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NAVALPOSTGRADUATESCHOOL Monterey,California
THESIS STOCKINTRANSIT:WHYWEHAVEIT,WHYIT MATTERS by
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FormApprovedOMBN 0704-0188
REPORTDOCUMENTATIONPAGE
Public Public reportin reporting g burden burden for this collecti collection on of informat information ion is estimate estimated d to average1 average1 hou resp respon onse se, , incl includ udin ing g the the time time for for revi review ewin ing g inst instru ruct ctio ion, n, sear search chin ing g exis existi ting ng data data gath gather erin ing g and and main mainta tain inin ing g the the data data need needed ed, , and and comp comple leti ting ng and and revi review ewin ing g the the coll collec ec information.Sendcommentsregardingthisburdenestimateoranyotheraspectofthiscolle of infor informat mation ion, , includ including ing sugge suggesti stions ons for reduci reducing ng this this burden burden, , to Washin Washingto gton n headq headq Services,DirectorateforInfor Services,DirectorateforInformationOperati mationOperationsandReports,1215 onsandReports,1215JeffersonDavisHighw JeffersonDavisHighway, ay, 1204,Arlington,VA 22202-4302, 22202-4302, andto theOffice ofManagement andBudget, Paperwork Redu Project(0704-0188)WashingtonDC20503. 1.AGENCYUSEONLY (Leave 2.REPORTDATE 3.REPORTTYPEANDDATESCOVER blank) June2002 Master’sThesis
4.TITLEANDSUBTITLE Stockin-Transit:Whywehaveit,whyit matters 6.AUTHORKirkM.Swiantek 7.PERFORMINGORGANIZATIONNAME(S)ANDADDRESS(ES) NavalPostgraduateSchool Monterey,CA93943-5000 9. 9.S SPO PONS NSOR ORIN ING G/ /MO MONI NITO TORI RING NGA AGE GENC NCY YNA NAME ME(S (S) )AN AND DAD ADDR DRES ESS( S(ES ES) )
5.FUNDINGNUMBERS
8.PERFORMINGORGANIZATIO REPORTNUMBER
10 10. .SP SPON ONSO SORI RING NG/M /MON ONIT ITOR ORIN IN AGENCYREPORTNUMBER 11.SUPPLEMENTARYNOTES Theviewsexpr Theviewsexpresse essedinthisthes dinthisthesisarethos isarethoseoftheautho eoftheauthorandd randd reflecttheofficialpolicyorpositionoftheU.S.DepartmentofDefenseortheU.S.Governme
12a.DISTRIBUTION/AVAILABILITYSTATEMENT Approvedforpublicrelease;distributionisunlimited 13.ABSTRACT (maximum200words)
12b.DISTRIBUTIONC
Stoc Stock k in-T in-Tra rans nsit it, , spec specif ific ical ally ly Stoc Stock k in-T in-Tra rans nsit it that that goes goes to a NonNonactivityremainsa activityremainsa majorproblem within within theNavy. TheNavy continuesto continuesto “writ billio billions ns of dollar dollars s due to stock stock in-tra in-transi nsit t losses losses each each year year and consis consisten tently tly trac track k of valu valuab able le repa repair ir item items. s. This This thes thesis is look looks s at the the effe effect cts s that that St Transi Transit t has on the Navy, Navy, in not only only the repair repair pipeli pipeline, ne, but overal overall l readin readin well. well. Currently, Currently,two two programsareinplacethatcouldsolvethisnon-T programsareinplacethatcouldsolvethisnon-TIRing IRingpro pro Comm Commer erc cial ial Asse Asset t Visi Visibi bil lity ity (CAV (CAV) ) and and a Pro Proxy TIR TIR Group roup. . We loo look at th asso associ ciat ated ed of impl implem emen enti ting ng one one or both both of the the two two solu soluti tion ons s and and the the bene benefi fi wouldbring.
14.SUBJECTTERMSSIT,Stockin-Transit,DLRpipeline,Lossof visibility
17.SECURITY CLASSIFICATION OFREPORT Unclassified
18.SECURITY CLASSIFICATIONOFTHIS PAGE Unclassified
19.SECURITY CLASSIFICATIONOF ABSTRACT Sign up to vote on this title Unclassified
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15.NUMBER PAGES 43 16.PRICE 20.LIMITA OFABSTRAC UL
NSN7540-01-280-5 500 Sta ndardForm298(R ev.2-89) PrescribedbyANSIStd.239-18
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Approvedforpublicrelease;distributionisunlimited
STOCKIN-TRANSIT:WHYWEHAVEIT,WHYITMATTERS
KirkM.Swiantek Lieutenant,UnitedStatesNavy B.A.,EasternMichiganUniversity,1993
Submittedinpartialfulfillmentofthe requirementsforthedegreeof
MASTEROFSCIENCEINMANAGEMENT fromthe
NAVALPOSTGRADUATESCHOOL June2002 You're Reading a Preview Unlock full access with a free trial.
