Improving DLA Supply Chain Agility: Lead Times, Order Quantities, and Information Flow
RAND NATIONAL DEFENSE RESEARCH INST SANTA MONICA CA
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The core mission of the Defense Logistics Agency DLA is to efficiently support the armed services requirements. To fulfill this mission, it must maintain inventories of items for which demand is highly variable even when relatively stable, could increase or decrease dramatically on short notice, or may never even materialize. While commercial firms might consider stocking such items unprofitable and would be unlikely to do so without a purchase guarantee, DLA does not have this option if it is to effectively support the warfighter. Thus, the high level of customer support that DLA has achieved has come at high inventory cost, manifested in inventory excess that leads to disposals. From 2005 to 2013, DLA disposed of an average of more than 1 billion per year. This represents prior spending for items that were ultimately not needed. In the Department of Defense DoD, this cost of doing business is charged by DLA to its customers through its cost recovery rate or surcharge that it is mandated to add to material costs when charging its customers for goods in order to cover its operating costs.
- Logistics, Military Facilities and Supplies