Navy Supply: Improved Material Management Can Reduce Shipyard Costs
NSIAD-94-181
Published: Jul 27, 1994. Publicly Released: Jul 27, 1994.
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Highlights
GAO reviewed the Navy's management of material costs in naval shipyards, focusing on: (1) whether the Navy's material requirements determination process minimizes waste caused by unused material; (2) shipyard compliance with Navy requirements prohibiting the accumulation of unrecorded material; and (3) the adequacy of controls used to manage materials, limit inventory levels, and safeguard material assets.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of the Navy | The Secretary of the Navy should direct the Commander, Naval Sea Systems Command (NAVSEA), to require that each shipyard identify and analyze the causes of unused material as a step toward developing strategies to improve the accuracy of material orders. |
Closed – Implemented
An improved version of the material management system has been installed at the shipyards. This version provides reports of unused material at the time of job order closure and allows shipyards to identify and analyze the causes of unused material.
|
| Department of the Navy | The Secretary of the Navy should direct the Commander, NAVSEA, to ensure that the planned system to collect historical material usage information is successfully implemented. |
Closed – Implemented
All shipyards have been provided the capability to collect historical material usage through the work packaging and control subsystem of the Baseline Advanced Industrial Management system. Material tables have been designed and developed to record material orders and actual usage.
|
| Department of the Navy | The Secretary of the Navy should direct the Commander, NAVSEA, to direct shipyard planners to order contingency material only when there is a sound basis for doing so. |
Closed – Implemented
By letter dated May 24, 1994, NAVSEA directed shipyard commanders to comply with restrictive policies on ordering contingency material. The policy does not prohibit the ordering of contingency material, but requires that high-value orders be based on sound judgment and approved at a supervisory level above the material planner.
|
| Department of the Navy | The Secretary of the Navy should direct the Commander, NAVSEA, to direct that top management at each shipyard make periodic spot checks for unrecorded material to help prevent the future accumulation of unrecorded inventories. |
Closed – Implemented
All shipyards have issued formal local instructions requiring periodic checks of production spaces for unrecorded material. Also, the NAVSEA functional area guide for command inspections was revised to include a review of management compliance with the spot-check requirement.
|
| Department of the Navy | The Secretary of the Navy should direct the Commander, NAVSEA, to require that project managers, or other officials accountable for material budgets, review shop store issues for ship repairs. |
Closed – Implemented
The capability for project managers or other officials to review shop stores issues has been provided to all shipyards. This feature has been provided in the automated material planning system for shop stores items ordered in advance by material planners. For walk-up sales, project managers and other officials can review daily transaction reports that list all sales transactions.
|
| Department of the Navy | The Secretary of the Navy should direct the Commander, NAVSEA, to establish additional controls over issues of items with personal use value. |
Closed – Implemented
By letter dated June 13, 1994, NAVSEA directed that all shipyards immediately begin recording employee badge numbers for shop stores issues and that issue volume by badge number be reviewed to identify possible abuse.
|
| Department of the Navy | The Secretary of the Navy should direct the Commander, NAVSEA, to direct the shipyards to eliminate shop store excess inventories that exceed NAVSEA retention criteria. |
Closed – Implemented
The shipyards have intensified efforts to eliminate excess inventories that exceed retention criteria. In addition, excess inventories are being reduced through a combination of reduced replenishment, consumption, and write-offs.
|
| Department of the Navy | The Secretary of the Navy should direct the Commander, NAVSEA, to ensure that shipyards comply with requirements for physical inventories of direct material. |
Closed – Implemented
NAVSEA is monitoring compliance with physical inventory requirements and requiring headquarters approval for any deviations. The Norfolk shipyard already has conducted two inventories and scheduled four more.
|
| Department of the Navy | The Secretary of the Navy should direct the Commander, NAVSEA, to determine the causes for lost material and develop strategies to reduce the losses. |
Closed – Implemented
NAVSEA charted a process action team to investigate losses of material. The team found that losses were small and within acceptable guidelines. New procedures implemented at all shipyards will improve material handling and location records through improved material handling discipline.
|
| Department of the Navy | The Secretary of the Navy should direct the Commander, NAVSEA, to direct each shipyard to identify and record all existing unrecorded material, retain only those materials that have a specific shipyard requirement, return all other needed materials to the supply system, and dispose of materials no longer needed. |
Closed – Implemented
All shipyards are reviewing and critically appraising procedures for control of unrecorded material. Special sweep-ups at the Norfolk and Puget Sound shipyards have been completed. They also are essentially complete at the other shipyards, except for some residual material and catalog/restorage efforts.
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Topics
Inventory controlInventory control systemsManagement information systemsMilitary cost controlMilitary inventoriesMilitary vesselsNaval suppliesProperty and supply managementRepair costsShipyards