The private sector, driven by a global competitive environment, faces the challenge of improving services while lowering costs. As a result, many companies have adopted innovative business practices to meet customer needs and retain profitability. DOD faces a similar challenge of providing better service at a lower cost. With the end of the Cold War, DOD’s logistics systems must support a smaller, highly mobile, high-technology force. Due to the pressures of budgetary constraints, DOD also must seek ways to make logistics processes as efficient as possible. To provide reparable parts for its approximately 7,300 aircraft (primarily helicopters), the Army uses an extensive logistics system that is based on a management process, procedures, and concepts that have evolved over time but are largely outdated. Reparable parts are expensive items that can be fixed and used again, such as hydraulic pumps, navigational computers, and landing gear. The Army’s logistics system, often referred to as a logistics pipeline, consists of a number of activities that play a role in providing aircraft parts where and when they are needed. These activities include the purchase, storage, distribution, and repair of parts, which together require billions of dollars of investments in personnel, equipment, facilities, and inventory. The Army’s depot repair location for helicopters and aviation parts is the Corpus Christi Army Depot (CCAD), Texas. The Army also relies on this pipeline for consumable parts (e.g., nuts, bearings, and fuses) that are used extensively to fix reparable parts and aircraft. The Defense Logistics Agency (DLA) provides most of the consumable parts that Army repair activities need and handles a large part of the warehousing and distribution of reparable parts. Although not as large as the Army, commercial airlines have similar operating characteristics to the Army. They maintain fleets of aircraft that use reparable parts and operate logistics pipelines having similar activities. For both the Army and commercial airlines, time plays a crucial role in the responsiveness of logistics operations and the amount of inventory needed. Pipeline complexity also adds to logistics costs by increasing overhead and adding to pipeline times. Condensing and simplifying pipeline operations, therefore, will simultaneously improve responsiveness and decrease costs by reducing inventory requirements and eliminating the infrastructure (warehouses, people, etc.) that is needed to manage unnecessary material. Over the last 10 years, we have issued more than 30 reports addressing the Army’s logistics problems. These reports have highlighted issues related to large inventory levels, inefficient repair practices, and information system problems. While the Army has taken actions to correct its logistics problems, these problems have not been completely resolved. The Army’s current depot repair pipeline, characterized by a $2.6 billion inventory investment, is slow, unreliable, and inefficient. For 24 different types of aviation parts examined, we calculated the Army’s logistics system took an average of 525 days to ship broken parts from field units to the depot, repair them, and return the repaired parts to using units. We estimated 507 days (97 percent) of this time was the result of unplanned repair delays, depot storage, or transportation time. In another measure of efficiency, we calculated the Army uses its inventory 6 times slower than an airline in our comparison. The amount of time required by the system is important because the Army must invest in enough inventory to resupply units with serviceable parts and cover the amount of time it takes to move and repair parts through this process. If this repair time were reduced, inventory requirements would also be reduced. For example, in an Army-sponsored RAND study, it was noted that reducing the repair time for one helicopter component from 90 days to 15 days would reduce inventory requirements for that component from $60 million to $10 million. Also, in a 1996 preliminary report to the Army, RAND concluded that “if non-value-added steps were reduced or eliminated, repair cycle times could become much shorter and far less variable. The benefits for the Army would be greater weapon system availability, more regular and predictable supply of serviceable components, savings from reduced pipeline inventory requirements, and a repair system more flexible and responsive in serving the needs of the combat commander.” To calculate the amount of time the Army’s system takes to repair and distribute parts using the current depot repair process, we judgmentally selected 24 types of Army aviation parts and computed the time the parts spent in four key segments of the repair process. The key segments were (1) preparing and shipping the parts from the bases to the depot, (2) storing the parts at the depot before induction into the repair shop, (3) repairing the parts, and (4) storing the parts at the depot before they were shipped to a field unit. For the parts we selected, it took the Army an average of 525 days to complete this process. Table 1 