Inventory Management:

More Information Needed to Assess DLA's Best Practice Initiatives

NSIAD-98-218: Published: Sep 2, 1998. Publicly Released: Sep 2, 1998.

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Pursuant to a congressional request, GAO reviewed the Defense Logistics Agency's (DLA) schedule for implementing best commercial practices for inventory management, focusing on whether the schedule: (1) described the extent to which the initiatives cover each supply category; (2) established key performance indicators to measure the overall impact the initiatives will have on logistics costs and efficiency of operations; and (3) provided criteria and plans for expanding or fully implementing the initiatives to cover the entire supply category.

GAO noted that: (1) DLA's schedule provides information on 73 initiatives it identified as best practices for improving the acquisition and distribution of certain categories of consumable supplies; (2) although GAO is encouraged that DLA has established these initiatives, the schedule does not provide adequate information to assess whether it effectively provides for the implementation of these practices to be completed by November 2000, as required by the fiscal year 1998 Defense Authorization Act; (3) specifically, the schedule does not contain information on the percentage of a supply category that will be affected by the initiatives; (4) consequently, users of the schedule are unable to determine the magnitude of impact the initiatives are intended to have; (5) also, the schedule does not present metrics or indicators that will be used to determine whether the initiatives are achieving the desired results; (6) this information is critical to determine whether readiness and sustainability goals are being met and cost goals are being achieved; and (7) in addition, the schedule does not provide milestones necessary to measure progress toward covering the entire supply category by the implementation date.

Matter for Congressional Consideration

  1. Status: Closed - Not Implemented

    Comments: Congress chose not to ask the Defense Logistics Agency to revise its schedule.

    Matter: If Congress decides it wants more information regarding DOD's plan to implement best practices over the next 3 years, it may wish to consider requiring DOD to supplement the information in each supply category with the type of information listed in GAO's recommendation.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: DOD said in its comments to GAO's report that, rather than revise the current schedule, it would provide updates to Congress for each of the next 2 years detailing progress in expanding the best practices initiatives in the schedule during fiscal years 1999 and 2000. On March 23, 2000, DOD updated the status of the initiatives from the original schedule, and added 39 new initiatives. The update included, where available, data on current or projected sales, number of items covered, and performance indicators. Although not completely responsive to GAO's recommendations, the revised schedule provides more information to assess initiative implementation progress and coverage of DLA operations.

    Recommendation: To develop a more effective implementation schedule, the Secretary of Defense should direct the Director, DLA, to revise its schedule. For each supply category, the schedule should identify the percentage of future sales or percentage of the items managed that DLA projects will be covered by the initiatives, key performance indicators to measure the overall impact the initiatives will have on logistics costs and efficiencies of operations, and plans for expanding or fully implementing the initiatives. For prime vendor initiatives the schedule should provide specific information on: (1) milestones for testing and evaluating each concept; (2) potential implementation sites; (3) planned dates for implementing the practices at the potential sites; and (4) the projected date that implementation will be completed.

    Agency Affected: Department of Defense

 

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