Author:
Kirk M. Swiantek
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Approvedby:
DonaldR.Eaton ThesisAdvisor Sign up to vote on this title
KevinR.Gue SecondReader
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ABSTRACT
Stock in-Transit, specifically Stock in-Transit goes
to
within billions
a the of
Non-TIRing Navy.
activity
The
Navy
dollars due to
remains
a
continues
major to
stock in-transit
th
prob
“write-o losses
ea
yearandconsistentlylosestrackofvaluablerepairitems This thesis looks at the effects that Stock in-Transit on the Navy, in not only the repair pipeline, but over readiness as well.
Currently, two programs are in pl
that could solve this non-TIRing problem, Commercial Asse Visibility (CAV) and a Proxy TIR Group. cost
associated of
implementing
one or
We look at both
of
the
solutionsandthebenefitstheywouldbring. You're Reading a Preview Unlock full access with a free trial.
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TABLEOFCONTENTS
I.
STOCKIN-TRANSIT ...................................... A. OVERVIEW ........................................ B. SCOPEOFSTUDY .................................. C. METHODOLOGYANDORGANIZATIONOFSTUDY ...........
II.
THESITPROBLEMANDALTERNATIVESOLUTIONS ............ A. THECREATIONOFSTOCKIN-TRANSIT ................ B. THEDEPOTLEVELREPAIRABLE(DLR)PROGRAM ........ C. SITEFFECT#1-OVER-ORDERINGDLRS .............. D. SITEFFECT#2–POLITICALEMBARRASSMENTANDCOSTS
III. SOLUTIONSTOPREVENTSIT“WRITE-OFFS” ................ A. COMMERCIALASSETVISIBILITY ..................... 1. BenefitsfromtheCAVProgram .............. 2. CostsandFeasibilityofImplementingCAV .. B. NON-TIRCOMMERCIALREPAIRPROXYTIRGROUP ....... 1. BenefitsfromtheProxyTIRProgram ........ 2. CostsAssociatedwiththeProxyTIRProgram You're Reading a Preview 3. FeasibilityoftheProxyTIRProgram ...... IV.
Unlock full access with a free trial. CONCLUSIONSANDRECOMMENDATIONS ...................... A. SUMMARY ......................................... B. CONCLUSIONANDRECOMMENDATIONS Download With Free Trial .................. C. SUGGESTEDTOPICSFORFURTHERRESEARCH ...........
INITIALDISTRIBUTIONLIST .................................
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ACKNOWLEDGEMENTS Theauthorwouldliketothankhisfamily,forthe understandingandforjustbeingabletoputupwithme
duringtheselastsixmonths.Tohisadvisorsforallthe
help,guidanceandrecommendationsputintothisproject.
ToallthepeopleatNavalSupplySystemsCommandandNaval
InventoryControlPoint,Philadelphiafortheassistancein gatheringinformation.
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I.
A.
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STOCKIN-TRANSIT
OVERVIEW The Government Accounting Office (GAO) reported
th
in the Fiscal Years (FY) between 1996-1998 the U.S. Na reported
in-transit
billion.
Naval
(NAVICP-P) losses
inventory
Inventory
losses
Control
of
more
Point,
than
Philadelp
was responsible for approximately 85% of
due
largely
to
the
vast
amount
of
stock
t
transferanditshighdollarvalue[Ref.1:p.1]. Although the GAO report of 1999 brought to light Stock in-Transit
(SIT) problem,
the Navy
still report
billions of dollars of SIT losses for FY’s 1999-2001. Stock
in-Transit
problem
as
a
whole
is
You're Reading a Preview
a
large
convoluted subject: there are 23 different scenarios tha Unlock full access with a free trial.
initiate a Stock in-Transit track, each requiring specifi business
rules
to
Downloada With Free Trial close record.
Thirteen
differ
computer programs lead into NAVICP-P’s Financial Invent module. Each program uses a different language to create
TransactionItemReportthathastomatchintheNAVICP-P’ Sign up to vote on this title FinancialInventorymoduletocloseaSITfile.
