secretary of Defense should direct the Under Secretary of Defense for Acquisition, Technology and Logistics to develop and enforce policies to require data-reliability assessments to be conducted by DOD organizations involved in the collection and reporting of distribution performance data, such as TRANSCOM and the military services, to evaluate and address any gaps in its distribution performance data.

    Agency Affected: Department of Defense

 

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