Managing the defence inventory : Ministry of Defence

The Ministry of Defence is buying more inventory than it uses and not consistently disposing of stock it no longer needs.

Between the end of March 2009 and the end of December 2011 the total value of the inventory held by the armed forces and in central depots of non-explosives increased by 13 per cent, from GBP17.2 billion to GBP19.5 billion.

The Department estimates that for raw material and consumable inventory, such as clothing or ammunition, it has spent GBP4 billion between April 2009 and March 2011, but did not use GBP1.5 billion (38 per cent) worth.

The NAO estimates that the costs of storing and managing inventory were at least GBP277 million in 2010-11.

Furthermore, over GBP4.2 billion of non-explosive inventory has not moved at all for at least two years and a further GBP2.4 billion of non-explosive inventory already held is sufficient to last for five years or more.

During 2010 and 2011, the MOD identified inventory worth a total of GBP1.4 billion that could either be sold or destroyed, but it was unable to information on the value of the stock that had been destroyed. MOD has already introduced improvements but strategies and performance reporting do not yet focus on effective inventory management.

There are also few targets for monitoring the efficiency of inventory management.

The Department has commissioned a review to establish and sustain more cost effective inventory management and plans to implement its recommendations by March 2013