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Highlights

Military operations in Iraq and Afghanistan have focused attention on the Department of Defense's (DOD) supply chain management. The supply chain can be critical to determining outcomes on the battlefield, and the investment of resources in DOD's supply chain is substantial. In 2005, with the encouragement of the Office of Management and Budget (OMB), DOD prepared an improvement plan to address some of the systemic weaknesses in supply chain management. GAO was asked to monitor implementation of the plan and DOD's progress toward improving supply chain management. GAO reviewed (1) the integration of supply chain management with broader defense business transformation and strategic logistics planning efforts; and (2) the extent DOD is able to demonstrate progress. In addition, GAO developed a baseline of prior supply chain management recommendations. GAO surveyed supply chain-related reports issued since October 2001, identified common themes, and determined the status of the recommendations.

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Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Defense 1. To improve DOD's ability to guide logistics programs and initiatives across the department and to demonstrate the effectiveness, efficiency, and impact of its efforts to resolve supply chain management problems, the Secretary of Defense should direct the Under Secretary for Defense Acquisition, Technology, and Logistics to complete the development of a comprehensive, integrated logistics strategy that is aligned with other defense business transformation efforts, including the Enterprise Transition Plan. To facilitate the completion of the strategy, DOD should establish a specific target for its completion. Further, DOD should take steps as appropriate to ensure the supply chain management improvement plan and component-level logistics plans are synchronized with the department's overall logistics strategy.
Closed - Implemented
In its written comments on a draft of this report, DOD concurred with this recommendation and stated that the strategy is under development and is aligned with other defense business transformation efforts. In July 2008, DOD released it Logistics Roadmap with the intent to develop a more coherent and authoritative framework for guiding, measuring, and tracking logistics improvement efforts. While additional refinements are needed, as indicated by our subsequent work (GAO-09-150), this roadmap meets the intent of our recommendation of completing the development of its strategy.
Department of Defense 2. To improve DOD's ability to guide logistics programs and initiatives across the department and to demonstrate the effectiveness, efficiency, and impact of its efforts to resolve supply chain management problems, the Secretary of Defense should direct the Under Secretary for Defense Acquisition, Technology, and Logistics to develop, implement, and monitor outcome-focused performance and cost metrics for all the individual initiatives in the supply chain management improvement plan as well as for the plan's focus areas of requirements forecasting, asset visibility, and materiel distribution.
Closed - Implemented
In its written comments on a draft of the report, DOD concurred with this recommendation, and in issuing its corrective action plans for the supply chain areas of inventory management, asset visibility, and materiel distribution, DOD has developed, implemented, and monitored outcome-focused performance and cost metrics for supply chain improvement initiatives. Specifically, in 2010, DOD issued the Comprehensive Inventory Management Improvement Plan to serve as its corrective action plan for requirements forecasting to improve inventory management practices to ensure investment in future purchases and repairs, and the costs associated with maintaining its inventory are aligned with customer needs. Also, in 2016, DOD issued its Materiel Distribution Improvement Plan, which guides and directs the department's efforts to improve materiel distribution. Through its improvement plan, in 2017 DOD approved and implemented a suite of distribution performance metrics, including a cost metric to improve efficiency. Additionally, in August 2017, DOD updated its Strategy for Improving DOD Asset Visibility and accompanying implementation plans, which represents DOD's corrective action plan and outlines initiatives intended to improve asset visibility. The August 2017 Strategy includes additional guidance for the military components to develop metrics for each asset visibility initiative and includes current and future implementation costs. The development of outcome-focused performance and cost metrics in DOD's corrective action plans allows DOD to track progress toward meetings its stated goal of improving the provision of supplies to the warfighter and improving readiness of equipment while reducing or avoiding costs through its supply chain initiatives.

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