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.
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.
GAO-16-88: Published: Dec 22, 2015. Publicly Released: Dec 22, 2015.
GAO-15-350: Published: Apr 20, 2015. Publicly Released: Apr 20, 2015.
GAO-15-148: Published: Jan 27, 2015. Publicly Released: Jan 27, 2015.
GAO-14-495: Published: Jun 19, 2014. Publicly Released: Jun 19, 2014.