The Department of Defense (DoD) sustainment supply chain community has increased performance and harvested significant efficiencies through process improvement activities and the rationalization of common activities. However, the majority of strides have been made within functions and processes. The authors build a case that opportunities remain for improvement through end-to-end supply chain integration — spanning all DoD organizations and its suppliers — of processes jointly affecting total supply chain costs and performance. They define supply chain integration, provide illustrative evidence of DoD supply chain integration shortfalls, and describe why such shortfalls exist. They then ...view middle of the document...
* DoD policy has under recognized the role of stock positioning in minimizing total supply chain costs through the integration of inventory, materiel handling, procurement, and transportation planning.
DoD Has Recently Developed Policies That Will Improve Supply Chain Integration
* The draft of a new DoD manual (DoDM), Supply Chain Materiel Management Procedures, addresses many of the supply chain integration policy gaps.
Effective Use of Enabling Management Mechanisms Engender Effective Execution of Policy
* They include incentives, decision rights and authorities, decision support tools, financial controls, information systems, and career development.
Reducing Lead Times and Order Quantities Are Key Opportunities to Reduce Supply Chain Costs
* Forecast error and the generation of excess inventory is driven by long lead times combined with nonstationary demand. Large order quantities increase the inventory exposure to reductions in demand. As a result, long lead times and high order quantities drive Department of Defense inventory holding costs for consumable items.
* Reductions in lead times and order quantities would also improve customer support by enabling improved responsiveness to unanticipated demand shifts.
* Lead time and order quantity reduction can likely be achieved through improved supplier and internal process integration.
There Are a Number of Other Potential Opportunities for Improved Efficiency Through Enhanced Organizational, Process, and Functional Integration
* Increase the emphasis on minimizing total supply chain costs to meet customer needs in Department of Defense (DoD) supply chain policy as per the draft DoD manual, Supply Chain Materiel Management Procedures.
* Increase the focus on the integrative role of stock positioning in supply chain policy, in conjunction with the broader adoption of stock positioning metrics.
* Incorporate a guiding supply chain framework into DoD supply chain policy.
* Ensure supply...