Case Study

Logistics Reform

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Aerial view of Defence National Storage and Distribution Centre

The Accelerated Inventory Optimisation Program has seen Defence embark on a clean out of its warehouses to minimise the number of surplus and obsolete items in its holdings. Working together, Joint Logistics Command and the Defence Materiel Organisation have been systematically identifying what is being stored that is no longer needed and taking steps to dispose of these items.

The disposal process is routine and ongoing; however, in recent years a backlog of surplus materiel has built up in warehouses. Items such as equipment that is no longer useful or that has been superseded, spare parts for such equipment, and stock kept 'just in case', not only clutter up space, but represent a drain on Defence resources as we are still responsible for counting and caring for redundant stock.

The Accelerated Inventory Optimisation Program and other planned inventory reform initiatives are designed to ensure that the right stock, parts and items are available in the right quantities in the right locations at the right time.

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Defence National Storage and Distribution Centre warehouse (internal).

Commencing at Defence's largest warehousing complex, Defence National Storage and Distribution Centre in Moorebank, NSW, 18,854 stock codes (or item types) were identified in the first three months of this concentrated program. The 1,458,000 items that those codes represent have been swiftly processed for disposal. The program at Moorebank is expected to realise a reduction in approximately 40,000 stock codes by November 2008. The Accelerated Inventory Optimisation Program is also being rolled out to all of Defence's major warehousing sites.

Optimising the current inventory reduces the overall cost of inventory ownership, maximises use of existing warehouses and provides greater accuracy in determining the value of Defence assets. Based on this sound foundation, further logistics reforms involving smarter investment decisions and improved warehousing and distribution processes will result in better, more cost-effective logistics management in Defence.