DOD's High-Risk Areas: Observations on DOD's Progress and Challenges in Strategic Planning for Supply Chain Management
Published: 2010-07-27T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The Department of Defense's (DOD) management of its supply chain network is critical to supporting military forces in Iraq, Afghanistan, and elsewhere and also represents a substantial investment of resources. As a result of weaknesses in DOD's management of supply inventories and responsiveness to warfighter requirements, supply chain management is on GAO's list of high-risk federal government programs and operations. In July 2010, DOD issued a new Logistics Strategic Plan that represents the department's current vision and direction for supply chain management and other logistics areas. Today's testimony draws from GAO's prior related work and observations from an ongoing review of DOD supply chain management, and, as requested, will (1) describe DOD's prior strategic planning efforts in the area of logistics, (2) highlight key elements in the new Logistics Strategic Plan, and (3) discuss opportunities for improvement in future iterations of this plan. In conducting its ongoing audit work, GAO reviewed the Logistics Strategic Plan, compared elements in the plan with effective strategic planning practices, and met with cognizant officials from DOD, the military services, and other DOD components as appropriate.
section_title: What GAO Found
paragraphs: Prior to the publication of its new Logistics Strategic Plan, DOD issued a series of strategic planning documents for logistics over a period of several years. In 2008, DOD released its Logistics Roadmap to provide a more coherent and authoritative framework for logistics improvement efforts, including supply chain management. While the roadmap discussed numerous ongoing initiatives and programs that were organized around goals and joint capabilities, it fell short of providing a comprehensive, integrated strategy for logistics. GAO found, for example, that the roadmap did not identify gaps in logistics capabilities and that DOD had not clearly stated how the roadmap was integrated into DOD's logistics decision-making processes. GAO's prior work has shown that strategic planning is the foundation for defining what an agency seeks to accomplish, identifying the strategies it will use to achieve desired results, and then determining how well it succeeds in reaching results-oriented goals and achieving objectives. DOD said that it would remedy some of the weaknesses GAO identified in the roadmap. The July 2010 Logistics Strategic Plan, which updates the roadmap, is DOD's most recent effort to provide high-level strategic direction for future logistics improvement efforts, including those in the area of supply chain management. The plan provides unifying themes for improvement efforts, for example, by including a logistics mission statement and vision for the department, and it presents four goals for improvement efforts with supporting success indicators, key initiatives, and general performance measures. One goal focuses specifically on supply chain processes. The plan is aligned to and reiterates high-level departmentwide goals drawn from both the 2010 Quadrennial Defense Review and the 2009 Strategic Management Plan for business operations. Key initiatives in the plan appear to focus on issues that GAO has identified as needing management attention. While the Logistics Strategic Plan contains some of the elements necessary for strategic planning, it lacks some detailed information that would benefit decision makers and guide DOD's logistics and supply chain improvement efforts. The plan lacks specific and clear performance measurement information (such as baseline or trend data for past performance, measurable target-level information, or time frames for the achievement of goals or completion of initiatives), definition of key concepts, identification of problems and capability gaps, and discussion of resources needed to achieve goals. Further, linkages to other plans and some key related activities under way within logistics are unclear, and it is similarly unclear how the plan will be used within the existing governance framework for logistics. Without more specific information in the Logistics Strategic Plan, it will be difficult for DOD to demonstrate progress in addressing supply chain management problems and provide Congress with assurance that the DOD supply chain is fulfilling the department's goal of providing cost-effective joint logistics support for the warfighter.

section_title: Letter
paragraphs: We are pleased to be here today to discuss the Department of Defense’s  (DOD) progress and challenges in developing a strategic plan to resolve  long-standing problems with supply chain management. DOD manages a  vast and complex supply chain network—providing everything from spare  parts and base support items to food and fuel—that is vital to supporting  operations and maintaining readiness. As you are aware, supply chain  management is critical to supporting military forces in Iraq, Afghanistan,  and elsewhere, and it also represents a substantial investment of  resources. While there are many aspects to supply chain management, at  its essence it is the operation of a continuous and comprehensive logistics  process, from the initial customer order of materials or services to the  ultimate satisfaction of the customer’s requirements. DOD’s goal is to  provide effective and efficient supply chain management and to deliver the  right items to the right place at the right time.
