Despite the billions of dollars invested in inventory, the Navy’s logistics system is still often unable to provide spare parts when and where needed. According to the Navy’s data, customers wait over  2.5 months, on average, to receive backordered items. Several Factors Contribute to Inefficient System

The Navy’s large inventory costs and slow customer service are the result of several factors, but the largest contributor is a slow and complex repair pipeline. Shown in figure 3 as “repair facility receiving” and “repair workshops,” these activities take an average of 73 days to complete. According to Navy officials, this is a common practice at the Navy’s repair facilities. These initiatives are the regionalization of supply management and maintenance functions, privatization and outsourcing, and logistics response time reductions. We identified four best practices in the airline industry that have the potential for use in the Navy’s system. In the past, deliveries took as long as 3 weeks. Recommendations

As part of the Navy’s current efforts to improve the logistics system’s responsiveness and reduce its complexity, we recommend that the Secretary of Defense direct the Secretary of the Navy, working with DLA, to develop a demonstration project to determine the extent to which the Navy can apply best practices to its logistics operations. The specific practices that should be tested are inducting parts at repair depots soon after they break, consistent with repair requirements, to prevent parts from sitting idle; reorganizing repair workshops using the cellular concept to reduce the time it takes to repair parts; using integrated supplier programs to shift the management responsibilities for consumable inventories to suppliers; using local supplier distribution centers near repair facilities for quick shipments of parts to mechanics; and expanding the use of third-party logistics services to store and distribute spare parts between the depots and end-users to improve delivery times.
Why GAO Did This Study

Pursuant to a congressional request, GAO examined the Navy's aircraft logistics system, focusing on the Navy's efforts to improve and reduce the cost of the system.

What GAO Found

GAO found that: (1) the best practices identified in the airline industry could improve the responsiveness of the Navy's logistics system and save millions of dollars; (2) the Navy's logistics system is complex and often does not respond quickly to customer needs; (3) the factors contributing to this situation include the lack of spare parts, slow distribution, and inefficient repair practices; (4) some customers wait as long as four months for available parts; (5) the Navy is centralizing its supply management and repair activities, outsourcing certain management functions, and analyzing the effectiveness of its repair pipeline; (6) the best practices employed by the private sector show promise for the Navy because these firms hold minimum levels of inventory, have readily accessible spare parts, and quick repair times; (7) it takes an average of 11 days to repair a broken part in the private sector, as opposed to 37 days in the Navy's repair process; (8) the private-sector average is a result of repairing items immediately after they break, using local distribution centers and integrated supplier programs, and third-party logistic providers; and (9) many of the airline industry's best practices are compatible with the Navy's logistics system.