We have issued a series of reports on private sector practices that could be applied to DOD’s expendable inventories. Similarities Between Air Force and Commercial Airline Logistics Operations

Although not as large as the Air Force, commercial airlines’ operations resemble the Air Force’s in several ways. Time also has a significant impact on cost. This report focuses on (1) best management practices used in the commercial airline industry to streamline logistics operations and improve customer service, (2) Air Force reengineering efforts to improve the responsiveness of its logistics system and reduce costs, and (3) barriers that may stop the Air Force from achieving the full benefits of its reengineering efforts. 2.3). 2.4). Air Force Reengineering Efforts Can Be Expanded, but Obstacles Must Be Overcome

In recognition of increasing budgetary pressures, the changing global threat, and the need for radical improvements to its logistics system, the Air Force has begun a reengineering program aimed at redesigning its logistics operations. This support will be needed if the full range of changes is to be carried out. The following principles for effective reengineering, reflecting panel members’ views, emerged from the symposium:
Top management must be supportive of and engaged in reengineering efforts to remove barriers and drive success. Without these logistics system improvements, the Air Force will continue to operate a logistics system that results in billions of dollars of wasted resources. Recommendations

To build on the existing Air Force reengineering efforts and achieve major logistics system improvements, we recommend that the Secretary of Defense commit and engage top-level DOD managers to support and lead Air Force reengineering efforts to ensure its success. Specific concepts that have been proven to be successful and should be considered, but have not been incorporated in the current Air Force program include installing information systems that are commercially available to track inventory amounts, location, condition, and requirements; counting existing inventory once new systems are in place to ensure accuracy of the data; establishing closer relationships with suppliers; encouraging suppliers to establish local distribution centers near major repair depots for quick shipment of parts; using integrated supplier programs to shift to suppliers the responsibility for managing certain types of inventory; using third-party logistics services to manage the storage and distribution of reparable parts and minimize DOD information technology requirements; reorganizing workshops, using the cellular concept where appropriate, to reduce the time it takes to repair parts; and integrating successful reengineered processes and flexible, team-oriented employees in new facilities (like the green field sites) to maximize productivity improvements, as new facilities are warranted to meet changes in the types and quantities of aircraft.
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed the Air Force's management of its reparable parts inventory, focusing on: (1) commercial airline industry practices to streamline logistics operations and improve customer service; (2) Air Force reengineering efforts to improve its logistics system and reduce costs; and (3) barriers to the Air Force's reengineering efforts.

What GAO Found

GAO found that: (1) the commercial airline industry, including certain manufacturers, suppliers, and airlines, are using leading-edge practices to improve logistics operations and reduce costs; (2) in recognition of increasing budgetary pressures, the changing global threat, and the need for radical improvements in its logistics system, the Air Force has begun a reengineering program aimed at redesigning its logistics operations; (3) GAO has urged these changes and supports them, and has identified additional private-sector practices that may result in even greater savings; (4) there are several major barriers to bringing about change that must be addressed and resolved if the Air Force is to reengineer its logistics system and save billions of dollars; (5) the Air Force reengineering effort addresses inherent problems with its logistics system, but additional steps can be taken to maximize potential improvements; (6) additional steps GAO identified that could enhance this program include establishing a top-level DOD champion of change to support the Air Force initiatives, greater use of third-party logistics services, closer partnerships with suppliers, encouraging suppliers to use local distribution centers, centralizing repair functions, and modifying repair facilities to accommodate these new practices; (7) the success of the Air Force in achieving a quantum leap in system improvements hinges on its ability to address and overcome certain barriers, such as inherent organizational resistance to change; (8) top-level DOD officials must be supportive of and engaged in Air Force reengineering efforts to remove these barriers and drive success; (9) information systems do not always provide Air Force managers and employees with accurate, real-time data on the cost, amount, location, condition, and usage of inventory; and (10) without the support of top-level DOD management and accurate, real-time inventory information, the expansion of the Air Force's reengineering efforts could be seriously impaired.