As a result of weaknesses in DOD’s management of supply inventories and  responsiveness to warfighter requirements, supply chain management has  been on our list of high-risk federal government programs and operations  since 1990. We initially focused on inventory management and later  determined that concerns extended to other aspects of the supply chain,  including requirements forecasting, asset visibility, and materiel  distribution. For many years, DOD has recognized a need to improve  logistics support and supply chain management, and has issued a series of  planning documents, including strategies, vision statements, and  roadmaps. Earlier this month, the Office of the Secretary of Defense  (OSD) issued DOD’s new Logistics Strategic Plan that represents the  department’s current vision and direction for supply chain management  and other logistics areas. DOD intends to update this plan annually.
In our statement today, we will (1) describe DOD’s prior logistics-related  strategic planning efforts, (2) highlight key elements in DOD’s new  Logistics Strategic Plan, and (3) discuss opportunities for improvement in  future iterations of this plan. Our statement is based both on previous  GAO work and observations from our ongoing review of DOD’s efforts to  improve supply chain management. In our ongoing review, which is being  performed under the authority of the Comptroller General to conduct  evaluations on his own initiative, we interviewed DOD and component  officials to discuss the development of the Logistics Strategic Plan and  reviewed relevant documents, such as current DOD-wide and service-level  plans and strategies. We also compared elements in the plan to practices  found in effective strategic planning that we have identified in previous  work. This work is being performed in accordance with generally accepted  government auditing standards.
subsections: section_title: Background
paragraphs: Before addressing these issues in detail, we would like to review two  primary reasons why effective and efficient supply chain management is  important for DOD. First, supply support to the warfighter affects  readiness and military operations. In fact, the supply chain is a critical link  in determining outcomes on the battlefield and can affect the military’s  ability to meet national security goals. We previously reported on  problems with supply distribution support in Iraq, including shortages of  critical supply items and weaknesses in requirements forecasting, asset  visibility, and distribution. DOD took steps to address such issues, for  example, by establishing a joint deployment and distribution operations  center to coordinate the flow of materiel into the theater. Second, given  the high demand for goods and services to support ongoing U.S. military  operations, the investment of resources in the supply chain is substantial.  DOD spends billions of dollars to purchase, manage, store, track, and  deliver supplies. It is particularly important that these substantial  resources are effectively and efficiently invested in light of the nation’s  current fiscal environment. In fact, the Secretary of Defense has recently  stated that given the nation’s difficult economic circumstances and fiscal  condition, DOD will need to reduce overhead costs and transfer those  savings to force structure and modernization priorities.
Congressional interest has likewise focused attention on areas within  DOD’s logistics portfolio that are in need of improvement. One such area  is inventory management. The Fiscal Year 2010 National Defense  Authorization Act requires DOD to prepare a comprehensive plan for  improving the inventory management systems of the military departments  and the Defense Logistics Agency (DLA), with the objective of reducing  the acquisition and storage of secondary inventory that is excess to  requirements. We understand that DOD is finalizing the development of its  comprehensive plan and expects to release that plan later this year.
As noted earlier, DOD supply chain management has been designated by  GAO as a high-risk area. GAO’s high-risk designation is intended to place  special focus on programs and functions that need sustained management  attention in order to resolve identified problems. We have reported that in  order to successfully resolve supply chain management problems, DOD  needs to sustain top leadership commitment and long-term institutional  support for its strategic planning efforts for supply chain management,  obtain necessary commitments for its initiatives from the military services  and other DOD components, make substantial progress in implementing  improvement initiatives and programs across the department, and  demonstrate progress in achieving the objectives identified in supply chain  management-related strategic planning documents. We have also  encouraged DOD to develop an integrated, comprehensive plan for  improving logistics. While we have previously noted progress DOD has  made toward improving some aspects of supply chain management,  demonstrating sustained improvement has been a continuing challenge  due in part to a lack of outcome-oriented performance measures that are  consistent across the department and that are linked to focus areas, such  as requirements forecasting, asset visibility, and materiel distribution, and  related initiatives.
