stock on hand, and creating an updated suite of DoD-level Class IX inventory management metrics.


To implement the plan, AMC initiated a “War on Excess” that has reduced dor- mant stock on hand by 2.5 million cubic feet and $2.3 billion in five years. (Dor- mant stock is any secondary item with no demands at any one location for two or more years.)


AMC also is focused on reducing Class IX procurements that exceed the chang- ing Requirement Objective levels. This metric has fallen from 12.6 percent of all procurement due-in to 6.4 percent as of June 2011. DoD’s goal is to reduce on- order excess to 6 percent by 2014 and to 4 percent by 2016. This aggressive reduc- tion will stop the delivery of secondary items that would be considered excess to requirements when received by the Army.


Currently, 79 percent of parts in the Army’s almost $20 billion Class IX inventory are active, 7 percent represent economic retention, 3 percent are con- tingency retention, and 11 percent are potential excess (see Figure 2).


The goal is to increase the percentage of the active inventory category.


The economic retention category is com- puted by an Army model that weighs the benefits of retaining an item for potential future use vs. disposing of it.


The contingency retention category is determined item by item. It contains assets that otherwise would be identified for potential disposal by the requirements system. A good example is an unservice- able reparable that the Army bought and can be repaired at a later date as needed. This is a better business decision than dis- posing of unserviceable assets today and


JUNE 2011 AWCF TOTALS


$15.5B


$11 $12 $13 $14 $15


$10 $9 $8 $7 $6 $5 $4 $3 $2 $1


PERCENT OF TOTAL INVENTORY


79%


Active Inventory


AMC’s Current Inventory Figure 2


$2.2B $1.3B $ .6B 7%


Economic Retention


3%


Contingency Retention


TOTAL INVENTORY = $19.6B TRACKING INVENTORY


This chart breaks down the AWCF inventory of almost $20 billion into categories of use. The goal is to increase the percentage representing the active inventory category. (SOURCE: HQDA G-4.)


possibly having to re-procure them later. Contingency retention stock, and the pol- icies that guide it, are closely monitored by AMC and DoD.


This is only part of many efforts underway to right-size the Class IX supply chain. Both the Army and DoD are also focused on improving capabilities for forecasting repair parts. The Army has completed deployment of its Logistics Moderniza- tion Program and is now fielding the Global Combat Support System-Army (see related article on Page 62).


Both of these new systems offer the promise of more efficient Class IX supply chain operations.


JOHN T. LAFALCE is a Logistics Manage- ment Specialist in the Supply Directorate of the Department of the Army G-4. He has a B.S. in business administration from the University of Kentucky, an M.S. in management from Texas A&M University, and an M.S. in national industrial strategy from the Industrial College of the Armed Forces. LaFalce is also a member of the U.S. Army Acquisition Corps.


ASC.ARMY.MIL 61 11%


Potential Excess


LOGISTICS


Billions


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