A recent report by the National Audit Office (NAO) scrutinises the Ministry of Defence’s (MoD) inventory management, evaluating its effectiveness and value for money. This analysis follows up on longstanding issues highlighted in previous assessments. The 2012 report had noted excessive purchasing and inadequate disposal of unneeded inventory by the MoD.
The report concludes:
The MoD’s inventory management has many long-standing weaknesses, which we have reported on before. In NAO’s 2012 report, Managing the Defence Inventory, they found that the MoD was buying more inventory than it was using and was not consistently disposing of inventory it no longer needed.
The MoD manages a vast inventory worth £11.8 billion across a complex and dispersed enterprise. Growing global instability, and the greater deployed presence envisaged in the Integrated Review, are making it ever more important that the MoD has the inventory it needs, in the right places and amounts.
While the MoD has taken steps to improve its logistics and commodity procurement, and removed financial incentives for over-purchasing, many long-standing weaknesses with its inventory management remain. These include its inefficient and poorly aligned activities and ageing legacy IT, which it has been slow to address. These weaknesses stand in the way of the MoD’s ambitions for inventory management set out in its Support Strategy. As a result, despite some improvements, the MoD is not yet set up to deliver value for money from its inventory management.
The MoD has started a number of transformation initiatives which provide opportunities to move towards realising effective, efficient and resilient inventory management. However, the scale of the change needed is substantial. If MoD does not prioritise the required resources to do this, it will frustrate its ability to build resilience and deploy the people and equipment it needs in the right places. It will also lose the opportunity to reduce waste and achieve cash savings or release resources for other priority expenditure.
Read the full NAO report: Defence inventory management – NAO report