Effectively Sustaining Forces Overseas While Minimizing Supply Chain Costs. Targeted Theater Inventory
Abstract
During Operation Iraqi Freedom (OIF), the costs of air shipments have garnered attention at different points for several reasons. These reasons include: shortfalls in overall funding with transportation then becoming one of the reduction targets due to a perception of it being a discretionary cost with an ability to switch to lower-cost options, rising cost trends, and examples or anecdotes of what seem to be relatively unimportant items going by air. Regardless of the reason, each time these circumstances have arisen the first action has been to push for more items to be shipped via sealift. This type of reaction should not be needed, though. With effective distribution network design, continually monitored and updated, items will be shipped via the ideal mode that meets customer response needs at the lowest total distribution cost possible not lowest transportation cost. Thus, we recommend that Department of Defense (DoD) supply chain managers design the distribution system to meet customer needs driven by their operational requirements in a way that minimizes total costs, with continuous monitoring and adjustment. In doing so it will become clear that for the lowest total distribution costs to meet customer needs, some items should be sent overseas by air and some should be sent by surface but usually to intermediate theater level inventory, not directly to units. Thus, the modal choice must be coordinated with global inventory management and stock positioning. This document builds on a previous report Leveraging Complementary Distribution Channels for an Effective, Efficient Global Supply Chain by examining in more depth how judicious overseas inventory positioning can reduce total supply chain costs and better align the use of air and sea lift with their ideal uses.
Document Details
- Document Type
- Technical Report
- Publication Date
- Jan 01, 2008
- Accession Number
- ADA484366
Entities
People
- Eric Peltz
- Kenneth J. Girardini
- Marc Robbins
- Patricia Boren
Organizations
- RAND Corporation