In addition, successful resolution of weaknesses in supply chain  management depends on improvements in some of DOD’s other high-risk  areas. For example, modernized business systems and the related  investments in needed information technology are essential to the  department’s effort to achieve total asset visibility, an important supply  chain management issue. Regarding financial management, we have  repeatedly reported that weaknesses in business management systems,  processes, and internal controls not only adversely affect the reliability of  reported financial data but also the management of DOD operations. Such  weaknesses have adversely affected the ability of DOD to control costs,  ensure basic accountability, anticipate future costs and claims on the  budget, measure performance, maintain funds control, and prevent fraud.
DOD’s new Logistics Strategic Plan is intended to support other recent  strategic planning efforts in the department, including the completion of  the 2010 Quadrennial Defense Review and the publication of the 2009  Strategic Management Plan. The Quadrennial Defense Review is a  congressionally mandated report that provides a comprehensive  examination of the national defense strategy, force structure, force  modernization plans, infrastructure, budget plan, and other elements of  defense programs and policies. The review is to occur every 4 years, with a  view toward determining and expressing the nation’s defense strategy and  establishing a defense program for the next 20 years. Also in response to  legislative requirements, DOD issued the Strategic Management Plan in  2008 and updated it in 2009. The Strategic Management Plan serves as  DOD’s strategy for improving its business operations, and describes the  steps DOD will take to better integrate business with the department’s  strategic planning and decision processes in order to manage  performance.
section_title: Prior DOD Logistics Planning Efforts Identified Goals and Initiatives but Fell Short of Providing a Comprehensive, Integrated Strategy
subsections: section_title: Sound Strategic Planning Is Critical to an Agency’s Results-Oriented Management
paragraphs: A key starting point in developing and implementing an effective results- oriented management framework is an agency’s strategic planning effort.  Our prior work has shown that strategic planning is the foundation for  defining what the agency seeks to accomplish, identifying the strategies it  will use to achieve desired results, and then determining how well it  succeeds in reaching results-oriented goals and achieving objectives.  Developing a strategic plan can help clarify organizational priorities and  unify the agency’s staff in the pursuit of shared goals. If done well,  strategic planning is continuous, provides the foundation for the most  important things the organization does each day, and fosters informed  communication between the organization and its stakeholders. Combined  with effective leadership, strategic planning provides decision makers with  a framework to guide program efforts and the means to determine if these  efforts are achieving the desired results.
The Government Performance and Results Act (GPRA) and associated  guidance from the Office of Management and Budget (OMB) require,  among other things, that government agencies periodically develop  agencywide strategic plans that contain certain necessary elements to be  used by the agency and external stakeholders in decision making.  Furthermore, recent OMB guidance concerning GPRA-related strategic  plans stated that such a strategic plan should also provide sufficient  context to explain why specific goals and strategies were chosen. The  strategic planning requirements of GPRA and its implementation guidance  generally only apply to agencywide strategic plans.
While GPRA does not apply to DOD’s Logistics Strategic Plan, our prior  work has identified many of GPRA’s requirements as the foundation for  effective strategic planning. Our prior work has shown that organizations  conducting strategic planning need to develop a comprehensive, results- oriented management framework to provide an approach whereby  program effectiveness is measured in terms of outcomes or impact, rather  than outputs, such as activities or processes. Such a framework includes  critical elements such as a comprehensive mission statement, long-term  goals, strategies to achieve the goals, use of measures to gauge progress,  identification of key external factors that could affect the achievement of  goals, a description of how program evaluations will be used, and  stakeholder involvement in developing the plan. DOD internally has  recognized the importance of these critical elements. For example, the  Office of the Assistant Secretary of Defense for Logistics and Materiel  Readiness directed each of the services to conduct strategic planning for  depot maintenance and to submit plans that focus on achieving DOD’s  strategy. The services were directed to include in their depot maintenance  plans many of the same strategic planning elements just mentioned. In  addition, we have reported that a strategic planning process should align  lower-level goals and measures with departmentwide goals and measures,  assign accountability for achieving results, be able to demonstrate results  and provide a comprehensive view of performance, and link resource  needs to performance. Further, such a strategic planning process and the  resulting plan should set strategic direction, prioritize initiatives and  resources, establish investment priorities and guide key resource  decisions, and monitor progress through the establishment of performance  goals and measures. Finally, we found in previous work that DOD’s prior  strategic planning efforts for logistics lacked information necessary to be  more useful tools for senior leaders, such as the inclusion of identified  logistics problems, performance measures, and a method for integrating  plans into existing decision-making processes.
