Logistics Managers Need To Consider Operational Readiness in Setting Safety Level Stocks

Highlights

GAO reviewed the services' management of safety level stocks to determine whether the extent of the services' activities investment in safety level stocks is a prudent investment and whether other alternatives exist that could serve the same purpose as a safety level.

Recommendations

Recommendations for Executive Action

Agency Affected	Recommendation	Status
Department of Defense	The Secretary of Defense should issue to the service Secretaries policy guidance which: (1) emphasizes the importance of operational readiness as a basis for stockage decisions; and (2) directs that the need for safety levels be related to those demand-based essential items which will increase readiness and not fill rates.	Closed – Not Implemented Actions planned by DOD will not occur for at least another year. This results in a 3-year lag from the time corrective action was initially promised. In view of the logistic philosophies, which have no doubt changed over this period, GAO plans to close this case and consider a future review of this area at a later date.
Department of Defense	The Secretary of Defense should direct the Secretaries of the Army and Navy to develop an item essentiality coding system which ranks the weapon systems in order of importance to mission accomplishment and relates the essentiality of each support item to the system. The essentiality rankings should then be used to identify those items requiring safety levels and to compute safety level amounts.	Closed – Not Implemented Actions planned by DOD will not occur for at least another year. This results in a 3-year lag from the time corrective action was initially promised. In view of the logistics philosophies, which no doubt have changes over this period, GAO plans to close this case and consider a future review of this area at a later date.
Department of Defense	The Secretary of Defense should direct the service Secretaries to emphasize intensive management of essential items as an alternative to safety levels.	Closed – Not Implemented DOD stated that the recommendation alternative was not practical because of the manpower constraints placed on the inventory control points.
Department of Defense	The Secretary of Defense should issue to the services policy guidance which identified the extent that item cost, demand frequency, and fill rate objectives should be considered in determining the safety level amount for essential items.	Closed – Not Implemented Actions planned by DOD will not occur for at least another year. This results in a 3-year lag from the time corrective action was initially promised. In view of the logistics philosophies, which no doubt have changed over this period, GAO plans to close this case and consider a future review of this area at a later date.

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Topics

National Defense

Combat readinessInventory controlOccupational safetyPolicy evaluationProperty and supply managementSafety regulationWeapons systemsMilitary forcesStocksLogistics