Defense Logistics: Lack of Key Information May Impede DOD's Ability to Improve Supply Chain Management
Highlights
Military operations in Iraq and Afghanistan have focused attention on the performance of the Department of Defense's (DOD) supply chain management. According to DOD, it spent approximately $178 billion on its supply chain in fiscal year 2007. As a result of weaknesses in DOD's management of its supply chain, this area has been on GAO's list of high-risk federal government programs since 1990. DOD released its Logistics Roadmap in July 2008 to guide, measure, and track logistics improvements. DOD has identified two technologies included in this roadmap, item unique identification (IUID) and passive radio frequency identification (RFID), as having promise to address weaknesses in asset visibility. GAO reviewed (1) the extent to which the roadmap serves as a comprehensive, integrated strategy to improve logistics; and (2) the progress DOD has made implementing IUID and passive RFID. GAO reviewed the roadmap based on DOD statements about its intended purposes and visited sites where IUID and passive RFID were implemented.
The Logistics Roadmap falls short of meeting DOD's goal to provide a comprehensive and integrated strategy to address logistics problems department-wide. The roadmap documents numerous initiatives and programs that are under way and aligns these with goals and objectives. However, the roadmap lacks key information in three areas necessary for it to be a more useful tool that DOD's senior leaders can use to guide and track logistics improvement efforts toward achieving stated goals and objectives. First, the roadmap does not identify the scope of logistics problems or gaps in logistics capabilities, information that could allow the roadmap to serve as a basis for establishing priorities to improve logistics and address any gaps. Second, the roadmap lacks outcome-based performance measures that would enable DOD to assess and track progress toward meeting stated goals and objectives. Third, DOD has not clearly stated how it intends to integrate the roadmap into DOD's logistics decision-making processes or who within the department is responsible for this integration. DOD officials stated they plan to remedy some of these weaknesses in their follow-on efforts. For instance, DOD has begun to conduct gap assessments for individual objectives in the roadmap and hopes to complete these by July 2009. They stated that they recognized the need for these assessments; however, they had committed to Members of Congress to release the roadmap by the summer of 2008 and were unable to conduct the assessments prior to the release of the roadmap. A comprehensive, integrated strategy that includes these three elements is critical, in part, because of the diffuse organization of DOD logistics, which is spread across multiple DOD components with separate funding and management of logistics resources and systems. Until the roadmap provides a basis for determining priorities and identifying gaps, incorporates performance measures, and is integrated into decision-making processes, it is likely to be of limited use to senior DOD decision makers as they seek to improve supply chain management. DOD has taken initial steps to implement two technologies included in the Logistics Roadmap-IUID and passive RFID-that enable electronic identification and tracking of equipment and supplies; but has experienced difficulty fully demonstrating return on investment for these technologies to the military components that have primary responsibility for determining how and where these technologies are implemented. Although DOD has undertaken initial implementation efforts of these technologies at several locations, at present, it does not collect data on implementation costs or performance-based outcome measures that would enable the department to quantify the return on investment associated with these two technologies. Without this information, it may be difficult for DOD to gain the support needed from the military components to make significant commitments in funding and staff resources necessary to overcome challenges to widespread implementation of these technologies. As a result, full implementation of these technologies is impeded and the realization of potential benefits to asset visibility DOD expects may be delayed.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Defense | To improve DOD's ability to guide logistics initiatives and programs across the department and to demonstrate the effectiveness, efficiency, and impact of its efforts to resolve supply chain management problems, and to have a comprehensive, integrated strategy for improving logistics, the Secretary of Defense should direct the Under Secretary of Defense (Acquisition, Technology, and Logistics) to identify the scope of logistics problems and capability gaps to be addressed through the Logistics Roadmap and associated efforts. |
Closed – Implemented
DOD concurred with this recommendation and identified the scope of logistics problems and capability gaps to be addressed through the issuance of the Strategy for Improving DOD Asset Visibility (Strategy), issued in 2014, with subsequent updates in 2015 and 2017; and the Materiel Distribution Improvement Plan (MDIP), issued in 2016, both of which included information that was lacking in the Logistics Roadmap. The 2017 Strategy creates a framework whereby the components work collaboratively to identify capability gaps and opportunities to improve asset visibility. Also, the MDIP identifies 18 corrective actions in the areas of metrics and performance, data accuracy, and policy and governance to address materiel distribution challenges and improve distribution performance. For example, to address identified distribution capability gaps, in 2017 the department adopted two responsiveness metrics and formally established performance targets to measure the ability of the distribution process to meet both customer needs and the capabilities of the distribution providers. As a result, DOD is able to comprehensively guide, monitor, and demonstrate the effectiveness, efficiency, and impact of its supply chain management efforts and to address associated challenges and capability gaps.
