Defense Inventory:

DOD Needs to Continue Efforts to Improve Management and Reduce Stocks

T-NSIAD-92-11: Published: Feb 19, 1992. Publicly Released: Feb 19, 1992.

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GAO discussed issues regarding Department of Defense (DOD) inventory management. GAO noted that: (1) between 1980 and 1990, the DOD secondary item inventory increased from $43.4 billion to $101.9 billion; (2) problems with the DOD inventory requirements determination processes include inaccurate or unsupported system data causing misstated inventory requirements, management personnel overriding computational models used to determine inventory requirements, inadequate consideration of an item's essentiality when ordering spare parts, item managers failing to cancel unnecessary or excess on-order material, and ineffective management controls; (3) wholesale level activities sometimes buy items that retail levels activities have in excess stock; and (4) DOD could save millions of dollars by adopting commercial practices. GAO believes that: (1) DOD needs to establish goals for reducing its inventory; and (2) the amount budgeted for secondary items in fiscal year (FY) 1993 should be at least $5 billion below the amount budgeted in FY 1992.

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