The
majority
of
SIT
losses
Useful
are
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attributable
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Systems
Command
and
Naval
Invent
Control Point, Philadelphia, re-engineered their Invent Tracking Program (PM76), and created a Supply Discrepan Reporting
(SDR)
system
a
web
based
program;
both
w
activatedinMay2001asaresultoftheGAOreport.Nava Supply
Systems
Command
also
established
the
Corpor
InformationSystem(CIS)asanoversighttoolusedtotrac
actualstockin-transit“write-offs”.TheobjectiveofSD and
the
PM76
upgrade were
to
prevent
further
stock
transit“write-offs”byreconcilingallopenSITbeforeth six-month
timeframe.
Naval
Inventory
Control
Poi
Philadelphia implemented SDR at 121 Navy sites and at Commercial Repair Activities. were
an
initial
12
Costs of these two progra
million
to
create
them,
approximately 2.8 million annually in daily operation You're Reading a Preview maintenance
costs. Unlock Thefull access effectiveness with a free trial.
of
these
implementations are still unclear. They have only been
Download With Free Trial
foroneyear,anditisstillanevolvingproject,withn
clearmetricestablishedtoshowperformance.[Ref.3:p.1]
B.
SCOPE OF STUDY We
focus just
on
NAVICP
Stock in-Transit, dealing with Depot Level Repairable
assets
Philadelphia’s
problem wi
Sign up to vote on this title
the loss ofNotvisibility useful Useful when
going to a Commerci
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METHODOLOGYANDORGANIZATIONOFSTUDY
Weinvestigatethefeasibility,benefits,andcostst the Navy of implementing two alternate methods of tracki SIT
to
a
Commercial
Repair
Activity
once it
enters
repair pipeline. The first is Commercial Asset Visibili (CAV),
a
Activity group.
web-based to
program
complete
a
TIR.
that The
allows
the
second
is
Commerc a
Proxy-
Information concerning the Proof of Receipt (P
andtheProofofDelivery(POD),totheCommercialActivit is entered at NAVICP-P and creates the appropriate TIR the Commercial Activity.
We also address the effect th
the loss of visibility of material categorized as SIT onoverallreadinessintheNavy. The remained of chapter I is background informatio on
NAVICP-P,
their
You're Reading a Preview accounting
and
inventory
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systems, and how it relates to stock in-transit.
track We al
discuss the Depot LevelRepair (DLR) Download With Free Trialprogram used, and this torelates to stock in-transit. Chapter II discus
theroleoftheNavy’sItemManager,andproblemsthatca arise from inaccurate inventory information.
Chapter
discusses the possible solutions to SIT, the costs Sign up to vote on this title and benefits
to
the Navy
concludes with
by
Useful them. Not useful incorporating Chapter
recommendations for the Navy
and sugges
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II. THESITPROBLEMANDALTERNATIVESOLUTIONS
A.
THECREATIONOFSTOCKIN-TRANSIT
Prior to the implementation of Centralized Accountin and
Billing
(CAB),
inventory
financial accountability Inventory
Control
Inventory
Reports
inventory
on
centralized CAB,
the
hand,
and
the
rendered
accountable
including
inventory management. financial
points
maintai
for inventory via the Financ
Ledger as
stock
the
officer
material Upon
accountability
Financ for
subject
implementation
for
the
value
centrallymanagedmaterialwastransferredtotheInventor Control
Point
(ICP).
When
one
CAB
stock
point
iss
material to another CAB stock point, the ICP deletes value of
the issued
You're Reading a Preview
material from the issuing activity
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Financial Inventory Control Ledger.
This is done with
Transaction Item Report (TIR) to the NAVICP comput Download Withsent Free Trial by the issuing activity.
At the same time the materi
issue is posted to the Financial Inventory Control Ledger the ICP posts the identical material issue transaction
theStockin-TransitfilewhichistheICPrecordofStoc Sign up to vote on this title useful Useful Not in-Transit between CAB stock points. Upon receipt of
material, the receiving stock point reports the materi
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The Stock in-Transit
system
consists
of
the NAVI
applicationofthein-transitfollow-upprocessingprogram which
tracks
Accounting
material
in-transit
between
and Billing activities.