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| Department of Defense | To improve DOD's ability to guide logistics initiatives and programs across the department and to demonstrate the effectiveness, efficiency, and impact of its efforts to resolve supply chain management problems, and to have a comprehensive, integrated strategy for improving logistics, the Secretary of Defense should direct the Under Secretary of Defense (Acquisition, Technology, and Logistics) to develop, implement, and monitor outcome-focused performance measures to assess progress toward achieving the roadmap's objectives and goals. |
Closed – Implemented
DOD concurred with this recommendation and developed outcome-focused performance measures through the issuance of the Strategy for Improving DOD Asset Visibility (Strategy) in 2014, with subsequent updates in 2015 and 2017; and the Materiel Distribution Improvement Plan (MDIP) in 2016, both of which included information that was lacking in the Logistics Roadmap. DOD's 2017 Strategy represents its corrective action plan and outlines initiatives intended to improve asset visibility. The 2017 Strategy includes guidance for the military components to develop metrics for each asset visibility initiative, recommending that components consider the key attributes (i.e., clarity, measurable target, objectivity, reliability, baseline and trend data, and linkage) of successful performance measures during metric development to improve DOD's efforts to monitor asset visibility initiatives. The MDIP guides and directs the department's efforts to improve materiel distribution. In 2017, DOD approved and implemented its suite of distribution performance metrics that allows the department to track progress toward meeting 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. As a result of developing and implementing these corrective action plans, which include developing specific initiative performance measures, DOD is able to assess progress towards achieving identified goals and objectives across the supply chain.
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| Department of Defense | To improve DOD's ability to guide logistics initiatives and programs across the department and to demonstrate the effectiveness, efficiency, and impact of its efforts to resolve supply chain management problems, and to have a comprehensive, integrated strategy for improving logistics, the Secretary of Defense should direct the Under Secretary of Defense (Acquisition, Technology, and Logistics) to document specifically how the roadmap will be used within the department's decision-making processes used to govern and fund logistics and who will be responsible for its implementation. |
Closed – Implemented
DOD concurred and addressed this recommendation through the issuance of the Strategy for Improving DOD Asset Visibility (Strategy), issued in 2014, with subsequent updates in 2015 and 2017; and the Materiel Distribution Improvement Plan (MDIP), issued in 2016, both of which included information that was lacking in the Logistics Roadmap. The 2017 Strategy creates the framework to guide and integrate Department-wide efforts to continuously improve asset visibility and to enable collaborative identification of sustainment and improvement opportunities. The components are designated as the offices of primary responsibility (OPR) to ensure the successful execution of their initiatives, including developing cost estimates and collecting performance data. The MDIP identifies the governing bodies, decision-makers, and lead offices responsible for implementing corrective actions designed to address challenges across the distribution system. The MDIP's corrective actions include the implementation of a cost metric, which according to officials, began operating in August 2018. As a result of these corrective action plans, DOD has improved its ability to guide logistics initiatives and programs across the department and to demonstrate the effectiveness, efficiency, and impact of its efforts to resolve supply chain management problems.
