Determining Outsourcing Potential for the Inventory Management of Navy Repairables.

The potential exists to outsource the inventory management of repairable items to the private sector. However, the Navy must be able to determine when outsourcing will benefit DoD. This research compares Navy inventory management to commercial inventory management in proposed and existing outsourcing programs and develops a model which the NAVICP can use to estimate the potential success for outsourcing repairable items. The research develops an inventory surcharge of 19 percent. The inventory surcharge represents the Navys costs to perform functions which can be outsourced and serves as a benchmark for comparison to commercial costs. The research then analyzes the costs and benefits of several successful DLA and NAVICP outsourcing initiatives. The analysis results in a model which NAVICP can use to screen repairable items to determine which level of outsourcing will succeed.