GAO: DEFENSE INVENTORY - Army Needs to Evaluate Impact of Recent Actions to Improve Demand Forecasts for Spare Parts

GAO: DEFENSE INVENTORY - Army Needs to Evaluate Impact of Recent Actions to Improve Demand Forecasts for Spare Parts
January 12, 2009

Since 1990, GAO has designated the Department of Defense’s (DOD) inventory management as a high-risk area. It is critical that the military services effectively and efficiently manage DOD’s secondary inventory to ensure that the warfighter is supplied with the right items at the right time and to maintain good stewardship over the billions of dollars invested in their inventory. GAO reviewed the Army’s management of secondary inventory and determined (1) the extent to which on-hand and on-order secondary inventory reflected the amount needed to support current requirements and (2) causes for the Army having secondary inventory that exceeded current requirements or, conversely, for having inventory deficits. To address these objectives, GAO analyzed Army data on secondary inventory (spare parts such as aircraft and tank engines) from fiscal years 2004 through 2007.

What GAO Recommends
GAO recommends that the Army strengthen inventory management by incorporating cost efficiency metrics and goals, evaluating and improving demand forecasting procedures, monitoring the effectiveness of providing operational information to item managers, and enhancing oversight of inventory management through the Army’s chief management officer. DOD agreed with three of GAO’s recommendations but disagreed that the chief management officer should exercise oversight.

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