The DOD supply chain is a global network that provides materiel, services, and equipment to the joint force. The Under Secretary of Defense for Acquisition, Technology and Logistics and its subordinate, the Assistant Secretary of Defense for Logistics and Materiel Readiness, prescribe policies and procedures for the conduct of logistics, maintenance, materiel readiness, and sustainment support, to include supply and transportation, and monitor and review these activities. Inventory management, a key component of the DOD supply chain, is the process of determining requirements and procuring, managing, cataloging, distributing, overhauling, and disposing of materiel. Management and oversight of DOD inventory is a responsibility shared among the Under Secretary of Defense for Acquisition, Technology and Logistics, DLA, and the services. Specifically, DLA procures, stores, and distributes mostly consumable items—those that are normally expended or intended to be used up beyond recovery or repair—and provides these items to the services when requisitioned in support of approximately 2,400 weapon systems. On the other hand, the services manage mostly reparable items—items that are generally more cost-effective to repair and reuse than to dispose of and replace. DOD maintains weapon systems (e.g., aircraft and ships) and equipment (e.g., generators and radars) that require regular and emergency maintenance to continue being available for DOD to meet national security goals. To sustain these systems and equipment at the depot level, the department uses a combination of military depots—public- sector facilities that are government-owned and government-operated— and private-sector contractors. Depot maintenance plays a key role in sustaining the complex weapon systems and equipment both in peacetime and during a mobilization, contingency, or other emergency. DOD’s 17 depot maintenance industrial sites are managed by the Army, Navy, Air Force, and Marine Corps, as shown in figure 1 below. These sites, which are managed by the service materiel commands—Army Materiel Command, Naval Sea Systems Command, Naval Air Systems Command, Air Force Materiel Command, and Marine Corps Logistics Command—repair and overhaul a wide range of vehicles and other military assets, including helicopters, combat vehicles, air defense systems, ships, fighter and bomber aircraft, intercontinental ballistic missiles, jet aircraft engines, components, and software. As a result of the 2005 BRAC round and a June 2005 administrative decision by the Under Secretary of Defense for Acquisition, Technology, and Logistics, the services were required to transfer to DLA all of their supply, storage, and distribution functions at depot-level industrial sites. These actions were intended to improve the efficiency of the supply chain by reducing the number of supply distribution warehouses and related excess capacity while enhancing the effectiveness of logistics support by reconfiguring DOD’s wholesale supply, storage, and distribution network and consolidating functions at several service maintenance sites. Traditionally, DLA had been DOD’s wholesale inventory manager for consumable items; however, the transfer of supply, storage, and distribution functions at the depot maintenance industrial sites, as recommended by BRAC, placed DLA in the role of managing consumable items at the retail level. As a wholesale inventory manager, DLA procures consumable items from commercial vendors and stores them in distribution warehouses to be requisitioned by the retail supply system, which is typically managed by the services. As a retail inventory manager at industrial sites, DLA manages the supply, storage, and distribution of consumable items at the industrial site and provides the items directly to the user (e.g., the depot artisan working to repair a weapon system). While sharing some similarities, the management of inventory at the wholesale and retail levels has a different focus—namely placing DLA in a direct, prominent role supporting service depot-level maintenance. Specifically, DLA, as a wholesale inventory manager, is typically replenishing retail inventory stocks, but as a retail inventory manager at the industrial sites DLA must have the part when it is needed; otherwise, there are operational effects to the depot maintenance being conducted on the end item being repaired. In 2007, 2008, and 2009, we reviewed the implementation of the supply, storage, and distribution BRAC recommendation and reported that a number of the assumptions used by the BRAC commission to calculate the potential cost savings of this recommendation were not validated and relied on flawed data, and that DLA faced numerous challenges in implementing the recommendation. For example, service officials expressed concerns that inserting DLA into depot operations may hinder their ability to meet depot production schedules and maintain equipment readiness. However, we did not make any recommendations pertaining to the transfer of supply, storage, and distribution functions at the industrial sites in those reports given that DLA’s planning process incorporated several key elements