DOD Can Save Millions of Dollars by Improving the Management of Air Force Inventories

LCD-80-6: Published: Oct 25, 1979. Publicly Released: Oct 25, 1979.

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An examination was made of the policies, procedures, and practices of the Department of Defense and the Air Force for identification and cancellation of excess stocks due-in, and for making small dollar issues from depot stocks. The examination took place at Headquarters, Air Force Logistics Command, and at two air logistics centers.

The Air Force can reduce investments in inventories by tens of millions of dollars annually by improving its system for controlling stock excesses and by placing greater management emphasis on the need for timely cancellation or deferral of procurements for items in excess of normal system requirements. Air Force depots filled many individual requisitions for low-value amounts, which were repetitive, and incurred processing costs which exceeded their sales value. The large volume of these issues made yearly by Air Force depots could be substantially reduced and significant savings in warehouse handling costs could be realized by establishing more economical units of issue.

Recommendation for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of Defense should direct the Air Force to eliminate permissive overstockage from its computations of excess stocks on order, revise computer programs so that duplicate requirements are not included in the buy computations, and provide for more timely identification and effective cancellation of excess on-order stocks. The identification and cancellation of the stocks could be done by: (1) improving the timeliness of the notices of quantities on order exceeding requirement objectives; (2) placing greater emphasis on the need for cancellation of procurements in excess supply; (3) systematically monitoring and measuring item managers' performance in canceling excess on-order stock; and (4) requiring that air logistics centers submit to the Air Force Logistics Command a report showing quarterly average overstock and the average value of overstock canceled along with their annual report for stock fund apportionment of obligation authority. The Secretary should also direct the Air Force to fill war readiness and foreign sales requirements from available stocks to the maximum extent practicable. In addition, the Secretary should, in coordination with the Administrator of General Services, revise the unit of issue of low-cost items to: (1) increase the unit of issue quantities in the supply catalog to minimum standard packs, wherever feasible; (2) require that unit pack quantities be determined in accordance with prescribed standards; and (3) emphasize the need to establish more economical units of issue when new items are entered in the supply system.

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