Centrali
Commercial
Overha
contractors are also considered Centralized Accounting Billing activities. activities
submit
Centralized Accounting
Transaction Item
and Bill
Reports,
an
automa
transmission to the ICP reporting change in stock positi
such asan issue, receipt or adjustment. Stock in-Transi includes
transactions
referrals,
retrograde
for
stock
redistributions,
transshipments
and
st
returns
f
commercialorotherservicerepairfacilities. The Navy accountability
accounting of
stock
system
that
provides
in-transit
inventory
financ is
You're Reading a Preview MaterialFinancialControlSystem(MFCS),whichisahybri Unlock full access modules. with a free trial. of three distinct accounting
with
These modules wo
Uniform Inventory Control Point (UICP - NAVICP-P
Download With Free Trial
ComputerSystem)thatinclude: •
B01–RealtimeRequisitionProcessing
•
B04–TransactionItemReporting
•
PM76–In-transitFollow-upProcessing Sign up to vote on this title
•
The
Useful PR04–RepairableManagement overall
objectives
of
the
Not useful
Material
Financ
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since 1993.
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It is a mainframe system that provides da
transactional data level reporting, capability
Sop Gartner
and
in
“Military Standard” format, deta
adjustment
postings
includes
to
history, the
In-transit
U.S.
automated revers Treasury’s
(OSO/SIT) loan
Gene
Ledger.
It
tracki
outgoing
billing and month end Congressionally mandat
reports. The
other
two
modules
perform
allotment
accr
accountingandexpenditureprocessingforthe$5billioni
annualfundsprocessedbyNAVICP-Pforequipment,supplies
andservices.TheywereplacedinproductionattheNAVICP PinJune2000. The
in-transit
application
that
transportation order
to
follow-up integrates
is
financial
a single
application
Unlock full access with a free trial.
in-transit
NAVSU
supply,
You're Reading a Preview
disciplines into
increase
module
visibility.
This
mod
tracks, follows-up on, andWith attempts Download Free Trial to resolve stock transit
records
through
perfect
or
relaxed
matches.
relaxed match for example, is when dollar amounts of
SITrecordsmatchbutthedocumentnumberdoesnot.Thes records represent the actual owned material
from
physical Sign up to movement vote on this title of
Na
Useful to Not useful holder one custodial another
variouspurposes:carcasstransshipments,movementintoan
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transit records that exist at any time in order to insu timely closure of the SIT cycle and to prevent write-of andphysicallosses. The
Financial
transaction
as
the
Inventory result
of
Receipt Transaction (TIRs). Inventory
module
function.
When
activity
to
transit”
steps.
from
another,
it
The
an
creates
Issue
a
Transaction
or
These TIRs come to Financ
the
Navy-owned
module
Transaction material
goes
issuing
is
through
a
activity
Item
Report
moved
from
series gets
a
of
“
Mater
Release Order or a carcass to transship, and generates Issue Transaction TIR. custody is (intended
The material is packaged and th
transferred either receiver)
or
to
directly
an
to
the consig
intermediary,
such
as
You're Reading a Preview shipping carrier or agent. The shipping carrier actual
Unlock full access with a free trial. transportsthematerialtotheconsignee,andthenformall
turns custody over to the receiver.
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It is expected th
material that is “in-transit” will go through these st within a reasonable time. The Navy considers 45 days normal
time
allowed
for
a
SIT
to
close
before
be
consideredan“UnmatchedSIT”file.Thein-transitfollow Sign up to vote on this title
up
processing
module
collects
information that useful docume Useful Not
thetransferofcustodyfromissuertocarriertoconsigne
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Stock in-Transit records created by the RTI is 74,400 wit an estimated dollar value of $2.3 billion. The volume SIT
records
system
at
115,000.
that any
are
open
given
Of
these
day
and at
in
the
NAVICP-P
records,
stock is
in-tran
approximat
approximately
60,000
unmatched issues, 47,000 are unmatched receipts and 8, are partially matched records.
[Ref.6] If
the In-trans
Follow-up Processing module cannot find a matching receip after 120 days, current Navy policy is to close the file. special
To
close
program
shipments.
indicating
unmatched
that
Using this
accomplished by
SIT
performs program,
file,
NAVICP-P
runs
presumptive receipts a presumptive receipt
posting a transaction, “administrative
that
documentation. stock
an
material
was
received
without
pro
At the same time, a corresponding loss You're Reading a Preview
in-transit
entry is withmade Unlock full access a free trial. and
an
“Account
Adjustment Loss” transaction is posted to the credit si
Download With Free Trial
oftheGeneralLedger.Thistransactionisreferredtoas “write-off”.[Ref.7:p.1]
B.
