DOD Supply Chain A Bust

You would think that the DOD supply chain would be one of the best in the world since its primary purpose is to protect humans and save lives. This is clearly not the case. As the GAO recently pointed out, after two years of evaluation and research, the DOD July 2010 version of their Logistics Strategic Plan lacks specific and clear performance measurement information, definition of key concepts, identification of problems and capability gaps, and discussion of resources needed to achieve goals. Additional problems relate to linkage with exisitng DOD resources and how plan governance will occur.

This is disappointing to a taxpayer, a consultant that creates supply chain strategies, and a trainer that teaches the subject. I’m sure that the DOD spent millions of dollars of resources to create this plan. Without a defined strategy and metrics to measure performance, how does anyone know whether the DOD is meeting its established goals.

The DOD should now immediately create the outline of a strategy that includes:

• A SWOT Analysis
• An evaluation of the supply chain environment
• Internal and External Resources
• Validation of customer needs
• Objectives
• Metrics
• Resources
• Implementation Plan

No wonder that the DOD has over $10 Billion of spare parts and billions of this amount unusable or excess.

Congress should hold DOD accountable for this new strategy and require reports on performance. President Obama wants to craft a strategy for Afghanistan. What he should be sure to do is to ensure that the DOD Logistics and Supply Chain plan supports and is integrated into the overall strategy.

Cross-Functional Teams and Management Support

There was a great post today on the factors leading to success for cross-functional teams.  One of the factors mentioned was support from executive leadership.  In my experience, this is not just a factor, it is THE factor in gaining buy-in from team members and ensuring their participation.  When the top managers are engaged in the process, team members know that their efforts have the potential to drive organizational change, making them more likely to add a positive contribution to the team’s efforts.

Without this support from management, team members often feel that decisions made by the team will not be implemented and treat team meetings like one more interference in completing their regularly scheduled work.

GAO Comments on Coordinated Rail Procurements Shortsighted

The GAO just released a report entitled ” Potential Rail Car Cost-Saving Strategies Exist”. Not only is the report’s title not appropriate but the content of the report is also off-track. The report recommends standardizing rail car specification, joint procurements to increase volume, and changing the way that the FTA funds rail car procurements.

One of the flaws in the research related to including supplier comments. The market is a monosomy, and the rail car manufacturers would not want to change a highly profitable business of $2.3 Billion per year. Another flaw is that the writers do not undessrtand the government contracting process.

Here is what the report said:

The procurement process takes two years- Agencies should be able to complete the process in six months

The five year limit on ordering is unduly restrictive- This is a way to allow for competition among the major players in the market and to take advantage of market changes regarding pricing and availability

Agencies that but jointly should receive more federal funds-The dynamics of various agencies within the U.S. is incredibly independent and subject to local initiatives.

A more effective direction for rail car purchases is to establish a way for all agencies to get market data in this industry, prices paid, and terms and conditions used. This would improve the efficiency of purchases.

Also, if the GAO can ensure that FTA receives it money on October 1st of each year, the agencies will have more time to complete their procurements rather than today’s reality of funding in the December to February timeframe. Funding certainty does play a large part in procurement efficiency.