Interim Measures To Realign the Department of Defense Material Distribution System

In an effort to integrate, consolidate, and standardize military service or agency distribution system functions and facilities, the Department of Defense (DOD) initiated a material distribution system (MDS) study in 1975. The study employed computer models capable of showing where depots should be located, what commodities each depot should carry, and which customers each depot should support. In early 1978 the study group issued a draft report recommending the elimination of the distribution function from three Army depots and from six depots of the Defense Logistics Agency (DLA). As a result of criticism of the study methodology by the Army and DLA, and the potential impact of the recommendations on the DOD distribution system's efficiency and effectiveness, DOD officials asked DLA and a team of independent operations research analysts to evaluate the study report. Because of problems encountered with the study and a desire to begin some realinement action quickly, the Assistant Secretary of Defense established a steering group to identify and evaluate alternatives to the existing material distribution system in terms of budgetary cost implications, workloads and capacities, employment levels, and military construction requirements. The steering group assigned the task to the American Management Systems, Inc., and this study effort was referred to as the material distribution system study, or MDS. The MDS study group directed most of its effort toward developing an alternative depot structure for the DLA and was therefore limited in scope.

Since the MDS study group concluded that the present management, control, and communications systems did not enable an inventory manager of one service to operate from the depot of another service, the study group avoided realinement actions requiring the crossing of service lines. Depots colocated with major maintenance activities were also excluded from realinement consideration. Although the techniques used in developing savings, costs, and depot capacity data included in the MDS report were generally acceptable, GAO believed that the optimum DOD material distribution system still needs to be designed. To do this, DOD will first have to address and resolve issues relating to standardization of military services' supply management policies and procedures and consolidation of maintenance functions.