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| Department of Defense | To improve the likelihood DOD will achieve the potential benefits it expects from the implementation of IUID and passive RFID, the Secretary of Defense should direct the Under Secretary of Defense (Acquisition, Technology, and Logistics), in conjunction with the military components, to collect detailed information on the costs, including costs currently being funded from operational accounts, and performance outcomes for ongoing and future implementation of these two technologies. |
Closed – Not Implemented
DOD has made some progress in its efforts to improve asset visibility; however, the department continues to face challenges in this focus area of supply chain management. For example, regarding RFID, we found in February 2013 that each of the services, USTRANSCOM, and DLA each has RFID initiatives underway and the department had developed a draft asset visibility strategy. However, we reported that DOD has not identified and does not yet have a ready means for identifying all in transit visibility efforts, such as RFID. Further, while each component was able to provide information regarding the costs for efforts managed by the component, no defense organization can provide cost figures for all ongoing in transit visibility efforts. As of July 2013, DOD has not issued its asset visibility strategy. Regarding IUID, we found in May 2012 that DOD continued to face numerous challenges in collecting cost and performance data on IUID implementation. Since that time, DOD has made some additional progress. For example, several services have identified the annual costs of marking legacy equipment with IUID. However, these efforts have yet to identify performance outcomes or the return on investment for the ongoing and future implementation of these two technologies.
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| Department of Defense | To improve the likelihood DOD will achieve the potential benefits it expects from the implementation of IUID and passive RFID, the Secretary of Defense should direct the Under Secretary of Defense (Acquisition, Technology, and Logistics), in conjunction with the military components, on the basis of these data, to develop an analysis or analyses of the return on investment to justify expanded investment of resources in the implementation of the technologies. |
Closed – Not Implemented
DOD has made some progress in its efforts to improve asset visibility; however, the department continues to face challenges in this focus area of supply chain management. For example, regarding RFID, we found in February 2013 that each of the services, USTRANSCOM, and DLA each has RFID initiatives underway and the department had developed a draft asset visibility strategy. However, we reported that DOD has not identified and does not yet have a ready means for identifying all in transit visibility efforts, such as RFID. Further, while each component was able to provide information regarding the costs for efforts managed by the component, no defense organization can provide cost figures for all ongoing in transit visibility efforts. As of July 2013, DOD has not issued its asset visibility strategy. Regarding IUID, we found in May 2012 that DOD continued to face numerous challenges in collecting cost and performance data on IUID implementation. Since that time, DOD has made some additional progress. For example, several services have identified the annual costs of marking legacy equipment with IUID. However, these efforts have yet to identify performance outcomes or the return on investment for the ongoing and future implementation of these two technologies.
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| Department of Defense | The Secretary of Defense should direct the Secretaries of the Army, the Navy, and the Air Force; the Commandant of the Marine Corps; and the Director of the Defense Logistics Agency to determine, on the basis of the aforementioned analyses, whether sufficient funding priority has been given to the integration of these technologies into their respective business processes and, if not, to take appropriate corrective action. |
Closed – Not Implemented
DOD has made some progress in its efforts to improve asset visibility; however, the department continues to face challenges in this focus area of supply chain management. For example, regarding RFID, we found in February 2013 that each of the services, USTRANSCOM, and DLA each has RFID initiatives underway and the department had developed a draft asset visibility strategy. However, we reported that DOD has not identified and does not yet have a ready means for identifying all in transit visibility efforts, such as RFID. Further, while each component was able to provide information regarding the costs for efforts managed by the component, no defense organization can provide cost figures for all ongoing in transit visibility efforts. As of July 2013, DOD has not issued its asset visibility strategy. Regarding IUID, we found in May 2012 that DOD continued to face numerous challenges in collecting cost and performance data on IUID implementation. Since that time, DOD has made some additional progress. For example, several services have identified the annual costs of marking legacy equipment with IUID. However, these efforts have yet to identify performance outcomes or the return on investment for the ongoing and future implementation of these two technologies. Further, without this type of information, it is unclear whether sufficient funding priority has been given to the integration of these technologies into their respective business processes.
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