Key Issues > DOD Supply Chain Management - High Risk Issue

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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. DOD has made sufficient progress in improving supply chain management. Consequently, GAO removed this issue area from its High Risk List, but will continue to conduct oversight of supply chain management at DOD.

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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.

We added supply chain management to the High-Risk List in 1990. DOD has made progress in addressing all three dimensions of its supply chain management: inventory management, materiel distribution, and asset visibility. In particular, we removed inventory management from the supply chain management high-risk area in 2017 due to the substantial progress made in addressing weaknesses. We removed the remaining two dimensions, materiel distribution and asset visibility, from the supply chain management high-risk area in 2019 because DOD had made sufficient progress in addressing actions and outcomes we had recommended.

For more on GAO's reports and recommendations, see the key reports tab above.

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Defense Logistics: Improved Performance Measures and Information Needed for Assessing Asset Visibility Initiatives

GAO-17-183: Published: Mar 16, 2017. Publicly Released: Mar 16, 2017.

The Department of Defense (DOD) has identified performance measures for the eight selected asset visibility initiatives GAO reviewed, but these performance measures generally cannot be used to monitor progress. Specifically, GAO found that the measures for the eight initiatives reviewed did not generally include key attributes of successful performance measures. For example, for six initiatives th...

Defense Inventory: Further Analysis and Enhanced Metrics Could Improve Service Supply and Depot Operations

GAO-16-450: Published: Jun 9, 2016. Publicly Released: Jun 9, 2016.

The military services have, to varying degrees, transferred retail supply, storage, and distribution functions at their depot-level industrial sites to the Defense Logistics Agency (DLA) and achieved some efficiencies, but have not fully assessed the costs and benefits of transferring more retail functions to DLA at Army and Marine Corps depots and Navy shipyards. Specifically, Air Force Air Logis...

Defense Logistics: DOD Has Addressed Most Reporting Requirements and Continues to Refine Its Asset Visibility Strategy

GAO-16-88: Published: Dec 22, 2015. Publicly Released: Dec 22, 2015.

The Department of Defense's (DOD's) 2014 Strategy for Improving DOD Asset Visibility ( Strategy) and accompanying implementation plans fully address 6 of the 11 statutory elements required by the Fiscal Year 2014 National Defense Authorization Act (NDAA) and partially address the remaining 5. For example, the Strategy fully addressed asset visibility goals and objectives, and roles and responsibil...

Defense Inventory: Services Generally Have Reduced Excess Inventory, but Additional Actions Are Needed

GAO-15-350: Published: Apr 20, 2015. Publicly Released: Apr 20, 2015.

The Navy and Air Force reported meeting the Department of Defense's (DOD) goal of reducing on-hand excess inventory (i.e., items categorized for potential reuse or disposal) to 10 percent of the total value of inventory, but the Army had not met the goal, as of March 2014. Reporting issues hinder full visibility of on-hand excess inventory and progress against DOD's goal. For example,the Army's ca...

Defense Inventory: Actions Needed to Improve the Defense Logistics Agency's Inventory Management

GAO-14-495: Published: Jun 19, 2014. Publicly Released: Jun 19, 2014.

The Defense Logistics Agency (DLA) developed and met goals for reducing on-hand inventory and on-order excess inventory (i.e., already purchased items that may be excess due to subsequent changes in the services' requirements) and has made progress towards its goals for reducing backorders (shortages of spare parts), but challenges remain. DLA disposed of $4 billion in items for a net reduction of...