Inventory Management

Adopting Best Practices Could Enhance Navy Efforts to Achieve Efficiencies and Savings Gao ID: NSIAD-96-156 July 12, 1996

This report is part of a series comparing the Defense Department's (DOD) logistics practices with those of the private sector. Although DOD has introduced some innovative practices, many opportunities exist for improving the logistics system. This report focuses on the Navy's logistics system for aircraft parts. GAO (1) examines the current performance of the Navy's logistics system, (2) reviews the Navy's efforts to improve its logistics system and reduce costs, and (3) examines leading best practices used by the airline industry that could potentially help the Navy bolster the efficiency and effectiveness of its logistics operations.

GAO found that: (1) the best practices identified in the airline industry could improve the responsiveness of the Navy's logistics system and save millions of dollars; (2) the Navy's logistics system is complex and often does not respond quickly to customer needs; (3) the factors contributing to this situation include the lack of spare parts, slow distribution, and inefficient repair practices; (4) some customers wait as long as four months for available parts; (5) the Navy is centralizing its supply management and repair activities, outsourcing certain management functions, and analyzing the effectiveness of its repair pipeline; (6) the best practices employed by the private sector show promise for the Navy because these firms hold minimum levels of inventory, have readily accessible spare parts, and quick repair times; (7) it takes an average of 11 days to repair a broken part in the private sector, as opposed to 37 days in the Navy's repair process; (8) the private-sector average is a result of repairing items immediately after they break, using local distribution centers and integrated supplier programs, and third-party logistic providers; and (9) many of the airline industry's best practices are compatible with the Navy's logistics system.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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