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GAO: New Shipping Methods Show Positive Results

Aug. 21, 2012 - 04:52PM   |  
By ADAM STONE   |   Comments
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The U.S. Army is making headway on a program to address distribution efficiencies, but some parts of the equation remain unresolved, according to a new report.

The Distribution Process Owner Strategic Opportunities initiative has shown significant and quantifiable results since launching in 2008, according to a new report from the Government Accountability Office (GAO).

“For what it was designed to do, it has had a very good outcome,” said Cary Russell, GAO’s acting director for defense capabilities and management.

The initiative calls on service and combat commands to look for ways to reduce inefficiencies while increasing the effectiveness of distribution operations. Reviews take place at four levels of narrowing scope, from intercontinental movements, down through strategic, theater and finally tactical or battlefield distribution.

Looking across the board, GAO sees improvements on track with the Defense Department’s stated goals.

In launching the initiative, defense officials set a goal of $500 million in cost avoidance through 2012, and had already reached the $490 million mark by April, GAO found.

Significant savings have been achieved through the optimization of aircraft in distribution, Russell said. DoD has avoided $284 million in potential aviation costs through actions such as pallet consolidation. So rather than counting the number of pallets to determine whether a plane is full, handlers now track whether individual pallets are full. That results in fuller plane loads.

Another $197 million has been saved in the area of surface shipments — distribution by ship, train or truck — especially involving 20-foot to 40-foot containers. Rather than pack smaller containers for individual customers, handlers have been filling larger boxes for delivery to multiple users.

“They found that if they mixed customers and put them in a bigger container, they could fill the containers faster and save money by shipping fewer containers,” Russell said.

GAO determined it takes a day and a half to pack multiple customers’ goods into 40-foot containers versus 10 days to fill a 20-foot container for a single customer.

Defense planners also aimed to cut delivery times by 25 percent. In this area, GAO saw more mixed results.

Efforts to streamline have been limited: Just 31 of 500 global shipping lanes have been targeted. Within those lanes, improvements have ranged from 7 percent to 40 percent, Russell said.

While it’s clear that efficiencies can be gained, the limited nature of the effort thus far leaves open the question of just how far the services have to go to truly improve delivery times.

“If you step back and look at it across the board, all we really know is that they still have some distribution challenges,” Russell said.

In addition, GAO was unable to verify one aspect of the initiative, known as strategic network optimization. This effort to optimize the supply chain network is still in development, and could not be evaluated.

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