Supply Chain Management Risks
Longtime readers of this blog are well-aware of the criticality of effective and efficient Supply Chain Management (SCM) within the Department, as well as the importance of Supply Chain Risk Management (SCRM) in identifying, assessing and perhaps most importantly, mitigating the myriad risks facing our supply chains.
Recent blog posts on these topics include “Insights into DoD Supply Chain Risks” and “Supply Chain Risk Management (SCRM) and Supply Chain Management (SCM) Resources”.
Additionally, the Government Accountability Office (GAO) recognizes that “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”. It’s considered so critical in fact, the GAO identifies DoD Supply Chain Management as a “High Risk Issue”, including it on its list of high-level “issues that are of national concern”, and highlighted on “GAO's High Risk List, which calls attention to the agencies and program areas that are high risk…”
The GAO goes on to state that “the Department of Defense (DOD) manages about 4.9 million secondary inventory items, such as spare parts, with a reported value of $91.7 billion as of September 2015. Effective and efficient supply chain management is critical for supporting the readiness and capabilities of the force and for helping to ensure that DOD avoids 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:
Recent blog posts on these topics include “Insights into DoD Supply Chain Risks” and “Supply Chain Risk Management (SCRM) and Supply Chain Management (SCM) Resources”.
Additionally, the Government Accountability Office (GAO) recognizes that “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”. It’s considered so critical in fact, the GAO identifies DoD Supply Chain Management as a “High Risk Issue”, including it on its list of high-level “issues that are of national concern”, and highlighted on “GAO's High Risk List, which calls attention to the agencies and program areas that are high risk…”
The GAO goes on to state that “the Department of Defense (DOD) manages about 4.9 million secondary inventory items, such as spare parts, with a reported value of $91.7 billion as of September 2015. Effective and efficient supply chain management is critical for supporting the readiness and capabilities of the force and for helping to ensure that DOD avoids 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 experienced high levels of inventory that were in excess of requirements and weaknesses in accurately forecasting the demand for inventory items.
- Materiel distribution. DOD has faced challenges in delivering supplies and equipment, including not meeting delivery standards and timelines for cargo shipments as well as not maintaining complete delivery data for 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.”
Supply chain management, supply chain risk management, and indeed DoD logistics and sustainment is clearly a vitally important area that we all must focus on. As General, and later President Dwight D. Eisenhower so famously observed, “ “You will not find it difficult to prove that battles, campaigns, and even wars have been won or lost primarily because of logistics”.