However, DOD’s three  distribution performance metrics do not provide decision makers with a  comprehensive view of performance across the entire global distribution  pipeline as they do not incorporate costs, cover all the military services, or  extend to the “last tactical mile.”

		DOD Has Established Three Metrics to Measure Its Distribution Performance

To measure the performance of its global distribution pipeline, DOD has  established three metrics—logistics response time, customer wait time,  and time-definite delivery. Similarly, DOD has set as a time-definite delivery standard that 85  percent of all items ordered from the United States for delivery to Japan  by ocean transport should be delivered within 57 days. DOD’s Metrics Do Not Provide a Comprehensive View of Distribution Performance

DOD’s three distribution performance metrics do not provide decision  makers with a comprehensive view of performance across the entire  global distribution pipeline. However, DOD’s definitions of its three metrics and  its guidance for using them to measure distribution performance do not  address cost. The DOD guidance establishing the customer wait time  performance measure requires that the military departments (e.g., the  Departments of the Air Force, the Army, and the Navy) use the customer  wait time measurement to assess the performance of the supply chain,  but does not require that each of the military services establish a  customer wait time standard to assess its distribution performance. Moreover, unless DOD’s guidance is revised to help ensure the three  distribution performance metrics address multiple priorities and provide  useful information for decision making on matters such as cost and  unless a service-wide customer wait time standard is established and  used for the U.S. Marine Corps, it will be difficult for DOD to form a  comprehensive view of the performance of its entire global distribution  pipeline. However, DOD officials stated that U.S. Forces–Afghanistan did not  report this performance assessment to TRANSCOM. DOD May Not Have Sufficiently Reliable Data to Accurately Determine Whether It Has Met Its Established Distribution Standards

DOD may not have sufficiently reliable data to accurately determine the  extent to which it has met the standards it has established for distribution  performance, because it has not conducted regular comprehensive  assessments of its data collection and reporting processes. responding to our data-reliability questionnaire, indicated that it had not  conducted a risk assessment of its data. In addition, officials we spoke with from TRANSCOM, the services, and  several other DOD components told us of a number of potential  inaccuracies in the data TRANSCOM uses to evaluate distribution  performance. Without a policy requiring regular comprehensive data- reliability assessments, DOD lacks reasonable assurance that  organizations will conduct such assessments and data will be sufficiently  reliable to effectively measure DOD’s performance in distribution. Specifically, we stated that the corrective action plan should  (1) identify the scope and root causes of capability gaps and other  problems, effective solutions, and actions to be taken to implement the  solutions; (2) include the characteristics of effective strategic planning,  including a mission statement; goals and related strategies (for example,  objectives and activities); performance measures and associated  milestones, benchmarks, and targets for improvement; resources and  investments required for implementation; key external factors that could  affect the achievement of goals; and the involvement of all key  stakeholders in a collaborative process to develop and implement the  plan; and (3) document how the department will integrate these plans with  its other decision-making processes; delineate organizational roles and  responsibilities; and support department-wide priorities identified in  higher-level strategic guidance. Although DOD has taken several actions to address its distribution  challenges and improve distribution processes, these efforts to improve  distribution are focused on a specific portion or segment of the process  and are not based on an assessment of the entire distribution pipeline. Implementing our previous recommendation that  DOD develop a comprehensive corrective action plan for distribution  would help to identify and address root causes of distribution challenges  and better position DOD to address distribution performance. To ensure the reliability of DOD’s distribution performance data, we  recommend that the Secretary of Defense direct the Under Secretary of  Defense for Acquisition, Technology and Logistics to develop and enforce  policies to require data-reliability assessments to be conducted by DOD  organizations involved in the collection and reporting of distribution  performance data, such as TRANSCOM and the military services, to  evaluate and address any gaps in its distribution performance data. DOD partially concurred with the recommendation to revise guidance to  ensure that the three distribution metrics incorporate cost. However, DOD did not agree that there would be value in any  parallel effort to incorporate cost into the third distribution performance  metric—time-definite delivery—because it maintains that this metric  provides the standards to measure whether logistics response time  performance is meeting expectations. DOD concurred with the recommendation to revise guidance to ensure  that a customer wait time standard is established and used for the Marine  Corps. We compared the responses to standards for internal control  within the federal government. To determine the extent to which DOD has taken actions to identify  causes and develop solutions for any gaps in distribution, we reviewed  documents provided by TRANSCOM, including from TRANSCOM’s  Distribution Performance Management Branch within its Strategy, Policy,  Programs, and Logistics Directorate. DOD’s High-Risk Areas: Observations on DOD’s Progress and  Challenges in Strategic Planning for Supply Chain Management.
Why GAO Did This Study

