Each military service manages reparable parts that are used for their operations. Private Sector Practices Streamline Logistics Operations

We previously reported that several commercial airlines have cut costs and improved customer service by streamlining their logistics operations. The most successful improvements include using highly accurate information systems to track and control inventory; employing various methods to speed the flow of parts through the pipeline; shifting certain inventory tasks to suppliers; and having third parties handle parts repair, storage, and distribution functions. Current DOD Initiatives Seek to Improve Logistics Systems

Each of the military services has programs underway to improve logistics operations and make its processes faster and more flexible. The program’s goals, concepts, and top management support parallel improvement efforts found in private sector companies. The Air Force describes Lean Logistics as the cornerstone of all future logistics system improvements. However, a wider application of best practices by DOD must be accomplished within the current legislative framework and regulatory requirements. Military Services and DLA Responsibilities for Adopting Best Practices

Section 395 of the National Defense Authorization Act for Fiscal Year 1998 requires the Director of DLA to develop and submit to Congress a schedule for implementing best practices for the acquisition and distribution of categories of consumable-type supplies and equipment listed in the section. Conclusions

Our work shows it is feasible for the list of items covered by section 395 to be expanded to include reparable parts. For example, each of the services and DLA have initiatives underway designed to improve their logistics operations by adopting best practices. However, if section 395 were expanded, the responsibility for the development and submission of a schedule to implement these practices would go beyond the purview of the Director of DLA. Matters for Congressional Consideration

If Congress decides it wants to expand the provisions of section 395 to include reparable parts, it may wish to consider (1) broadening the responsibility for responding to this legislation to include the military services and (2) developing provisions, similar to those in section 395, to encourage DOD to test combinations of best practices using a supply-chain management approach. We are sending copies of this report to other congressional committees; the Secretaries of Defense, the Army, the Navy, and the Air Force; the Directors of the Defense Logistics Agency and the Office of Management and Budget; and other interested parties. The Department of Defense Logistics Pipelines

The Department of Defense’s (DOD) depot repair pipelines for reparable parts are slow and inefficient.
Why GAO Did This Study

Pursuant to a legislative requirement, GAO reported on the feasibility of adding reparable parts to the list of consumable-type supplies and equipment covered by Section 395 of the National Defense Authorization Act of 1998, focusing on: (1) private-sector practices that streamline logistics operations; (2) Department of Defense (DOD) initiatives to improve its logistics systems; and (3) best practices that can be used to improve the military services' aircraft reparable parts pipeline.

What GAO Found

GAO noted that: (1) it is feasible for the list of items covered by section 395 to be expanded to include reparable parts; (2) in fact, all of the services and the Defense Logistics Agency (DLA) have initiatives under way designed to improve their logistics operations by adopting best practices; (3) however, if section 395 were expanded to include reparable parts, the responsibility for the development and submission of a schedule to implement best practices would also have to be expanded to include the military services, since responsibility for service-managed reparable parts is beyond the purview of the Director of DLA; (4) private-sector companies have developed new business strategies and practices that have cut costs and improved customer service by streamlining logistics operations; (5) the most successful improvement efforts included a combination of practices that are focused on improving the entire logistics pipeline--an approach known as supply-chain management; (6) the combination of practices that GAO has observed includes the use of highly accurate information systems, various methods to speed the flow of parts through the pipeline, and the shifting of certain logistics functions to suppliers and third parties; (7) DOD recognizes that it needs to make substantial improvements to its logistics systems; (8) the Army's Velocity Management program, the Navy's regionalization and direct delivery programs, and the Air Force's Lean Logistics initiative are designed to improve logistics operations and make logistics processes faster and more flexible; (9) although these initiatives have achieved some limited success, significant opportunities for improvement remain; (10) GAO's work indicates that best practices developed by private-sector companies are compatible with DOD improvement initiatives; and (11) however, GAO recognizes the use of these best practices must be accomplished within the existing legislative framework and regulatory requirements relating to defense logistics activities, such as the Office of Management and Budget Circular A-76.