GAO discussed the Army's inventory management practices, focusing on its two-level supply system consisting of a: (1) wholesale level, responsible for computing wholesale-level requirements, buying and storing items, and issuing them to Army installations; and (2) retail level, responsible for computing requirements, requisitioning items from the wholesale level, and issuing them to users. GAO noted that the system's lack of centralized records and communication links among levels and installations: (1) made it difficult to identify and redistribute excess items; and (2) caused accumulations of excess items at some units, shortages of the same items at other units, and wholesale-level procurement of items for which there was no demand. GAO also noted that problems contributing to procurement of excess items included: (1) overestimation of part failure rates; (2) configuration changes; (3) requisitioning errors; (4) reduced or cancelled repair programs; (5) changes in stock management criteria; and (6) units' retention of excess items. GAO believes that the Army could improve its inventory management efficiency through: (1) continued development of several asset visibility systems and adoption of new practices and policies to improve excess item redistribution; and (2) adoption of a supply system that would facilitate wholesale-level identification and redistribution of excess items.
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