DoD inventory management cultural changes and training in commercial practices
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As the largest single portion of discretionary spending in the federal budget, the Department of Defense (DoD) is a prime target for budgetcuts. Perceptions of fraud and waste have put DoD under tight scrutiny, resulting in many Congressional inquiries and General Accounting Office (GAO) audits. Several of these have identified excess inventory as an area needing major improvement (see the list of related GAO reports in the References Section). As reported in the GAO Report GAO/HR-97-5, DoD's inventory was estimated to be $69.6 billion in 1995. The report also states that about half of the $69.6 billion inventory is considered excess, beyond what is needed to support war reserve and current operating requirements. While military inventory management practices have remained largely unchanged, the past thirtyyearshavewitnessedarevolutioninthewaycommercialfirmsmanagetheirinventories. The private sector has completely changed its view of logistics and how logistics contributes to profitability. As a result, businesses have slashed their on-hand inventories, improved their distribution systems, developed long-term relationships with a small number of suppliers who produce top-quality products, and improved their bottom lines. How can DoD better manage its inventories, get rid of excesses and free up scarce defense dollars for recapitalization and other needs? Can DoD apply the same commercial practices, such as just-in-time (JIT) inventory, direct vendor delivery (DVD), total asset visibility (TAV), and logistics cycle time reduction, that have slashed private sector inventories?
NPS Report NumberNPS-SM-98-002
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Randle, David J. (Monterey, California. Naval Postgraduate School, 1996);The Department of Defense (DoD) has repeatedly been accused of needlessly holding large inventories. In comparison, the commercial sector has drastically cut its inventories over the last twenty years through such practices ...
Thorne, Steven C. (Monterey, California: Naval Postgraduate School, 1999);In its report "Major Management Challenges and Program Risks: Department of Defense," (GAO/OCG-99-4, January 1999), the Government Accounting Office (GAO) reported that half of the Department of Defense's (DOD) $69.9 billion ...
Steiner, Leonard T. (Monterey, California. Naval Postgraduate School, 1996);The Department of Defense (DoD) and private firms share a common set of logistical challenges. Rising costs, external pressures, new technology, and other factors have focused attention on improving logistics management. ...