Defense Spare Parts Inventory Management is Unacceptable

I just finished reviewing the GAO report entitled “Defense Inventory: Defense Logistics Agency needs to expand on efforts to more effectively manage spare parts”. Once I finished reading the report, I realized what an understatement the title was. It should have read “DLA inventory management inept and wasteful”. Here is why:

1) 27% of the inventory is inactive…that means there has been no demand for the spare parts

2) 15% of the inventory represents over 2 years of demand and almost 10% of inventory represents over 10 years of usage.

These results are terrible. Private industry performance is typically 300% better and corrective actions are much more drastic than what was proposed in the report. The litany of deficiencies noted in the report included inaccurate forecasting, poor lead time estimates, ineffective satisfaction of customer needs, lack of timely data, poor contract administration, lack of contingency planning, and poor tracking of costs. These are significant problems. The corrective actions proposed and accepted by GAO related to planning and evaluation, not actions to be taken to improve performance. I would suggest the following best practices:

1) set min-max levels for inventory based on a formula

2) have contractor’s hold inventory

3) implement lean management processes

4) eliminate obsolete parts

A casual reader of the report will leave with an impression of more studies and planning, and notcie the lack of clear resolve by the DLA to significantly improve performance. Hopefully, Congress and the public will push for more effective corrective action and an expeditious resolution for the poor and unacceptable performance.