DOD Medical Inventory: Reductions Can Be Made Through the Use of Commercial Practices
NSIAD-92-58
Published: Dec 05, 1991. Publicly Released: Dec 05, 1991.
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Highlights
Pursuant to a congressional request, GAO compared commercial logistics practices with similar Department of Defense (DOD) and Department of Veterans Affairs (VA) operations, focusing on medical logistics practices at DOD hospitals and warehouses and selected private hospitals.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Defense | The Secretary of Defense should direct the services and DLA to conduct pilot programs that will demonstrate the applicability of commercial practices to military medical facilities. Those programs should include facilities from all three services, test initiatives encompassing all aspects of inventory management, and quantify the cost and benefits of the changes. Those programs should comprehensively test the extensive changes in the total logistics system needed to dramatically reduce inventory costs. Among the practices that should be included in the tests are: (1) significantly reducing duplicative inventory requirements in medical facilities; (2) establishing electronic ordering capabilities with private vendors and DOD medical facilities; (3) using prime vendors to deliver supplies from a variety of manufacturers directly to medical facilities; (4) eliminating the need to store medical supplies in warehouses adjacent to medical facilities and in the DLA depot system; and (5) contracting with private firms to maintain and rotate war reserve material. |
Closed – Implemented
DOD began its first pilot program in January 1993, which is now operating at 119 hospitals within 14 geographic regions. It plans to soon extend pilot programs to 26 more hospitals in 7 other regions. Specific cost savings attributed to these pilots include a $104.8-million reduction in DLA inventory, a $6.2-million reduction in Walter Reed Medical Center inventory, a $6.2-million reduction in operating costs at Walter Reed, and an undertermined reduction in other DOD medical facilities inventories. Officials also noted other benefits, such as: (1) better item visibility and demand data; (2) a more cooperative partnership with the private sector; and (3) increased standardization of supplies.
|
| Department of the Air Force | The Army, Navy, and Air Force should tailor changes required in each of their facilities so the successful results of the pilot programs can be applied. This approach would allow DOD the flexibility to accommodate special conditions such as remote facility locations, access to commercial distribution systems, and support for overseas operations and at the same time improve its logistics systems and save money. |
Closed – Implemented
Air Force facilities have not eliminated retail inventory storage facilities with the prime vendor program. Potential inventory reductions therefore still exist. GAO is examining this issue under job code 709055.
|
| Department of the Navy | The Army, Navy, and Air Force should tailor changes required in each of their facilities so the successful results of the pilot programs can be applied. This approach would allow DOD the flexibility to accommodate special conditions such as remote facility locations, access to commercial distribution systems, and support for overseas operations and at the same time improve its logistics systems and save money. |
Closed – Implemented
Navy facilities have not eliminated retail inventory storage facilities with the prime vendor program. Potential inventory reductions therefore still exist. GAO is examining this issue under job code 709055.
|
| Department of the Army | The Army, Navy, and Air Force should tailor changes required in each of their facilities so the successful results of the pilot programs can be applied. This approach would allow DOD the flexibility to accommodate special conditions such as remote facility locations, access to commercial distribution systems, and support for overseas operations and at the same time improve its logistics systems and save money. |
Closed – Implemented
Army facilities have not eliminated retail inventory storage facilities with the prime vendor program. Potential inventory reductions therefore still exist. GAO is examining this issue under job code 709055.
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Topics
Best practicesComparative analysisDefense cost controlFederal supply systemsHealth care cost controlInventory control systemsLogisticsMedical suppliesMilitary hospitalsMilitary inventoriesProperty and supply managementComparative benchmarking products