shows the fastest, slowest, and average time the Army took to complete each of the four pipeline segments. As shown in table 1, the repair pipeline time was both long and highly variable. The fastest time the Army took to complete any of the four pipeline segments was less than 1 day, but the slowest times ranged from 887 days to more than 1,000 days. In contrast, one airline we found to be using leading-edge practices, British Airways, took a much shorter period of time to move a part through its logistics system. As shown in figure 1, the average time to move a gearbox assembly through the first three segments was 116 days for British Airways while the Army’s average time was 429 days, or about 4 times longer. While the Army’s repair time was twice as long as British Airways, most of the Army’s time occurred in the shipping and storage segments. In part, because of this slow process, the Army has invested billions of dollars in inventory to support peacetime operations that is not used as effectively as it could be. DOD reported that as of September 1995, the value of the Army’s reparable aviation parts inventory was $2.6 billion,with 74 percent ($1.9 billion) allocated to support daily operations, 11 percent for war reserves, and 15 percent allocated as long supply— a term identifying stock that is excess to current Army requirements. One measure of the repair process efficiency is a calculation of how often an organization uses its inventory. This calculation is called the turnover rate. The higher the turnover rate, the more often a company is using its inventory. At one airline we visited—British Airways—the turnover rate for reparable parts was 2.3 times each year. In comparison, we calculated that, based on fiscal year 1995 repairs, the Army’s turnover rate was 0.4 times, or about 6 times slower (see fig. 2). This calculation neither includes inventory the Army has allocated for war reserves nor inventory the Army has stored at field level organizations, which is classified as retail inventory. Comparing the Army’s engineering estimate of the repair time that should be needed to complete repairs with the actual amount of time taken is another measure of the repair process’ efficiency. Of the 525-day average pipeline time from our sample, the Army estimates an average of 18 days should be needed to repair the item(s). The remaining 507 days, or 97 percent of the total time, were spent to transport or store the part(s) or for unplanned repair delays. Several factors contribute to the Army’s slow logistics pipeline. Four of the factors are (1) slow processing and shipping of parts from the field to the repair depot, (2) delays in inducting parts into the repair shops, (3) inefficient organization of the depot repair process, and (4) lack of consumable parts needed to complete repairs. Because of these factors, parts sit idle or are delayed in the repair process, which lengthens the total repair time. Preparing and shipping a broken part from the operating unit to the depot for repair—a process called “retrograde”—took an average of 75 days for the items we examined. In contrast, British Airways estimated that only 2 days were needed to prepare and ship components from operating locations to its repair centers. In May 1996, RAND also found the Army’s retrograde process to be slow; the median retrograde time for a sample of items it measured from the point when maintenance personnel determined a part was not reparable at the operating unit until it arrived at a DLA depot storage facility was 22 days and the longest time was more than 100 days. Our sample data show that broken parts may sit in storage at the depot facility for a long period of time until a certain quantity of parts are moved to or are “inducted” into the repair shop. Because different operating units ship parts to the depot in various quantities, each part that is inducted for repair may be stored for different amounts of time. For example, the Army inducted helicopter gearboxes into the repair shop 5 times over a 2-year period. The average storage time for the parts inducted in each group ranged from 15 to 366 days. Table 2 shows the quantity of parts inducted and the average amount of days the parts were stored before being inducted. According to Army officials, parts sit in storage before induction because of the method that is used to plan repair programs. Item managers periodically review and compare inventory levels and the projected requirements for parts. Based upon this analysis, an item manager determines how many parts should be either repaired or purchased to meet the Army’s anticipated needs. For items that need to be repaired, the Army develops a repair program, which includes a funding estimate for the repairs. The depot can induct parts into the repair process only after this program and its related funding have been approved. Also, parts may sit in storage because an excessive amount of inventory is available to meet current and projected Army requirements. As previously discussed, 15 percent of the Army inventory is classified as long supply, or excess to current requirements.