Summary: The Navy can reduce ship overhaul costs by sending damaged parts to a central point and either repairing them in batches or scrapping them. The remove-and-replace concept avoids unnecessary repair of items that are available in the supply system and increases shipyard efficiency. The Navy uses the concurrent rework concept which entails components being repaired simultaneously with the ship's overhaul. This method is less efficient than the remove-and-replace concept, which is not followed because implementing procedures were never issued. In the last 6 years, costs per overhaul have increased almost threefold. Components which were available in the supply system could have been overhauled at a lower cost through batch processing. Navy policy is to ensure that all material is readily available before starting ship overhauls to avoid production stoppages, but in practice, not all of this material is used during overhauls. Shipyards have accumulated sizable inventories of leftover material. Excess items in shipyard inventories occurred because the supply system did not have visibility over the material, and the shipyard did not report the excesses to the supply system in a timely manner. Items which are in excess when individual job orders are complete are not reported as excess until ship overhaul is complete. This interval can vary from a few months to over a year.
The Navy could reduce overhaul costs for electronic components by several million dollars a year by taking advantage of the remove-and-replace concept. The Navy should establish procedures to ensure that assets available in the system are adequately considered before initiating any concurrent rework. It should also periodically monitor and evaluate shipyards' implementation of established procedures and policy. Greater efficiency and effectiveness is possible through better supply system visibility of shipyard inventories. During the interval between job order completion and ship overhaul completion, the supply system does not have visibility over the excess material and identical items may be procured or repaired by inventory managers to satisfy the needs of other users.
