Defense Logistics:

Lack of Key Information May Impede DOD's Ability to Improve Supply Chain Management

GAO-09-150: Published: Jan 12, 2009. Publicly Released: Jan 12, 2009.

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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.

Status Legend:

More Info
  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: 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.

    Agency Affected: Department of Defense

    Status: Closed - Not Implemented

    Comments: 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.

    Recommendation: 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.

    Agency Affected: Department of Defense

    Status: Closed - Not Implemented

    Comments: 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.

    Recommendation: 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.

    Agency Affected: Department of Defense

    Status: Closed - Not Implemented

    Comments: In July 2010, DOD issued a Logistics Strategic Plan that serves as an update to the Roadmap. The Plan contains some positive strategic planning aspects, such as outlining a performance management framework. However, it lacks a substantial amount of information needed to successfully 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. Further, the performance management framework defined in the Plan lacked specific information on how the framework was to be implemented, such as clear roles and responsibilities for some organizations and a communication strategy, for monitoring results and incorporating that information into future revisions of the plan. While DOD indicated that it would update this plan annually, it has not issued an updated plan as of July 2013. As such, DOD has not issued a comprehensive, integrated strategy to resolve supply chain management problems or clearly defined how the Plan will be used as part of the performance management framework for supply chain management.

    Recommendation: 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.

    Agency Affected: Department of Defense

    Status: Closed - Not Implemented

    Comments: In July 2010, DOD issued a Logistics Strategic Plan that serves as an update to the Roadmap. The Plan contains some positive strategic planning aspects, such as outlining a performance management framework. However, it lacks a substantial amount of information needed to successfully 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. Further, it does not identify performance measures and other related information, such as milestones and targets, needed to assess progress toward achieving objectives and goals. While DOD indicated that it would update this plan annually, it has not issued an updated plan as of July 2013. As such, DOD has not issued a comprehensive, integrated strategy to resolve supply chain management problems that identifies and can be used to monitor outcome-focused performance measures to assess progress in achieving departmental objectives and goals for supply chain management.

    Recommendation: 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.

    Agency Affected: Department of Defense

    Status: Closed - Not Implemented

    Comments: In July 2010, DOD issued a Logistics Strategic Plan that serves as an update to the Logistics Roadmap. The Plan contains some positive strategic planning aspects, such as outlining a performance management framework. However, it lacks a substantial amount of information needed to successfully 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. Further, it does not identify the scope of logistics problems and associated capability gaps. While DOD indicated that it would update this plan annually, it has not issued an updated plan as of July 2013. As such, DOD has not issued a comprehensive, integrated strategy to resolve supply chain management problems that identifies the scope of logistics problems and associated capability gaps.

    Recommendation: 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.

    Agency Affected: Department of Defense

    Status: Closed - Not Implemented

    Comments: 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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