THEDEPOTLEVELREPAIRABLE(DLR)PROGRAM The Navy’s
Depot Level Repairable
(DLR) retrogra
Sign up to vote on this title
system is designed to facilitate the movement and tracki Useful Not useful
of expensive components that the Navy has deemed more cos
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On average, more than 8,000 DLRs are turned ba
intothesupplysystemforrepaireachweek.[Ref.8:p.1] The ATAC technically screens the DLR to confirm th the
turn-in
documentation
accurately
identifies
component and to determine disposition instructions (i. transship
to
a
storage
facility
awaiting
induction
repair, ship directly to a repair facility (commercial organic) or ship to Defense Reutilization Material Offi
(DRMO)fordisposal).Thevastmajorityaresenttooneo
severalDesignatedStoragePoints(DSPs)awaitinginductio for repair.
Once inducted
for repair, the component
sent to one of three Naval Aviation Depots, or to one roughly
1,300
commercial
repair
activities.
Follow
repair, the majority of assets are transshipped back to
You're Reading a Preview DSPand are made available to the component’s Item Manage
Unlock full access with a free trial. forreleasetothenextrequisitioner.Theaveragecosto
a DLR is excess of $50,000. accurately material tracking
track
the
through
the
is
Automation is essential
Download With Free Trial physical
and
retrograde
essential to
ensure
financial
pipeline.
proper
flow Accur
billing to
fl
customersaswellastohavepositivevisibilityoftheSI Sign up to vote on this title
throughoutthepipeline.
Useful
Not useful
One problem with the current system is that the
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system.SincetheGAOreportof1999,Non-TIRingactivitie continues to be the top reason for SIT write-offs.
NavyinFY’s1999,2000and2001,theNavy“wrote-off”$1. billion, $2.2 billion and 1.0 billion, respectively due non-TIRing
activities. [Ref. 6]
In
FY
2002, “Unmatch
SIT”filescausedbynon-TIRingactivitieshasaveraged$6 millionpermonth.[Ref.2]
C.
SITEFFECT#1-OVER-ORDERINGDLRS
For many
years,
DOD has had difficulties
in
obtain
timely and accurate information on the location, movemen and status of its equipment and supplies. lack
of
adequate
visibility
over
The continui
operating materials
supplies substantially increases the risk that millions dollars will be spent unnecessarily to acquire more it
a Previewmore accurate pict than would be neededYou're if Reading a clearer, Unlock full access with a free trial. existedofitemsininventory.
Here automated
is
how
process
this can Download Withhappen: Free Trial called
Supply
The
Demand
Navy
uses
Review
as
primarymeansofassistingItemManagersindeterminingho much
inventory
needs
to
be
purchased
and
when
and
contracts need to be awarded, canceled, oronmodified. Sign up to vote this title process
uses
inventory
data
Useful Not usefulmodels and mathematical
determine inventory needs and to compare the needs to
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Item
incorporates
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Managers
“Toolkit” which uses
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use
Supply
a
computer
Demand
Review
current inventory levels
into
system
cal
principles its decisi
making.Duetothestockin-transitproblem,ItemManager are
over
ordering
materials
by
creating
unnecess
purchasesbasedontheinaccurateinventorylevelsprovide by“Toolkit”. Item Managers lose visibility over their assets on they
are
unable
sent
to
to
create
production
reports
a a
Commercial TIR.
from
Item
Repair Managers
the Contractor
Activity rely to
on
that mont
update
th
inventorylevelsanddueinallowances.TheItemManageri then forced
to
manually
enter the Contractor’s data
in
toolkit to remain up to date. Inaccurate inventory lev
You're Reading a Preview haveadirecteffectonmoneyspenttopurchaseunnecessar materials
that
Unlock full access with a free trial. could be spent elsewhere,
this
effe
overallmilitaryreadiness,forexample:
Download With Free Trial
•
An internal Naval Audit reported that invent records held by Item Managers differed f quantities actually on-hand about 22 percent the time. These inaccurate inventory levels lead to excess inventory and unneeded purchases Sign up to vote on this title [Ref.10:p.4]
•
Useful
Not useful
AnotherGAOreportsurveyed200records,12item for which parts in the repair cycle were
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11cockpitvideorecords(valuedat$56,650)wer senttoanon-TIRingcommercialrepaircontracto in Santa Clara, CA. This inventory eventually “written-off” as loss in-tran stock. NAVICP-P purchased 185 cockpit vi recordersat$5,398each($998,630total)andsi months later purchased 40 more at $6,850 e ($274,000total).[Ref.11:pp.6-7]
•
A GAO report showed that the computerized Na inventory files showed that the Navy purchasing $1.6 billion of secondary inventor $121 million of which exceeded requirements economicorderquantities.[Ref.9:p.3]
•
D.
of 41
Sop Gartner
SITEFFECT#2–POLITICALEMBARRASSMENTANDCOSTS The Office of the Secretary of Defense is required
report
the
status
of
DOD’s
on
hand
inventory
September (of the previous year) to Congress.
as
of
The Supp
System Inventory Report is developed by OSD based on ea
You're Reading a Preview
DOD
component’s
inputs.