section_title: DOD Has Issued Prior Strategic Plans on Logistics and Supply Chain Management
paragraphs: Over a number of years prior to the publication of its Logistics Strategic  Plan, DOD issued a series of strategic planning documents for logistics  and the management of its supply chain. These plans have differed in  scope and focus, although they have typically included a number of high- level goals and related initiatives. For example, for a period of several  years beginning in the mid-1990s, DOD issued a series of strategic plans  for logistics. Later, the 2004 DOD Logistics Transformation Strategy  attempted to reconcile several of DOD’s ongoing logistics approaches,  namely focused logistics, force-centric logistics enterprise, and sense and  respond logistics. In 2005, DOD issued the first iteration of its Supply  Chain Management Improvement Plan to address some of the systemic  weaknesses that were highlighted in our reports. That same year, DOD  produced its Focused Logistics Roadmap, which catalogued current (“as  is”) efforts and initiatives.
Building on the “as is” Focused Logistics Roadmap, DOD recognized the  need for a comprehensive, integrated strategy for transforming logistics  and released its Logistics Roadmap in July 2008 to provide a more  coherent and authoritative framework for logistics improvement efforts,  including supply chain management. DOD indicated that the roadmap  would be a “living” document and that future updates would incorporate  new initiatives and programs, report progress toward achieving logistics  capability performance targets, and help connect capability performance  targets to current and planned logistics investment for an overarching  view of DOD’s progress toward transforming logistics.
The roadmap documented numerous initiatives and programs that were  then under way and organized these around goals, joint capabilities, and  objectives. However, we found that the roadmap was missing information  that would make it more useful for DOD’s senior leaders. First, it did not  identify the scope of DOD’s logistics problems or gaps in logistics  capabilities. Second, it lacked outcome-based performance measures that  would enable DOD to assess and track progress toward meeting stated  goals and objectives. Third, DOD had not clearly stated how it intended to  integrate the roadmap into DOD’s logistics decision-making processes or  who within the department was responsible for this integration. A  comprehensive, integrated strategy that includes these three elements is  critical, in part, because of the diffuse organization of DOD logistics,  which is spread across multiple DOD components with separate funding  and management of logistics resources and systems. Moreover, we stated  that without these elements, the roadmap would likely be of limited use to  senior DOD decision makers as they sought to improve supply chain  management and that DOD would have difficulty fully tracking progress  toward meeting its goals.
To address these weaknesses, we recommended that DOD include in  future updates of its Logistics Roadmap the elements necessary to have a  comprehensive, integrated strategy for improving logistics and to clearly  state how this strategy would be used within existing decision-making  processes. Specifically we recommended that DOD  identify the scope of logistics problems and capability gaps to be  addressed through the roadmap and associated efforts;    develop, implement, and monitor outcome-focused performance  measures to assess progress toward achieving the roadmap’s  objectives and goals; and    document specifically how the roadmap will be used within the  department’s decision-making processes used to govern and fund  logistics and who will be responsible for its implementation.
DOD officials concurred with our recommendations and stated that they  planned to remedy some of these weaknesses in their follow-on efforts to  the roadmap. DOD officials subsequently stated that they had begun a  series of assessments of the objectives included in the roadmap in order to  identify capability gaps, shortfalls, and redundancies and to recommend  solutions. As part of this assessment process, DOD officials stated that  supply, maintenance, deployment, and distribution managers had been  tasked with determining which specific outcome-oriented performance  metrics could be linked to each of the objectives and goals within the  roadmap in order to assess progress toward achieving desired results.  DOD officials said that the results of these assessments would be included  in the next version of the roadmap, which was scheduled for release in  2009. DOD further stated that a joint Executive Advisory Committee made  up of senior leaders responsible for implementing logistics programs and  initiatives had been established to guide the roadmap process to ensure  that it is a useful tool in decision making.
