High Risk Series

Defense Inventory Management Gao ID: HR-95-5 February 1, 1995

In 1990, GAO began a special effort to identify federal programs at high risk of waste, fraud, abuse, and mismanagement. GAO issued a series of reports in December 1992 on the fundamental causes of the problems in the high-risk areas. This report on defense inventory management is part of the second series that updates the status of this high-risk area. Readers have the following three options in ordering the high-risk series: (1) request any of the individual reports in the series, including the Overview (HR-95-1), the Guide (HR-95-2), or any of the 10 issue area reports; (2) request the Overview and the Guide as a package (HR-95-21SET); or (3) request the entire series as a package (HR-95-20SET).

GAO found that: (1) DOD has achieved some inventory reductions, but it has made little overall progress in correcting long-standing inventory management problems that perpetuate overbuying, excessive supply storage, and waste; (2) inventory funding and levels have remained high despite the downsizing of military forces; (3) DOD has failed to give its personnel the the tools and incentives to properly manage inventory; (4) the two main DOD initiatives have not yet delivered the full benefits that they were expected to, and need much more management attention; (5) DOD still lacks adequate inventory oversight and financial accountability; and (6) although DOD has had some success using commercial inventory practices, it needs to be more aggressive in changing its inventory management culture in order to ensure high levels of readiness within existing resource constraints and to take advantage of new management practices, technologies, and logistics systems.

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