Auditors
Unlock full access with a free trial.
found
that
informationon$7.8billionininventorieswasnotinclude
Download With Freestatements. Trial in the Navy’s year-end financial inventory
records
distort
Inaccura
financial records and financ
reportsusedbyseniormanagers.This,inturn,resultsi decisionstobuywrongquantities.[Ref.12:p.11] Sign up to vote on this title
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THISPAGEINTENTIONALLYLEFTBLANK
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III.SOLUTIONSTOPREVENTSIT“WRITE-OFFS”
A.
COMMERCIALASSETVISIBILITY The
Commercial
Asset
Visibility
(CAV)
applicat
provides an automated method of tracking Government ow
repairable assets as they flow through the repaircyclea thecontractor’s repair facility.
The main purpose ofCA
istoprovideaninventorymanagementsystemforrepairabl assets
while
However,
they
CAV also
are
at
provides
Commercial Repair the Navy
Item
Activiti
Manager’s wi
visibilityoftheirrepairableitemsthroughoutthevariou
stagesoftherepaircycle,andprovidestheNavywithth currentstatusofthepartsbeingrepaired. In a time of declining resources and the availabil
You're Reading a Preview
of
enhanced
essential to
technology,
it
has
become
Unlock full access with a free trial.
track each
asset undergoing
possible repair
in
ne
Download With Free Trial real-time.CAVontheWeballowsthecontractortorepor transactions
as
automatically
update
they
occur;
the
Inventory Control Point.
CAV
these
database
transacti at
the
The incorporation of
Na
Web-ba
Sign up to vote on this title technologyandaWindowsbasedoperatingenvironmentallow
the Naval Inventory Control Point, repair
vendor
immediate
access
to
Useful
Not useful
Philadelphia
the
repair
and
data
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Designated
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Overhaul
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Point.
Commercial
Asset Visibili
alsoprovidesthemeanstotrackmaterialin-transittoan from
the
Designated
Overhaul
Point
and
allows
da
transaction reporting while minimizing workload impacts the
Designated
Overhaul
Point.
The
CAV
input
that
contractorprovidespermitstheItemManagerstomakesoun decisions, such as: to induct assets for repair, purcha new
repairable,
or
reallocate
repairable
to
sati
priorities. Under the CAV system, the Designated
Overhaul
Po
has24separatemenuitemsthatupdatestockin-transitan
repairassetinformationintotheNAVICP-P’sdatabase.Th contractor
is
obligated
contractually
to
report
inventory/repair transactions that fall under the scope CAV reporting.
You'reto Reading a Preview CAV reporting is The key effective
document number.
Unlock full access with a free trial. The Repair Cycle Document Number (RCD
is a unique tracking number that is assigned to the as
Download With Free Trial
whenitisreceivedinCAVandremainswiththatcomponen throughout the repair the
computer
will
process.
automatically
Upon entering a receip assign
a
RCDN
to
e
asset.ThereceiptisenteredintoCAVusingthedocumen Sign up to vote on this title
number identified on
the packing slip, Useful the useful NotNational
It
IdentificationNumber(NIIN)actuallyreceived,theroutin
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Facility maintain the RCDN identity of all assets on han [Ref.13:pp.1-11]
1.
BenefitsfromtheCAVProgram
The CAV program not only keeps complete visibility the asset through the repair cycle, it also provides Navy Item Manager and NAVICP-P with important informati abouttherepaircycle.Forexample,it •
•
•
•
•
trackstherepairturnaroundtimeforeachNIIN
indicates when an asset is awaiting parts whetherthepartsneededtoaccomplishtherepai areGovernmentorcontractorfurnishedmateria tracksthetotalcycletimE immediately notifies the Item Manager when asset repair is completed, and restored back “readyforissue”condition
You're Reading a Preview of indicates mode and carrier Navycustody
shipment
back
Unlock full access with a free trial.
•
records proof of shipment, which is used reconcileNAVICP-P’sfilesforstockin-transit. Download With Free Trial
ThroughtheenhancedCAV,inventoryaccuracy,theICP is
able
to avoid
making
additional
procurements
due
accurate and timely data for items currently in the rep process.
