Defense Spare Parts Inventory Management is Unacceptable
June 14, 2010 Leave a comment
I just finished reviewing the GAO report entitled “Defense Inventory: Defense Logistics Agency needs to expand on efforts to more effectively manage spare parts”. Once I finished reading the report, I realized what an understatement the title was. It should have read “DLA inventory management inept and wasteful”. Here is why:
1) 27% of the inventory is inactive…that means there has been no demand for the spare parts
2) 15% of the inventory represents over 2 years of demand and almost 10% of inventory represents over 10 years of usage.
These results are terrible. Private industry performance is typically 300% better and corrective actions are much more drastic than what was proposed in the report. The litany of deficiencies noted in the report included inaccurate forecasting, poor lead time estimates, ineffective satisfaction of customer needs, lack of timely data, poor contract administration, lack of contingency planning, and poor tracking of costs. These are significant problems. The corrective actions proposed and accepted by GAO related to planning and evaluation, not actions to be taken to improve performance. I would suggest the following best practices:
1) set min-max levels for inventory based on a formula
2) have contractor’s hold inventory
3) implement lean management processes
4) eliminate obsolete parts
A casual reader of the report will leave with an impression of more studies and planning, and notcie the lack of clear resolve by the DLA to significantly improve performance. Hopefully, Congress and the public will push for more effective corrective action and an expeditious resolution for the poor and unacceptable performance.
A Plague of Spreadsheets
August 11, 2010 by J Robinowitz Leave a comment
Interesting post over at the 21st Century Supply Chain on the continuing use of spreadsheets for the purpose of business intelligence. The big question seems to be why are companies still using them at all. 21st Century gives a few reasons which are all definitely valid, but they also leave out some of the ones I see as key.
In my experience, many companies have implemented business intelligence software in an ad hoc way, buying the core modules without paying any attention to the add-ons. This results in software solutions that are great for day-to-day operations, but not so great for aggergating data to use when making strategic decisions. Take spend analysis for example, the big ERP systems have great capabilities when it comes to entering purchase orders and contracts data and looking up individual purchases. But what they don’t have is some way of looking at the entire spend, which is what we really need to make strategic decisions. So, what’s the solution? Exporting the data into a spreadsheet and running some pivot tables of course.
Another issue is the high degree of customization within the business intelligence space. So many systems are customized to the point where each organization is essentially running a different software application, even if they are all running Oracle or SAP. As a consultant this means it is impossible for me to run a complementary software package and have client data be usable. Again, the solution is to export the data into a spreadsheet and complete the analysis there.
Even some of the stand-alone applications require the data first be exported to a spreadsheet, manipulated, and then re-imported due to compatibility issues.
Until companies recognize that just implementing business intelligence systems is not a panacea and that the systems must be properly implemented with all the necessary tools to meet the needs of the business, spreadsheets are going to be here to stay.
Filed under Commentary Tagged with Business Intelligence, ERP, planning, procurement, software, spend, strategy