section_title: DOD’s 2010 Logistics Strategic Plan Provides High-Level Strategic Direction
paragraphs: The 2010 Logistics Strategic Plan is DOD’s most recent effort to provide  high-level strategic direction for future logistics improvement efforts,  including those in the area of supply chain management. According to  DOD officials, the plan serves as an update to the 2008 Logistics  Roadmap. They further explained that the plan is an effort to identify the  enduring and ongoing logistics efforts within the department and provide a  good balance between the need for specificity and generality, without the  level of detail included in the prior roadmap and with a broader scope than  that provided in the Supply Chain Management Improvement Plan.
The Logistics Strategic Plan articulates the department’s logistics mission  and vision. The plan further states that to continue improving logistics  support to the warfighter, it is essential that all elements of DOD’s logistics  community take steps to better integrate logistics with strategic planning  and decision processes and to manage logistics performance. To drive the  department’s logistics enterprise toward that end, the plan includes goals,  key initiatives, and some information on how DOD plans to track progress,  including general performance measures. Through the inclusion of these  elements, the plan provides unifying themes for improvement efforts.
The Logistics Strategic Plan reiterates high-level department goals drawn  from both the Quadrennial Defense Review and the Strategic  Management Plan. For example, the Logistics Strategic Plan  incorporates two of the Strategic Management Plan’s business priorities:  support contingency business operations to enhance support to the  deployed warfighter and reform the department’s acquisition and support  processes. In addition, the Logistics Strategic Plan contains four logistics  goals:  Goal 1: Provide logistics support in accordance with warfighter  requirements.
Goal 2: Institutionalize operational contract support.
Goal 3: Ensure supportability, maintainability, and costs are considered  throughout the acquisition cycle.
Goal 4: Improve supply chain processes, synchronizing from end-to-end  and adopting challenging but achievable standards for each element of the  supply chain.
The plan lists 30 key initiatives related to the four logistics goals.  According to a senior DOD official, the initiatives were selected based on  the determination of officials within the Office of Assistant Secretary of  Defense for Logistics and Materiel Readiness and were subsequently  provided to the military services for review. In our review of the plan, we  noted that key initiatives appear to focus on issues that we have identified  as needing management attention. For example, our prior work on  warfighter and logistics support in Iraq and Afghanistan has identified  issues that directly relate to initiatives that support Goal 1—provide  logistics support in accordance with warfighter requirements. We recently  testified that DOD has taken steps to improve distribution of materiel to  deployed forces in Afghanistan; however, we found several challenges that  included difficulties with transporting cargo through neighboring  countries and around Afghanistan, limited airfield infrastructure, and lack  of full visibility over cargo movements. The Logistics Strategic Plan  contains an initiative to facilitate logistics support for Afghanistan,  including interagency coordination and development of transportation and  distribution alternatives, as needed. In addition, our work has also raised  concerns about the lack of risk assessments conducted for DOD’s Civil  Reserve Air Fleet program, and DOD’s management of the program has  not provided air carrier participants with a clear understanding of some  critical areas of the program. DOD’s Logistics Strategic Plan includes a  related initiative.
With regard to Goal 2—institutionalize operational contract support—we  have issued reports over a period of many years on progress and problems  with contract support during contingency operations. We testified in  March 2010 that DOD had taken steps to institutionalize operational  contract support by appointing a focal point to lead efforts, issuing  guidance, and beginning to determine its reliance on contractors; but we  also identified ongoing challenges associated with contractor support.  These challenges include inadequate oversight and management of  contractors, providing training on how to work effectively with  contractors during operations, ensuring proper screening of local and  third-country nationals, compiling reliable data on the number of  contractors supporting U.S. forces in contingencies, and identifying  contractor requirements.
Our prior work related to Goal 3—ensure supportability, maintainability,  and costs are considered throughout the acquisition cycle—includes  reviews of weapon system life cycle management, depot maintenance, and  sustainment costs. For example, while we have noted that DOD has placed  increased emphasis on life cycle management, we reported recently that  DOD lacks key information on weapon system operating and support costs  and therefore may not be well-equipped to analyze, manage, and ultimately  reduce these costs.
