The Department of Defense has developed a Comprehensive Inventory Management Improvement Plan which lays out a course of action to improve inventory level setting processes, demand planning accuracy, and reduce forecast error. The implementation of this Department-wide plan, initiated in October 2010, will result in the following outcomes related to demand forecasting:
- Reduction of on-order and on-hand excess of secondary inventory items
- Identification of improved forecasting methods and inventory management techniques that consider an item’s life cycle
- Implementation of standard metrics to set inventory levels
- Improved and automated methods for collaboration and exchange of information
- Approaches for improving setting inventory levels for low-demand items
Investment risk reductions for new consumable items
DEPARTMENT-WIDE LIFE CYCLE FORECASTING ANALYSIS
Prior to developing the Plan, the Office of the Secretary of Defense (OSD) initiated a program to improve demand forecasting for secondary items throughout their lifecycles. Because improved forecasting should reduce inventory excesses and shortfalls and thereby provide for more effective and efficient materiel support, the program and this project subsequently became part of the overall improvement plan. The three primary lifecycle stages are: New item introduction, Sustainment and End of life.
The first phase of the life cycle to be analyzed, the Item Introduction or Provisioning phase was completed in November 2010.
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