DOD operates a complex, multibillion-dollar distribution system for delivering supplies and equipment to U.S. forces globally. DOD's goal in operating this global distribution pipeline is to deliver the right item to the right place at the right time, at the right cost. GAO has reported on weaknesses in DOD's distribution performance and has identified management of DOD's entire supply chain as a high-risk area.
This review assesses the extent to which DOD (1) has established metrics for its distribution performance, (2) is able to accurately measure its performance against distribution standards, and (3) has taken actions to identify causes and develop solutions for any gaps in distribution. GAO analyzed DOD's distribution metrics, DOD's responses to data-reliability questionnaires, and corrective actions, and interviewed DOD officials.

What GAO Found

To measure the performance of its global distribution pipeline, the Department of Defense (DOD) has established three metrics:(1) logistics response time—number of days between the time a customer submits an order and receives it, (2) customer wait time—number of days between the time a maintenance unit, a subset of customers, submits an order and receives it, and (3) time-definite delivery—a measure of the probability (e.g., 85 percent) that a customer will receive an order within an established logistics response time. However, these metrics do not provide decision makers with a complete representation of performance across the entire global distribution pipeline. DOD's definitions of its metrics and guidance for using them do not address cost, although DOD officials stated that cost is included in metrics used to assess other aspects of the supply chain, and the Marine Corps has not established a customer wait time metric. Further, although joint doctrine has set efficient and effective distribution “from the factory to the foxhole” as a priority, these metrics do not always include performance for the final destination. Unless DOD's guidance is revised to ensure the three distribution performance metrics include cost information for decision making and the Marine Corps establishes a customer wait time metric, and DOD incorporates metric performance to the final destination, it will be difficult for DOD to achieve a comprehensive view of the performance of its entire global distribution pipeline.
DOD may not have sufficiently reliable data to accurately determine the extent to which it has met the standards it has established for distribution performance, because it has not developed policy for requiring regular comprehensive assessments to be conducted of its distribution data-collection and reporting processes. Several DOD organizations indicated that they had not conducted this type of review that would be consistent with standards for internal control in the federal government. Specifically, the Air Force indicated that it had not conducted a risk assessment of its data, a part of assessing data reliability. Officials GAO spoke with from U.S. Transportation Command (TRANSCOM), the services, and other DOD components described a number of potential inaccuracies, such as delivery dates recorded after deliveries were actually made, in the data TRANSCOM uses to evaluate distribution performance. Without a policy requiring regular comprehensive data-reliability assessments, DOD lacks reasonable assurance that organizations will conduct such assessments and that data will be sufficiently reliable to effectively measure DOD's performance in distribution.
Although DOD has taken several actions to address gaps in its distribution performance, including conducting performance reviews, and holding workshops to assess problems and develop solutions, these efforts focus on specific areas of distribution, and DOD has not developed a comprehensive corrective action plan for the entire distribution pipeline that identifies the scope and root causes of capability gaps and other problems, solutions, and actions to be taken. In July 2011, GAO recommended DOD develop such a corrective action plan. DOD did not concur, citing several ongoing efforts. However, these efforts do not address gaps across all distribution operations. Thus, implementing GAO's prior recommendation would help identify root causes of and solutions to distribution challenges and better position DOD to address distribution performance.

What GAO Recommends

GAO recommends that DOD (1) revise guidance to ensure its metrics incorporate cost, (2) revise guidance to ensure the Marine Corps establishes a customer wait time metric, (3) incorporate performance information from the final destination, and (4) develop policy requiring data-reliability assessments. DOD concurred with the second and fourth recommendations and partially concurred with the first, stating that there would be no value to affix cost to time-definite delivery. DOD did not concur with the third recommendation, stating that data to the final destination should not be incorporated into DOD's performance metrics. GAO continues to believe the recommendations are valid, as discussed in the report.