Defense Logistics

Pursuant to a congressional request, GAO reported on private-sector efforts to improve logistics operations and reduce inventory costs during the last decade, focusing on the feasibility of the applicability of those efforts to Department of Defense (DOD) operations.

GAO found that: (1) integrated logistics management involved integrating such basic logistics functions as transportation, warehousing, inventory management, and customer service, and helped to reduce costs and increase competitiveness; (2) to achieve integrated logistics management, top management support was essential; (3) the implementation of integrated logistics resulted in notable inventory reductions for most of the 7 companies studied; (4) firms used benchmarking, which involved examining other organizations to identify methods, practices, and processes that improved performance and could be implemented in the home unit; (5) benchmarking helped increase productivity and reduce costs; (6) if DOD could cut its operating costs without sacrificing readiness by adopting integrated logistics management, it would not have to shrink the size and scope of other activities dramatically; and (7) DOD may be able to benefit from private-sector experiences in improving logistics operations.