Defense Inventory:

Opportunities to Reduce Warehouse Space

NSIAD-95-64: Published: May 24, 1995. Publicly Released: Jun 23, 1995.

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Pursuant to a congressional request, GAO reviewed the Department of Defense's (DOD) inventory management system, focusing on the: (1) size and space occupied by DOD secondary inventory; (2) cost of storing this inventory; and (3) efforts taken to reduce DOD secondary inventory.

GAO found that: (1) DOD secondary inventory occupies about 218.8 million cubic feet; (2) 60 percent of the secondary inventory is not needed to satisfy current war reserve or operating requirements, however, many items may have potential future use; (3) the inventory not currently needed consists of 2.2 million different types of items; (4) DOD has more than a 20-year supply for some items, but many others have deteriorated or become obsolete; (5) DOD should get rid of unneeded items that occupy space and exceed more than 20 years of supply; (6) although DOD has begun programs to reduce the secondary inventory, its efforts have been partially offset by decreasing inventory demands and increasing returns of materials by deactivated forces; (7) DOD disposed of secondary inventory items valued at $43 billion during the past 3 fiscal years; and (8) the Defense Logistics Agency is implementing a pricing procedure that should increase inventory managers' incentives for disposing of unneeded items.

Recommendation for Executive Action

  1. Status: Closed - Not Implemented

    Comments: DOD advised that it had a systematic approach for reducing storage space and did not plan to change its approach. DOD stated that its latest edition of its logistics strategic plan calls for reducing inventory from $73 billion in 1994 to $52 billion in 2001.

    Recommendation: The Secretary of Defense should develop a systematic approach for reviewing the secondary inventory currently on hand. The Secretary could begin by instructing inventory control points and program managers to focus their inventory reduction efforts on the material that occupies a great deal of storage space and has more than 20 years of supply on hand.

    Agency Affected: Department of Defense

 

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