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Poor supply chain management within DND leads to late deliveries to military half of the time: AG report

Defence Minister Harjit Sajjan. SALTWIRE NETWORK FILE PHOTO
Defence Minister Harjit Sajjan. SALTWIRE NETWORK FILE PHOTO

Poor management within the Department of National Defence’s supply chain for the Canadian Armed Forces has resulted in late deliveries 50 per cent of the time for things such as uniforms, rations and parts, according to a report by Canada’s auditor general.

The report, which was completed in January but tabled Wednesday, concluded that the Department of National Defence (DND) often did not deliver material requested by the Canadian Armed Forces on time, and that it did not have the right controls in place to determine whether it avoided needless transportation costs.

On average, the report says, material such as uniforms, rations and parts was delivered at least 15 days later than requested half of the time, and 40 days later 25 per cent of the time.

“Among the high-priority requests, we found that 60 per cent arrived after the required delivery date,” the report states. “Of these, 50 per cent were at least six days late and 25 per cent were at least 20 days late.”

The audit found that delays were frequent due to stock shortages.

When stock is unavailable, the report says, material needs to be located elsewhere and transported to the right location, requiring additional steps in the supply chain and delaying deliveries.

The audit found that one-third of about 1 million requests were rerouted, resulting in increased use of commercial transportation, which is often more costly than other options.

The audit also found that in a number of cases the minimum stock level was set at zero for all warehouses in a requesting unit’s supply chain structure, but National Defence could not confirm whether this level was by accident or design.

Of the 129 high-priority requests examined by the audit, minimum stock levels were set at zero in 100 cases.

“Flags need to be going up to signal the need to re-order stock to avoid shortages and subsequent delays in filling the Canadian Armed Forces’ requests for material,” said a statement that accompanied the release.

These findings led the Auditor General’s Office to conclude that National Defence often did not deliver on time the material the Canadian Armed Forces requested, and that it did not have the right controls in place to determine whether it avoided needless transportation costs. As such, the report outlines three recommendations to DND surrounding martial forecasting and availability, stock management, oversight of high-priority requests and transportation costing.

“It is important to note that the steps we are taking today are not final actions regarding the way we order, store and distribute equipment for the Canadian Armed Forces.”

DND has agreed to all the recommendations, and in an emailed statement Defence Minister Harjit Sajjan said he welcomes the auditor general’s report.

“We know strong supply chain management provides the necessary backbone for effective operations, which is why we have developed a holistic supply management approach that not only responds to the auditor general’s report, but also modernizes our system and supports various strong, secure, engaged initiatives,” Sajjan stated.

DND has already made considerable improvements to asset management, Sajjan said.

“We have made improvements to stock-taking, the reporting of inventory costs and the oversight of supply work. We are also advancing a number of new management projects, such as procuring standardized barcoding technology and new electronic system capabilities, to further improve our performance,” he said.

“It is important to note that the steps we are taking today are not final actions regarding the way we order, store and distribute equipment for the Canadian Armed Forces.”

Sajjan also said the department plans to enhance data analytics capabilities and rely on real data to ensure the right supply chain approach.

“These steps will make sure that we have the right equipment, in the right quantities, at the right places to meet the challenges we ask our members to face now and in the future.”

Twitter: @notandrea

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