Summary: Inventory management problems have plagued the Defense Department for decades. Despite efforts by the Pentagon to correct these shortcomings, GAO has included inventory management as part of its list of government areas most prone to fraud, waste, and abuse. (See GAO/HR-97-5, Feb. 1997.) GAO recently reported that half of DOD's $69.6 billion inventory of spare parts, medical supplies, hardware, food, and clothing is either obsolete or rarely used. (See GAO/NSIAD-97-71, Feb. 1997.) The underlying causes of this unneeded inventory include outdated and inefficient inventory management practices that often fail to meet customer demands, inadequate inventory oversight, weak financial accountability, and overstated requirements. Because of these problems, GAO's annual outlay of $15 billion for additional inventory is vulnerable to waste and trouble. In the short term, DOD must continue to stress the efficient operations of its existing logistics systems. This includes disposing of unneeded inventory, implementing efficient and effective inventory management practices, training personnel and rewarding the right behavior, improving data accuracy, and enforcing existing policies to minimize the acquisition of unneeded inventory. In the longer term, DOD must establish goals, objectives, and milestones for changing its culture and adopting new management tools and practices. Key to changing DOD's management culture will be an aggressive approach using best practices from the private sector.
