Defense Inventory:

Management of Repair Parts Common to More Than One Military Service Can Be Improved

NSIAD-00-21: Published: Oct 20, 1999. Publicly Released: Oct 26, 1999.

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Pursuant to a congressional request, GAO reviewed the Department of Defense's (DOD) management of identical repairable parts used by more than one DOD component, focusing on: (1) DOD's progress in correcting problems in the management of identical parts; and (2) opportunities to improve management of these parts.

GAO noted that: (1) DOD initiatives dating to the early 1970s to improve the management of identical parts have been largely ineffective; (2) many identical parts continued to be managed by more than one service, even though opportunities for savings and management efficiencies exist by using a single manager when there are multiple users of the same part; (3) while GAO cannot precisely quantify the savings from improving management of identical parts, GAO's work and past DOD studies showed that they would be considerable; (4) for example, GAO's analysis of 7,683 identical parts, with assets on hand valued at $474 million, showed that they should have been managed by one DOD component; (5) this condition is similar to what existed in 1995 when the DOD Inspector General reported that the primary inventory manager did not have information on over $400 million in assets held by the other services and that over $140 million of these assets could have been used to fill the needs of the primary manager; (6) due to planning and management weaknesses, the DOD initiatives have not been successful in moving to an approach that would result in a single manager performing all inventory management functions; (7) these weaknesses include not developing an implementation plan that contains performance objectives, milestones, and outcome measures linked to DOD's Logistics Strategic Plan, and not establishing oversight accountability for implementing the single manager approach Department-wide; and (8) these weaknesses are similar to long-standing problems noted in GAO's high risk reporting on DOD's inventory management that have hindered other major inventory management improvement initiatives.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: In a September 13, 2000, phone discussion with the key DOD contact (Business Area Team Leader and Coordinator for Supply Chain Implementation, DUSD(L)), GAO found that DOD agrees with GAO in concept, but does not have the resources to zero in on this small area of the reparable parts system. Instead, they are using improvements via broader approaches that would include the identical parts area. These broader approaches include Total Asset Visibility and lateral redistribution of repair parts. Also, they are continuing communication and coordination among inventory managers to reduce instances of duplication. GAO will keep tabs on this area in future work.

    Recommendation: In order to address the systemic management weaknesses that have hindered DOD's progress toward achieving a single manager for identical parts, the Secretary of Defense should establish goals to support the next DOD Logistics Strategic Plan designed to improve management of identical parts by moving to a single manager approach.

    Agency Affected: Department of Defense

  2. Status: Closed - Implemented

    Comments: In a September 13, 2000, phone discussion with the key DOD contact (Business Area Team Leader and Coordinator for Supply Chain Implementation, DUSD(L)), GAO found that DOD agrees in concept, but does not have the resources to zero in on this small area of the reparable parts system. Instead, they are using improvements via broader approaches that would include the identical parts area. These broader approaches include Total Asset Visibility and lateral redistribution of repair parts. Also, they are continuing communication and coordination among inventory managers to reduce instances of duplication. GAO will keep tabs on this area in future work.

    Recommendation: In order to address the systemic management weaknesses that have hindered DOD's progress toward achieving a single manager for identical parts, the Secretary of Defense should develop an implementation plan that addresses short- and long-term actions to improve the management of identical parts. Short-term actions should include improvements in communications and reporting and long-term actions should include the elimination of primary and secondary managers so that a single manager will manage identical parts. The implementation plan should contain performance objectives, milestones, timetables, and outcome measures that support the Logistics Strategic Plan. The plan should provide outcome measures, such as improved efficiency, reduced costs, and better service to the customer.

    Agency Affected: Department of Defense

  3. Status: Closed - Implemented

    Comments: In a September 13, 2000, phone discussion with the key DOD contact (Business Area Team Leader and Coordinator for Supply Chain Implementation, DUSD(L)), GAO found that DOD agrees in concept, but does not have the resources to zero in on this small area of the reparable parts system. Instead, they are using improvements via broader approaches that would include the identical parts area. These broader approaches include Total Asset Visibility and lateral redistribution of repair parts. Also, they are continuing communication and coordination among inventory managers to reduce instances of duplication. GAO will keep tabs on this area in future work.

    Recommendation: In order to address the systemic management weaknesses that have hindered DOD's progress toward achieving a single manager for identical parts, the Secretary of Defense should establish clear accountability for Department-wide oversight and component execution of the implementation plan and achievement of desired results.

    Agency Affected: Department of Defense

 

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