Although all four goals of the Logistics Strategic Plan have aspects  relating to supply chain management, Goal 4 explicitly addresses the need  to improve supply chain processes. DOD identifies four success indicators  and three performance measures for this goal. The success indicators  address both the efficiency and effectiveness of DOD’s supply chain  management. For example, one success indicator states that  enterprisewide solutions for the management of inventories and services  will optimize total supply chain costs, and another states that effective  demand planning will increase forecast accuracy and reduce costs. The  performance measures, which are listed separately from the success  indicators, include the percent of negotiated time definite delivery  standards met globally (by combatant command), the percent of actual  demand compared to forecasted demand, and number of days of  customer wait time (time from submission of order to receipt of order) by  lift area. The Logistics Strategic Plan lists 12 key initiatives that support  Goal 4. The key initiatives focus on, among others issues, life cycle  forecasting, the distribution process, automatic identification technology,  and the department’s human capital strategy for logistics personnel. We  have reported on some of these issues. For example, we reported in 2009  that DOD has taken steps to implement automatic identification  technologies, such as item unique identification and passive radio  frequency identification, to identify and track equipment and supplies, but  has experienced difficulty in fully demonstrating return on investment to  the military services responsible for implementation.
The Logistics Strategic Plan also includes some information on how DOD  plans to track progress. The plan lists success indicators and performance  measures under each goal, and it states that the plan will be implemented  by following the performance management framework found in the  Strategic Management Plan. This framework contains six steps: plan, set  targets, cascade measures, align processes, assess and report, and correct.  By modeling the performance management framework of the Logistics  Strategic Plan after that of the broader Strategic Management Plan, DOD  officials expect that this alignment will naturally have a complementary,  behavior-shaping influence on organizations subject to both plans.
section_title: Logistics Strategic Plan Lacks Specificity Regarding Strategies and Time Frames
subsections: section_title: Plan Lacks Detailed Information in Several Areas
paragraphs: Although the Logistics Strategic Plan contains some key elements of an  effective strategic plan and provides unifying themes for improvement  efforts, it lacks detailed information regarding strategies and time frames  that would help to specify how and when goals will be achieved. In our  review of Goal 4, which focuses on supply chain processes, we found that  detailed information was lacking in several areas, which may limit the  plan’s usefulness as a tool for decision makers, including:    Performance measurement information. While the plan presents  three performance measures associated with Goal 4, it lacks baseline  or trend data for past performance, measurable target-level  information, or time frames for the achievement of goals or completion  of initiatives. These are among the characteristics of successful  performance measures that we have identified in our prior work.  Such elements are needed to monitor the progress of implementation  efforts and to determine how far DOD and its components must go to  achieve success. In addition, there is not a clear linkage between the  three measures and the success indicators or key initiatives under  Goal 4. A senior DOD official stated that the performance measures in  Goal 4 were included to present information about the overall  functioning of the supply chain rather than specific improvement  efforts.
Key concepts. Some concepts in the plan express broad, positive  ideas but are not fully defined. For example, Goal 4 states that  processes should be “synchronized end-to-end,” and a success  indicator states that supply chain costs should be “optimized.” The  plan, however, does not define what aspects of the supply chain need  further synchronization, how costs should be further optimized, or  how DOD will gauge progress in these efforts.
Problems and capability gaps. The plan does not include a  discussion about overall departmentwide or DOD component-specific  logistics problems or challenges, nor does it indicate the extent or  severity of any identified capability gaps. Such information is  necessary to establish a clear and common understanding of what  problems and gaps the plan is trying to address. For example, the plan  does not discuss logistics problems encountered during operations in  Iraq and Afghanistan. We raised a similar concern about the 2008  Logistics Roadmap.
Resource needs. The plan does not discuss resources needed to  implement improvement efforts. As noted, an effective strategic  planning process should be able to link resource needs to  performance, prioritize initiatives and resources, establish investment  priorities, and guide key resource decisions.
