Book Description

This report is the 11th in a series of reports comparing the Department of Defense's (DOD) logistics practices with those of the private sector. We are continuously examining DOD'S inventory management practices to identify areas where costs can be reduced and problems can be avoided by using leading private sector practices. This report focuses on DOD'S progress in adopting best inventory management practices for hardware items such as bearings, valves, and bolts. The objectives of this review were to determine (1) DOD and private sector practices for managing hardware items, (2) whether DOD has adopted best practices for these items, and (3) opportunities that DOD can take advantage of to improve its management of hardware items. While DOD has implemented some innovative management practices, more opportunities exist to better manage its reported 5 - 7 Billion hardware inventory and achieve substantial savings. 2. DOD continues to manage its hardware inventory using outdated and inefficient business practices that create unnecessary inventory levels, provide poor customer service, generate excess and obsolete inventory, and cost approximately $1 billion per year to manage and distribute. DOD buys hardware inventory years in advance of when the items are actually used. For example, based on our analyses of DOD records, 62 percent of DOD'S hardware items did not have a demand from September 1995 to August 1996, and an additional 21 percent of the items had enough inventory to last for more than 2 years. These items account for about $4.4 billion, or 77 percent, of DOD'S $5.7 billion hardware inventory. Despite DOD'S substantial investment in inventory, in many cases, hardware inventory is not available when needed by DOD customers.