Wednesday, December 17, 2008

GAO: DEFENSE INVENTORY - Management Actions Needed to Improve the Cost Efficiency of the Navy's Spare Parts Inventory

GAO: DEFENSE INVENTORY - Management Actions Needed to Improve the Cost Efficiency of the Navy's Spare Parts Inventory
December 17, 2008

Highlights of GAO-09-103, a report to congressional requesters

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 and the Defense Logistics Agency effectively and efficiently manage DOD’s secondary inventory to ensure that the warfighter is supplied with the right items at the right time. It is also imperative that they maintain good stewardship over the billions of dollars invested in their inventory. GAO reviewed the Navy’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 Navy’s having secondary inventory in excess of current requirements or, conversely, for having inventory deficits. To address these objectives, GAO analyzed Navy secondary inventory data (spare parts such as aircraft and ship engines and their components and accessories) from fiscal years 2004 through 2007.

What GAO Recommends
GAO recommends that the Navy strengthen inventory management by incorporating cost-efficiency metrics and goals, evaluating and improving demand forecasting procedures, revising inventory management practices to better accommodate demand fluctuations, and enhancing oversight though the chief and deputy chief management officers. DOD concurred with GAO’s recommendations.


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