Opportunities Still Exist for the Army To Save Millions Annually Through Improved Retail Inventory Management

Gao ID: LCD-81-16 January 19, 1981

In 1975, GAO reported to the Secretary of Defense that the Army could save tens of millions of dollars annually through improved management of inventories at installations and divisions. The Department of Defense (DOD) agreed and advised GAO of a number of corrective actions that the Army would take to bring about the desired improvements. A review was conducted to determine the effectiveness of actions taken by the Army and to determine whether additional opportunities for savings existed.

GAO found that the Army has made little progress in resolving the previously disclosed retail inventory management problems and that opportunities for savings of $126 million exist. GAO found that: (1) Army retail supply activities continue to hold for prolonged periods tens of millions of dollars of stock excesses which are critically needed elsewhere; (2) Army installation, division, and corps supply activities annually lose visibility and, thus, control over the prompt recovery of tens of millions of dollars of inoperable but economically reparable items; and (3) Army installation, division, and corps supply activities overstate stock requirements and inflate budget requests for procurement funds and spending authority by millions of dollars annually because of inaccuracies in ordershiptime, inventory record, and materiel demand data used in requirements computations. These problems continue to exist because prescribed policies and procedures are either inadequate, or are not being observed, and because of inadequacies in computerized logistics systems.


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