Army Inventory:

Divisions' Authorized Levels of Demand-Based Items Can be Reduced

NSIAD-93-9: Published: Oct 20, 1992. Publicly Released: Oct 20, 1992.

Additional Materials:

Contact:

Mark E. Gebicke
(202) 512-5140
contact@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

Pursuant to a congressional request, GAO reviewed whether the Army's inventory levels of demand-based items are excessive and whether those inventory levels could be reduced without impairing military readiness.

GAO found that: (1) $28.8 million of demand-based items do not meet retention criteria; (2) the Army's annual assessment of internal controls did not identify as a material weakness the issue of retaining items that did not meet the criteria for demand-based inventory; (3) demand-based items represent a relatively large percentage of total inventory but a relatively small percentage of the inventory issued to the divisions' customers; (4) the Army does not have a policy regarding inventory turnover rates; (5) few demand-based items were requisitioned on a priority basis, which would indicate equipment was inoperable or a unit was unable to perform its mission due to a lack of parts; (6) in the absence of a single supply system, retail-level activities were stocking unneeded items and not reporting all excess inventory to the wholesale level for possible redistribution, and Army managers at the wholesale level were buying items that were excess at the retail level; (7) the Army is in the process of implementing a system which will provide superior responsiveness to the supply system customer at reduced costs and enable the single supply system item manager to direct the redistribution of assets among retail activities; (8) the sparing to availability (STA) concept would increase the number of authorized inventory items; and (9) STA would increase the discretion of the unit commander at the retail level for determining the composition of the authorized inventory.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: The Army FY 1992 FMFIA identified demand-based items that do not meet the criteria for retention as material weakness and directed all commands to identify such items and delete them from the authorization stock list.

    Recommendation: In the Army's fiscal year 1992 annual Federal Managers' Financial Integrity Act report on internal controls, the Secretary of the Army should identify: (1) the retention of demand-based items that do not meet retention criteria as a material internal control weakness; and (2) an action plan to correct the weakness.

    Agency Affected: Department of Defense: Department of the Army

  2. Status: Closed - Implemented

    Comments: The Army has an ongoing initiative to study the current criteria and determine whether they need to be revised. The criteria for determining what and how much inventory should be maintained at the division are the minimum criteria. Commanders can reduce the inventory levels beyond the minimum criteria.

    Recommendation: The Secretary of the Army should direct the Deputy Chief of Staff for Logistics to reassess the criteria for determining which items and what item quantities should be retained on divisions' authorized stock lists. The reassessment should be performed with a view toward making the retention criteria more restrictive in order to ensure that the Army's inventory investment optimizes item demands, issues, and supply responsiveness.

    Agency Affected: Department of Defense: Department of the Army

  3. Status: Closed - Implemented

    Comments: The Army decided that STA would not be implemented at the retail level.

    Recommendation: The Secretary of the Army should not approve STA for implementation at the retail level unless it can be clearly demonstrated that the concept can achieve its intended objectives and that it will not conflict with the objectives of a single supply system.

    Agency Affected: Department of Defense: Department of the Army

 

Explore the full database of GAO's Open Recommendations »

Sep 22, 2016

Sep 21, 2016

Sep 19, 2016

Sep 12, 2016

Sep 8, 2016

Sep 7, 2016

Sep 6, 2016

Aug 25, 2016

Looking for more? Browse all our products here