Integrating the Department of Defense Supply Chain: Techincial Report

By Eric Peltz; Marc Robbins | Go to book overview

Summary
In the mid-1990s, the U.S. Department of Defense (DoD) began a sustained effort to improve its supply chain, improving performance and harvesting significant efficiencies through process improvement initiatives, rationalizing functional activities across organizations, and integrating functions and organizations within processes. However, additional opportunity exists for integrating the supply chain across processes. In a fully integrated supply chain, processes are intertwined in a way that process design and execution decisions must consider impacts on all other processes and the total supply chain in order to achieve optimal supply chain performance and efficiency rather than focusing on the success of individual processes, functions, and organizations.To help DoD determine how to tap the full potential of supply chain integration, the Assistant Secretary of Defense for Logistics and Materiel Readiness (ASD(L&MR)) asked the RAND National Defense Research Institute (NDRI), based upon prior research and analysis and ongoing DoD initiatives, to develop a framework for an integrated DoD supply chain, identify barriers and enablers to integration, and make recommendations to align policy with the framework. In addition, NDRI was also asked to identify opportunities for efficiency through improved integration.2
Case Studies
The project developed two related case studies that illustrate the need for improvement in DoD supply chain integration.
The first is on the DoD journey to improve centralized theater inventory, which focuses on optimizing the trade-offs among inventory, transportation, and materiel handing to minimize total supply chain costs versus focusing on minimizing each of these costs independently.
The second case study shows how one functionally isolated decision—a well-meaning decision to shift transportation modes to reduce costs—propagated across the supply

2 The study’s scope included supply classes II (clothing, individual equipment, tools, and administrative supplies), IIIP (packaged petroleum, oil, and lubricants), IV (construction materiel), VI (personal demand items), and IX (repair parts). These are sustainment supply classes currently or recently handled by the DoD distribution network and with the supply chain largely managed by DoD personnel. A few examples in this report also include classes I (subsistence) and VIII (medical materiel).

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