Commercial Practices:

Leading-Edge Practices Can Help DOD Better Manage Clothing and Textile Stocks

NSIAD-94-64: Published: Apr 13, 1994. Publicly Released: May 18, 1994.

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Pursuant to a congressional request, GAO reviewed the Department of Defense's (DOD) inventory management system for supplying clothing and textile (C&T) items to the military services, focusing on: (1) inventory problems and other inefficiencies in the Defense Logistics Agency's (DLA) C&T logistics system; (2) commercial practices to reduce inventory holding and distribution costs; and (3) DOD progress in improving C&T inventory management.

GAO found that: (1) DOD maintains aging and overstocked C&T inventories and incurs excessive and unnecessary storage and handling costs; (2) DOD has a total C&T inventory value of over $1.8 billion of which about 26 percent represents a 10-year supply; (3) the large DOD C&T inventory is due to the multiple layers of the DLA supply system, the need to maintain war reserves, the low turnover of stock, the nonvisibility of retail level assets, excessive lead times, liberal retention policies, short-term contracts, and the failure to deplete phase-out items before issuing new clothing; (4) the holding costs for the C&T inventory have exceeded the items' original purchase prices; (5) leading private-sector companies use just-in-time inventory practices and centralized distribution points to keep inventories low and fill orders quickly; (6) many private-sector firms and some federal agencies use prime vendors to manage their clothing inventories; (7) prime vendors minimize inventories and holding costs by providing timely and direct delivery between customers and suppliers and ordering additional stock from manufacturers on short notice; (8) although DOD has begun to use innovative commercial inventory practices, its progress has been slow; (9) DLA needs to enhance its computer capabilities to implement commercial inventory practices and overcome government procurement requirements that inhibit the use of commercial practices; and (10) DLA has not explored the use of prime vendors for high volume C&T items which would benefit recruit induction centers' operations.

Recommendations for Executive Action

  1. Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: In addition to current modified prime vendor demonstration efforts to obtain low volume and special order items, the Secretary of Defense should direct the Director, DLA, to conduct a pilot project to demonstrate whether the prime vendor concept is beneficial in providing high usage uniform items, such as items that are currently a part of the Defense Personnel Supply Center quick response initiatives, to recruit induction centers.

    Agency Affected: Department of Defense

  2. Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of Defense should direct the Director, DLA, to determine the number of prime vendors, items, military services, and recruit induction centers include in the project to measure the cost benefit potential.

    Agency Affected: Department of Defense

  3. Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of Defense should direct the Director, DLA, to use the pilot project as an opportunity for testing ways to overcome other impediments such as software and hardware incompatibilities within DOD and inconsistencies between DOD and commercial sector procurement practices.

    Agency Affected: Department of Defense

 

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