Accenture Federal Services, Arlington, Va., has won a two-year contract to help the U.S. Department of Defense improve its inventory management.
Under the contract with the U.S. Office of the Deputy Assistant Secretary of Defense, Accenture will find ways to improve forecasting techniques throughout the military, thus reducing inventory. The $971,438 contract looks primarily at stockpiles of spare parts and could reduce “potentially millions” in excess inventory, said Jeff Miller, vice president in the Defense Portfolio at Accenture Federal Services. “The better you can forecast it, the less inventory you will need on hand to support the same requirements.”
The question of excess inventory management has plagued defense for decades.
“Since 1990, we have identified DoD supply chain management as a high-risk area due in part to ineffective and inefficient inventory management practices and procedures,” the Government Accountability Office (GAO) reported in January 2011. “These factors have contributed to the accumulation of billions of dollars in spare parts that are excess to current requirements.”
GAO still was lamenting defense efforts as recently as May, when it noted that despite efforts to improve inventory management, DoD “has not determined if it will incorporate these metrics into guidance. This may hamper its ability to assess inventory management performance and sustain management attention on improvement.”
There’s no guarantee that Accenture’s findings will translate into guidance, but in these early days, that is at least the premise of the effort.
“We don’t want to create policies that sit on shelves. We want to create policies that result in real outcomes, that reduce cost and improve service at the same time,” Miller said.
Accenture will look to improve forecasting techniques across the entire military, a necessary approach to a decentralized system, Miller said.
As things stand, the Defense Logistics Agency manages inventory at the equivalent of a wholesale level, while the separate services operate in retail mode. Each must forecast its needs accurately.
“If anybody in that supply chain performs their forecasting poorly, that impacts everything else,” Miller said.
Improved forecasting is largely a matter of math, applying complex equations across an intricate system.
“There is a lot of data that is just sitting out there, and if you use the right analytical models, you can do a lot of very accurate forecasting,” Miller said. “We are just crunching lots and lots of data to develop a predictive capability.”
The math is manageable. The real challenge, Miller said, will be overcoming existing processes.
“Think about it from the point of view of a guy in the maintenance pool in Bagram doing maintenance on [an armored vehicle.] When he pulls a part out of a bin, what processes were used in the supply chain for him to get [to] that point?” Miller said. “How many touch points were there along the way? You’ve got a lot of organizations that are not intentionally stovepiping the information they share, but just because of their mission and what they are doing, the information doesn’t necessarily flow well from one organization to another.”