that were intended to provide a smooth transition and mitigate the risk of disrupting depot operations. The depot maintenance process across the services generally involves three primary steps–planning, disassembly, and rebuilding–as shown in figure 2 below. Step 1: The depot maintenance process begins by planning the maintenance to be conducted on a particular end item, which could be a weapon system (e.g., C-5 Galaxy cargo plane, M1A2 Abrams tank) or depot-level reparable (e.g., a ship blade propeller, brake assembly). Initially, a detailed statement of the specific work to be performed is developed for the end item. Once this scope of work is decided upon, a number of key planning factors are necessary to identify the materials and spare parts needed for the maintenance: (1) the number of end items to go through maintenance, (2) the schedule for inducting the end items into maintenance, (3) the bill of materials (i.e., the list and quantity of parts needed to conduct the maintenance on the end item), and (4) the replacement factors (i.e., the estimated frequency of replacement based on historical trends and engineering estimates) for the parts on the bill of materials. These planning factors are used to forecast the spare parts needed to conduct the maintenance on the end item, as shown in figure 3 below. Proactive and accurate planning is necessary to ensure the timely availability of spare parts for the maintenance process, especially since the acquisition lead time for spare parts can range from days to years depending upon the specific part. However, in 2011, 2013, and 2015, we found that part shortages was one of several factors negatively affecting the industrial sites’ ability to complete maintenance timely and efficiently. Accurate planning is also important in preventing the accumulation of excess inventory. Step 2: Once the end item is inducted into the maintenance process it is disassembled. During this step, the end item and its components are inspected to determine the type and degree of repair required or whether the parts need to be replaced. While some parts are always replaced, other parts are assessed for repair. Repairs vary by the time and type of use since the last overhaul. Because usage differs from end item to end item, demands on the supply chain for new and repaired items varies. Step 3: Following disassembly, the end item is then rebuilt with new and repaired parts. In general, the rebuilding of the end item follows a sequential process, necessitating the timely availability of new and repaired parts to ensure the efficient reassembly of the end item. Part shortages (i.e., backorders) require workarounds–additional efforts to obtain a part (e.g., local manufacturing or obtaining parts from another end item)–that can delay maintenance and negatively affect productivity and costs of depot maintenance. Once the end item is rebuilt, then it is tested and validated for sale to and use by the customer (e.g., a military unit). Navy F/A-18 Hornet Maintenance One of the primary end items repaired at Fleet Readiness Center (FRC) Southwest and FRC Southeast is the F/A-18 Hornet. The first aircraft was manufactured in the late 1970s and became operational in the early 1980s. As an aircraft ages, it incurs additional inspections and structural repairs. One of those additional inspections occurs when an aircraft reaches 8,000 flying hours. DOD’s aging weapon systems pose sustainment challenges that affect depot maintenance as well as supply support, especially for aircraft. Depot maintenance on aging weapon systems becomes less predictable as structural fatigue occurs and parts that were not expected to need replacement begin to wear out. Cracking, corrosion, or other unanticipated issues–identified through detailed inspections–must be remedied through the repair or the manufacture of new parts, often requiring engineering support and estimates that can take considerable time to develop. For example, the Navy F/A-18 Hornet jet and Air Force B-52 Stratofortress bomber–both aging weapon systems–have recently experienced unanticipated structural and part replacement issues (see sidebar for information on the F/A-18 Hornet). Additionally, diminishing manufacturing sources and material shortages, and part obsolescence issues increase as weapon systems age, complicating supply support for the depot maintenance process and potentially resulting in a less efficient process if not properly mitigated or resolved. Manufacturers discontinue production and support of needed items because it is no longer profitable to produce the part given low or sporadic demand. DOD’s diminishing manufacturing sources and material shortages guidebook provides guidance on mitigating and managing these issues as well as examples in which the department successfully managed and resolved these issues, such as parts obsolescence for the B-1 Lancer bomber and the Virginia class submarine. of the aircraft to identify structural weaknesses, such as metal fatigue and cracks in the aircraft, and determine what needs to be repaired. engineering support to develop repair solutions for the damaged areas of the aircraft.