| Synopsis: |
Between April 2009 and March 2011, the Ministry of Defence purchased 38% more raw material and consumable inventory, such as clothing or ammunition, than it used, at a value of GBP1.5 billion. The Ministry has also not consistently disposed of stock it no longer needs or does not use regularly. The National Audit Office identified the need for the Ministry to improve its management of inventory as long ago as 1991, but the root causes of the problem have not been addressed. The Ministry has failed to provide effective incentives or accountability for those responsible for ordering, retaining, and disposing of inventory. A lack of investment in information systems and professional inventory skills is also limiting the Ministry's visibility of the problems, and its ability to manage its inventory efficiently. The Ministry has already introduced its own internal control measures to prevent over-ordering of inventory, some of which are showing early signs of success. The Ministry is on track to reduce spending on inventory by GBP300 million in 2012-13, and plans to reduce it by GBP500 million a year within the next three years.It also plans to reduce by 35% the volume of stock it holds to relieve pressure on central depots in advance of the anticipated return of inventory from Afghanistan and Germany. However, if the Ministry is to be successful this time it must also drive change through the inventory management system and address the root causes of ordering and holding excess stock. |