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Inventory Management: DoD Can Build on Progress in Using Best Practices to Achieve Substantial Savings


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DOD operates a worldwide logistics system to buy, store, and distribute inventory items. Through this system, DOD manages over 4 million types of consumable items, of which 3.6 million are managed by the Defense Logistics Agency (DLA). Traditionally, DLA buys consumable items (such as food, clothing, and hardware supplies) in large quantities, stores them in wholesale distribution depots until they are requested by the military services, and then ships them to the appropriate service facility where the items are used. To accomplish this role, DLA uses over 1,400 warehouses at 27 distribution depots and other storage locations. The depots held DLA consumable inventory valued at $10.2 billion as of June 1994. Like DOD, the private sector uses similar consumable supplies in its day-to-day operations. Faced with increasing costs associated with acquiring supplies and increasing competitive pressure, some private sector companies have developed new inventory management practices to eliminate the need to buy, store, and distribute large quantities of supplies. For this reason, GAO has focused this report on the consumable items managed and distributed to the services by DLA.



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