DLA stumbles on spare parts management
The U.S. military's Defense Logistics Agency has more spare parts in inventory than it knows what to do with, according to a congressional watchdog agency's report released Thursday.
The DLA procures and manages large supplies of spare parts to keep military equipment ready and operating. However, the Government Accountability Office found the agency had significantly more spare parts in secondary inventory than were needed to meet current requirements in fiscal years 2006 through 2008.
The average annual value of the inventory for the three years reviewed by the GAO was about $13.7 billion. Of that total, about $7.1 billion (52 percent) was beyond the amount needed to meet requirements, and about $5.1 billion (37 percent) was not needed to meet the requirements plus two years of estimated future demand. Of the $5.1 billion, DLA had an average of $4.1 billion in retention stock and had identified $1 billion as potential excess.
The Defense Department's policy requires DLA to minimize inventory investments. However, the GAO said seven factors continue to cause DLA to order and stock parts that do not align with the military's requirements.
Three factors relate to how many parts to buy, namely:
' Inaccurate demand forecasting for parts.
' Unresolved problems with accurately estimating lead times needed to acquire spare parts.
' Challenges in meeting the military's special requests to DLA for future spare parts for weapons systems.
The GAO pointed out three factors related to DLA initiatives that, while showing promise for reducing the purchase and retention of parts not needed to meet requirements, do not appear to be achieving their full potential:
' Closing gaps in providing accurate, timely data to inventory managers as input into purchase decisions.
' Modifying or canceling planned purchases that may no longer be needed to meet estimated requirements.
' Reducing contingency retention stock that may no longer be needed.
In addition, the GAO said the DLA is not tracking the overall cost efficiency of its inventory management.