The Supply Chain Sustainability School
MoD wastes billions 'buying equipment it doesn't need'
Evidence provided to MPs by the MoD revealed between April 2009 and March 2011 it purchased 38 per cent more raw material and consumable inventory - such as clothing or ammunition - than it used, costing £1.5 billion.
It also conceded it has not disposed of stock it no longer needs. Over £4.2 billion of non-explosive inventory has been held unused at least two years and should be removed, and a further £2.4 billion of non-explosive inventory already held is sufficient to last for five years.
In a statement Richard Bacon, Conservative MP and member of the committee, warned: "With stock returning from Afghanistan and soon from Germany, the problem is likely to get worse. [The MoD] needs to act fast as some central depots for non-explosive items are already 90 per cent full."
He continued: "The MoD is spending over £1 billion on a new inventory system but any system is only as good as the information put into it, while currently the department lacks information on the inventory it holds and thus does not know the true scale of the problem it faces."
Bacon recommended the department carry out a "full cleansing" exercise before getting the new system up and running, to ensure it doesn't waste more public money. "The MoD is now considering the outsourcing of inventory management but going ahead with this now, before the MoD has a firm grip on the true situation it faces, risks paying far more than necessary to outsource," he added.
The PAC advised setting targets to reduce over-ordering and regularly reviewing progress to see where money can be saved. It also said the MoD needs to work with the Cabinet Office to address the purchasing skills gap it is facing. Currently around 20 per cent of inventory management posts are vacant, and 13 per cent of those in post don't have the appropriate qualifications for their roles.
In response, the MoD has said it is on track to reduce spending on inventory by £300 million in 2012-13, and it plans to reduce it by £500 million a year within the next three years. It also plans to reduce the volume of stock it holds by 35 per cent to relieve pressure on central depots in advance of the anticipated return of inventory from Afghanistan and Germany.
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