Page 153 - 2018 Defense White Paper

of the 2018 defense budget, KRW 12.9 billion of cost savings were achieved, thanks to the demand

forecasts for 19 units of equipment. In the formulation of the 2019 defense budget, KRW 16.9
billion of cost savings were reached, due to demand forecasts for 23 units of equipment. The
management of repair parts for equipment that are planned to retire has also improved—in case

of equipment planned to retire within f ive years, a budget is allocated only to essential repair
parts, while repair parts that have already been procured are recommended to be used. As a
result, around KRW 20 billion were saved in the formulation of the 2019 defense budget.

The MND set an objective to raise the accuracy of demand forecasts for repair parts to 85% by
2023, and has been enhancing the repair parts management system that covers the procurement
of appropriate repair parts for each equipment and ef f icient inventory management.

Regarding the spare parts of imported equipment that have limited timely procurement,
the MND verif ies the causes of the challenges for each spare part with the overseas supplier,
analyzes them, and devises solutions using the “no-bid item procurement handling manual.” 35)
This practice helped boost the rate of on-schedule foreign spares procurement on schedule Chapter 4

from 67% in 2013 to 74% in 2017. Continuous efforts for the stable procurement of spares are
underway—for example, the MND is seeking to establish a production system that utilizes 3-D

printing technology for the on-schedule supply of spares with diminishing supply and dif f icult
procurement.

| Distribution Innovation | Since 2014, the MND has pursued innovation in military supplies

distribution to provide the needed supplies to combat units on schedule. It has streamlined
the supply support procedures; unif ied the delivery networks for units in the same area; and
standardized distribution facilities, equipment, and supplies.

As a result of the distribution innovation programs, the previous four- to five-step supply
support process has been streamlined into the two- to three-step process. Other achievements
include a 40% improvement in the distribution speed and a 50% reduction in transportation

costs. Thanks to the use of information systems and the acquisition of material handling
equipment, the average number of days taken to deliver military supplies to a combat unit from

35) A manual that describes in detail the actions to be taken for each purchase process, from the confirmation of
item information to the procurement of the item, when no bid was made for the procurement of a repair part of
an imported equipment

Section 5 Systematic Development of Fundamental Warfighting Capabilities 151