The
result
is
a
Sign up to vote on this title
recurring
savingsinFYof$150.6million.
Useful
inventor
Not useful
accur
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personnel costs that
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would have
been
required
to
mana
inventoryworkload. Navy CAV records indicated 1.2% of items received
contractors were misdirected in FY01. This number is dow from 4.3% in FY00, due to CAV data.
This realizes annu
savingsof$455,000throughimprovedprocedures.Thisals leads into shortening the pipeline time that could redu
theRepairCycleRequirementandproducepotentialone-tim savingsof$79.6million.[Ref.17:pp.1-3] In summary, key improvements available to the Navy a result of using CAV system are savings realized thro making
better
business
decisions,
improving
sup
performancestatistics,andoptimizingbudgetresources.
2.
CostsandFeasibilityofImplementingCAV You're Reading a Preview
NavalInventoryControlPoint,Philadelphiastartedt Unlock full access with a free trial.
use
Commercial
1992-1998, provided
Asset
Naval 140
Visibility
program
Download With Free Trial Inventory Control
contractors
with
in
1992.
Point,
F
Philadelp
Government
Furnis
Equipmentcomputersystemsatapproximately$5,000apiece Over
the
years,
the
Philadelphia
has
refitted
th
up to vote on this title computers at an additional $5,000 Sign a piece for a total
approximately
1.4
million.
maintenance costs associated
Useful
Annual
with
Not useful
operating
CAV ran approximat
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personnel, of which two to three members would go to Commercial establish
Repair the
Activity, do
base
line
the physical
inventory
and
inventory
train
person
involved. The CAV team can do physical inventories, bri
on-lineandtrainapproximately15-20CommercialActivitie
ayear,dependingonthetotalamountofassetsthatarea the Activity.
Approximate operating and maintenance cost
associatedwithWeb-CAVis$5millionannually.[Ref.16:p 1]
TheotherfactorthataddstothecostofusingCAVi theGovernment has to negotiate with the contractor to
CAVsinceitisoutsideoftheirnormalinventorysoftware
Thereisnostandardsetpriceusedbythegovernment,fo the contractor to use CAV. receive
$50
per
receive $500.
For example, one company
You're Reading each CAV TOR a Preview created
and
another
co
Unlock fullusage access withprices a free trial. are rolled into These CAV
repairpriceofthecontract.
B.
Download With Free Trial NON-TIRCOMMERCIALREPAIRPROXYTIRGROUP
The principal tasking of maintain
accuracy
reporting directly
of
the Proxy TIR Group is
all non-TIR facilities
to
incapable
NAVICP-P, who are destinations Sign up to vote on this title
Not useful TIR Gro UsefulThe Proxy Navy secondary item asset retrograde.
establishes
processing
using
both
automated
and
man
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designated non-TIR facility at
least one week before
commencementofProxyTIRstatus.
1.
BenefitsfromtheProxyTIRProgram
The
group
posted
monitors
SIT receipts
and
posted
analyzes
to
the
NAVICP-P
automatica
software
progra
based on proof of delivery. The group ensures accuracy
balancescreatedbytheTIRingactivityandcreatesaProo of Receipt TIR for the non-TIR facility.
The Group al
posts a proxy Proof of Delivery TIR on behalf of the no TIRing
commercial
repair
activity
determined “Ready for Issue”
when
the
asset
and shipped back into
Na
custody.ThisisapresumptiveorforcedTIRbasedsolel on
Proof
of
Delivery
information
received
from
governmentTIRfacility.[Ref.14:pp.1-3]
2.
You're Reading a Preview CostsAssociatedwiththeProxyTIRProgram Unlock full access with a free trial.
The Proxy TIR group consists full
time
salary,
of three personnel,
approximately $160,000. Download With Free Trial
They
en
transactionsdirectlyintotheUICPcomputersonosoftwar oradditionalpurchasesarenecessary.
3.
FeasibilityoftheProxyTIRProgram
The
Proxy
reports
TIR
provided
group by
the
uses
Sign up to vote on this the monthly ortitle quarte
Useful
contractor
Not useful
to
establish
baseline inventory, no travel or physical inventories
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Currently, The Proxy group is working on establishing company that has 5000 “open SIT” documents. group
has
three-week
researched
and
period
close
to
entered those
527 527
To date,
SIT receipts “open
SIT”
in fil
[Ref.15]
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THISPAGEINTENTIONALLYLEFTBLANK
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IV. CONCLUSIONSANDRECOMMENDATIONS
A.
