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Research Synopsis

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Research Questions

  1. Can efficiencies be gained in the global military medical logistics enterprise?
  2. How much efficiency can be gained through purchasing power?
  3. How much efficiency can be gained through improved information technology?
  4. Can efficiencies be identified in warehousing and distribution?

The Department of Defense (DoD) provides medical care to service members all over the world and must ensure that health care providers have the proper quantity and quality of medical materiel. RAND investigated opportunities to gain efficiencies in the global military medical logistics enterprise without sacrificing capability, notably through minimizing intermediate materiel handling, seeking the greatest value from commercial freight, and streamlining warehouse operations.

RAND suggests DoD take steps to optimize its global medical logistic enterprise by maximizing direct delivery to end users, exercising control over the materiel catalog, managing inventory held overseas to support surges and bridge supply chain interruptions, and managing inventory and contracts to maximize supplier responsiveness.

To minimize intermediate materiel handling, the study recommended closing the U.S. Army Medical Materiel Center in Southwest Asia as a Central Command distribution point because its efforts are duplicative of those in Europe. Combined with renegotiating European shipping contracts, closing this distribution point could save $10-$20 million annually.

The study recommends against consolidating distribution of medical items with other items handled by the Defense Logistics Agency (DLA). The greatest barrier to consolidation is the inability of the DLA warehouse management information technology system to download item information using the commercial stock numbers, which identify the bulk of military medical items. Thousands of new medical items enter military use each year, and it is infeasible for the organizations tasked with assigning military-specific stock numbers to do so for these items.

Key Findings

Efficiencies Can Be Attained Throughout the Supply Process

  • Restricting materiel used by deployed units to clinically necessary items and reducing the variety of substitutable items could achieve supply-chain efficiencies.
  • Pooling usage projections across all end users might allow streamlined orders, maintain a fairly smooth aggregate rate of demand, and compel vendors to deliver materiel faster under contracted standards.
  • Direct delivery of material rather than through an intermediate warehouse eliminates processing and shipping costs. Decreasing such operations in Southwest Asia alone could save $6 million to $11 million annually.
  • The greatest barrier to further consolidating medical item distribution is the lack of a warehouse management software system that downloads item information based on commercial stock numbers.

Recommendations

  • Do not consolidate medical distribution with other DLA distribution activities.
  • Close the U.S. Army Medical Materiel Center in Southwest Asia as a distribution point.
  • Consolidate local procurement capabilities in such a way as to maintain a sufficient local presence to meet with local suppliers while gaining efficiency through economies of scale.
  • Reduce the variety of items available for end users to purchase to only those that are clinically necessary, in cases where they rely upon intermediate distribution support.
  • Use commercial shippers to ship items directly to end-users when possible.
  • Locate medical materiel distribution warehouses near to MTFs or other military logistics facilities if efficiencies can be gained in transportation or infrastructure.

Table of Contents

  • Chapter One

    Introduction

  • Chapter Two

    Medical Logistics in COCOMs

  • Chapter Three

    Contracting / Catalog Management

  • Chapter Four

    Transportation to First Delivery Location

  • Chapter Five

    Warehousing

  • Chapter Six

    Transportation to End-User

  • Chapter Seven

    Conclusions

  • Appendix

    Actions Subsequent to the Project Final Briefing

Research conducted by

The research described in this report was sponsored by the United States Army and conducted by the RAND Arroyo Center.

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