In the absence of more detailed information in these areas, the usefulness  of the Logistics Strategic Plan for decision making may be limited.  Measuring performance, for example, allows for tracking progress toward  goals and gives managers crucial information on which to base their  decisions. In addition, if the plan included information on problems,  capability gaps, and resource needs, managers could use the plan as a  basis for establishing priorities for formulating, funding, and implementing  corrective actions. DOD has recognized the need to include some of this  information, and the plan states DOD’s intent to establish baseline  performance and then measure that performance against interim targets  through an annual assessment process.
section_title: Plan Does Not Show Explicit Links with Related Supply Chain Management Plans and Activities
paragraphs: Although the Logistics Strategic Plan is linked to some broader strategic  plans, it does not show explicit links with other strategic plans of supply  chain or logistics defense components, and the link between that plan and  some major logistics activities is not clear. These plans and activities could  have a major role in shaping future logistics capabilities and functions.  Some DOD components have issued their own strategic plans, but the  linkages between the logistics-related issues in those plans and the  Logistics Strategic Plan are not transparent. DOD states in the Logistics  Strategic Plan that the combatant commands, military departments, and  defense agencies should review and revise their respective strategic plans  and associated goals, objectives, measures, and targets to reflect the  Logistics Strategic Plan’s broader priorities. Moreover, DOD indicates  that logistics leaders at the component level may find it necessary to  realign operations and organizational structures to better integrate  functional activities with larger end-to-end processes. However, the  mechanism for ensuring that needed changes are made is not specified.
Further, the plan does not reflect some activities and information that  could affect supply chain management. For example, the military services  have ongoing supply chain management improvement efforts under way;  however, there is no explicit mention of these service-level efforts or  goals, initiatives, or measures, even though the services have important  responsibilities for carrying out logistics and supply chain functions. In  addition, officials from various components stated that the Joint Supply  Joint Integrating Concept, co-led by the Joint Staff and DLA, is a major  ongoing effort. However, this concept is not discussed in the Logistics  Strategic Plan. The purpose of this concept is to guide development and  employment of future joint supply capabilities.
It is not clear how the Logistics Strategic Plan will be used within the  existing logistics governance framework to assist decision makers and  influence resource decisions and priorities. For example, the plan states  that the Joint Logistics Board and executive-level functional logistics  governance bodies play critical roles in providing oversight and guidance  to implementation of the Logistics Strategic Plan. While the Joint  Logistics Board and other bodies may play critical roles in DOD’s supply  chain management improvement efforts, their roles are not defined in the  plan. In addition, the organizations responsible for key initiatives included  in the plan are not identified.
Similarly, the plan does not clearly define how oversight of plan  implementation will occur. The plan briefly mentions the development of a  Logistics Strategic Management Report that, along with a management  dashboard of measures maintained by the Under Secretary of Defense for  Acquisition, Technology and Logistics, will be used to report progress.  However, the specific process or responsibilities for ensuring that  corrective actions are taken in response to underperformance are not  detailed in the plan. DOD officials stated that corrective actions are the  responsibility of process or activity owners, while the responsibilities  defined in the Logistics Strategic Plan include “implement corrective  actions” as a responsibility of the Assistant Secretary of Defense for  Logistics and Materiel Readiness. In its description of performance  management, the plan states that accountable individuals will identify and  implement corrections. Lastly, budget development is an important aspect  of the existing governance framework, yet DOD has not shown how the  plan will be used to help shape logistics budgets developed  departmentwide or by individual components.
In conclusion, strategic plans need to remain at a high enough level to  provide a clear vision and direction for improvement, but without more  specific information in the Logistics Strategic Plan, it will be difficult for  DOD to demonstrate progress in addressing supply chain management  problems and provide Congress with assurance that the DOD supply chain  is fulfilling the department’s goal of providing cost-effective joint logistics  support for the warfighter.
Mr. Chairman, this concludes our prepared remarks. We would be happy  to answer any questions you or other Members of the Subcommittee may  have at this time.
section_title: Contacts and Acknowledgments
paragraphs: For further information regarding this testimony, please contact Jack E.  Edwards at (202) 512-8246 or edwardsj@gao.gov or William M. Solis at  (202) 512-8365 or solisw@gao.gov. Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page  of this statement. Individuals making contributions to this testimony  include Tom Gosling, Assistant Director; Jeffrey Heit; Suzanne Perkins;  Pauline Reaves; and William Varettoni.
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