SUMMARY
TheNavyhasnoteffectivelycontrolleditsin-transi inventory,
leaving
unaccounted. al
all
of
the
“in-transit”
These weaknesses
ineffective
logistic
potentially
buying
over/underestimating
of
inventory
invent
practices
unnecessary current
and the problems
result
the
failure
of
managem
demonstrate inefficient
management
weaknesses of
amounts
The Navy admits significant weaknesses exis
levels
structure.
significant
inventory
inventory they the
levels.
create
Navy
such
Th
are primarily
to
follow
its
policies and procedures regarding controls of “in-trans inventory.
You're Reading a Preview
These weaknesses undermine the Navy’s abil Unlock full access with a free trial.
to measure its progress toward achieving its goal of percentvisibilityoveritsmaterialby2004. Download With Free Trial Stock in-Transit, specifically Stock in-Transit goes
to
a
Non-TIRing
activity
remains
a
major
th
probl
Currently, two programs are in place that could solve
non-TIRing
problem that
Sign up to vote on this title faces NAVICP-P, Commercial
VisibilityandaProxyTIRGroup.
B.
CONCLUSIONANDRECOMMENDATIONS
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Conclusion #1: millions
of
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The Navy is continually “writing-off
dollars
of
losses
to
stock
in-transit
e
fiscalyear.Theselosseshaveadirecteffectonmilitar
readinessoftheNavy,andonfuturedollarsbeingspento repairsandnewprocurements.
Recommendation #1: We recommend that Naval Invent Control Point, Visibility
Philadelphia
(CAV)
program
insist
be
that
Commercial
implemented
on
all
As fut
Commercial Repair Facility contracts.
We have proven
benefits
far
of
using
the
CAV
program
out
way
implementationcosts.
Conclusion #2 There are approximately 1300 Commercia Repair Facilities currently used by the Navy, to date are
CAV
reporters.
activities
of
Approximately
You're Reading a Preview
961
are
non-TIR
those 961 approximately 10-percent
make
Unlock full access with a free trial.
90-percentoftheStockin-Transit“write-offs”.[Ref.2]
Recommendation immediately group
to
Download With Free Trial We recommend #2:
institute
manage
the
the
CAV
program
approximate
100
that
or
end of 2002.
TIRing
Proxy
non-TIRing
facilities. Between the CAV implementation PROXY TIR group,
the
NAVICP
team
Sign up to vote on this title
rep and
could be accomplished before
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The immediate gain in visibility of th
assets should drastically
reduce
stock in-transit
“wri
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programs.
of 41
The
management,
ERP
weapon
is
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trying
system
to
incorporate
acquisition,
financ
asset
tracki
configuration management and human resources. Naval Sup Systems
Command
has
stated
that
UICP
and
various
ot
financial and tracking systems will be phased out by 20 to
make
analysis
way be
for
the
conducted
ERP on
program. the
We
suggest
feasibility
of
that
ERP
implementedasacuretothestockin-transitsystem.
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LISTOFREFERENCES 1.
GeneralAccountingOfficeReportGAO/NSIAD-99March1999
2.
InterviewbetweenLCDRGregoryA.Hajzak, Director,InventoryAccuracyDepartment,NAVICPP,andtheauthor,12February2002.
3.
InterviewbetweenEmilyBurt-Hedrick,NAVSUP, SDR/SITTeamLeader,andtheauthor,28May2002.
4.
NavalSupplyCommandPublicationNAVSUPP-723 Subsection7:ReconciliationofStockin-Transit
5.
PointPaper,EllenSimon,NAVICP-P,dated20 February2002
6.
CorporateInformationSystem–MetricAnalysis, pulled12February2002
7.
PointPaper,LCDRMingJohnson,NAVSUP-0132A, dated14January2002
8.
TechFrancisSchoolofBusinessReport,dated You're Reading a Preview August2001,“DeterminingtheStepstoReengineer theNavy’sDepotLevelRepairableProgramin Unlock full access with a free trial. PreparationforERP”
9.
GeneralAccountingOfficeReportGAO/NSIAD-98-8 Download With Free Trial dated30April1998
10. GeneralAccountingOfficeReportGAO/AIMD-98-56 16March1998
11. GeneralAccountingOfficeReportGAO/NSIAD-00-61 February2000 Sign up to vote on this title 12. GeneralAccountingOfficeReportT-NSAID–99-83 Useful Not useful dated25February1999 13. CommercialAssetVisibility(CAV)Statementof
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17. CommercialAssetVisibility(CAV)program support,costbenefitanalysis,performedby InnovativeLogisticsTechniques,INC,submitted9 May2002.
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