Think of expanding a business enterprise 35 times overnight! That is what the Navy had to do in the last war. The most efficient business enterprise in the world could not expand at this rapid rate, without waste, even under ideal circumstances. The Navy was called upon to do it at a time of confusion and uncertainty, at a time when everything required for expansion was in short supply.
In addition to expanding at an unprecedented rate, the Navy was called upon to make monetary decisions that were related to lives as well as to economy. This fact, in addition to the rapid expansion and the normal complexities of military supply, created an extremely complicated material control problem. Yet, despite all of the ramifications of this problem, the Navy did develop controls and programs designed to make maximum use of every appropriated dollar. All of these programs are interesting, but this article will be confined to just one of them: a very interesting one—the Navy’s Inventory Control Program.
The program was started in 1944, by then Secretary of the Navy Forrestal, with the objective that the supply of, and the demand for, each item of Navy material be balanced —in other words, with the objective that the Navy determine and then buy exactly what it needs. Overbuying and underbuying are equally serious and dangerous. The first results in wasted production, wasted manpower, and wasted transportation; the second results in delays to schedules and costly emergency procurement. Serious mistakes in either direction could in time of war cost victory itself. The need for inventory control, the means of determining how much of each item should be procured and stocked, is, therefore, a matter of extreme and immediate importance.
Because the General Motors Corporation, Montgomery Ward and Company, and other leading business enterprises have spent millions of dollars yearly for many years to attain inventory control, one might properly ask, why did the Navy delay until 1944 to start its inventory control program? In answering this question it must be remembered that before the last war the Navy had no need for such a program. Only 250,000 items were carried in stock; these items, called General Stores, were for the most part common types of supplies that were utilized by nearly all ships and stations. A large percentage of these items was cataloged and centrally controlled by the Bureau of Supplies and Accounts, Navy Department, Washington, D. C.
With the advent of World War II and its impact on the nation’s inventive and productive genius which in turn gave the Navy a multiplicity of new weapons and machines, the number of items stocked increased from approximately 250,000 to over 3,000,000. Because of the fact that in the early years of the war the demand for all items greatly exceeded the supply, the Navy fully realized that it was forced to buy some things in substitution for things really desired and that numerous supply and distribution systems were springing up within the Navy; however, there was nothing that could be done, at the time, to stop this most undesirable situation. For instance, the engineers in the Bureau of Ships realized only too well the desirability of having the same types of electrical equipment on all new aircraft carriers. This ideal situation would have permitted a relatively small stock of repair parts, would have permitted a simple distribution system, and would have allowed emergency transfers of repair parts between the ships at sea.
No single manufacturer or group of manufacturers, however, had in stock enough of the type of electrical equipment desired for all of the aircraft carriers being built; nor could they manufacture the amounts required without re-tooling. The choice, therefore, had to be made between taking the different types of electrical equipment which were available or delaying the construction of the carriers to allow manufacturers time to re-tool. This problem of getting what is desired (specifications) or taking something that will do the job (performance) always has complicated and always will complicate the material problem in time of war.
After a war once starts, the emphasis is rightly placed on production; there just isn’t time to permit re-tooling of industry. The engineers have to be content with any piece of equipment that will allow ships to operate. When a nation is fighting for its very life, it is far better to have two aircraft carriers with different types of electrical equipment, different types of pumps, boilers, turbines, etc., than to have only one carrier, regardless of the immediate monetary loss and the continuous waste which results in not getting the equipment that is really wanted. Only as new plants are built or old plants expanded, is opportunity provided to tool these plants in a manner which will achieve material specifications rather than performance specifications.
It was because of these facts that the Navy was not able to pursue a unified Navy-wide Inventory Control Program until 1944. Previous to that time progress was confined to specific categories of material. Initial success, by utilizing all of the modern principles of inventory control, was attained in the field of aviation supply. The Aviation Supply Office was the Navy’s first effective inventory control point. This point, as the result of the application of inventory control principles to airplane engine parts alone, saved the Government, in the year of 1944, more than $275,000,000; more than enough to operate the Aviation Supply Office at full wartime strength for over 30 years.
It was apparent in the earliest phases of the program that inventory control was a joint problem, one that could be solved only by the joint cooperation and avowed willingness of each technical bureau (engineering specialists) and the Bureau of Supplies and Accounts (supply specialists). Realization of this fact has permitted the program to operate with dispatch and efficiency.
Inventory control in the Navy is attained by the accomplishment of two primary objectives:
(1) Navy-wide determination of requirements by central stock control points.
(2) Establishment of a catalog of Navy material—the medium which provides common language between all procuring and stocking activities.
A good start has been made toward the accomplishment of these objectives. Control points have been established for all categories of materials. The cataloging program is progressing very satisfactorily; however, because of the large number of items to be catalogued, this program cannot be completed for an estimated 3 to 5 years.
If one has any doubt concerning the effectiveness of the Navy’s formula for attaining inventory control, let him examine the economies and savings, presently resulting from cataloging operations, represented by the typical examples cited below. Some of the facts presented are in terms of consolidation and reduction of inventories. For these facts no exact monetary savings have been developed because the figures would be controversial; however, no one can deny that the monetary savings are substantial.
Bureau of Aeronautics
The Bureau of Aeronautics has deter mined that thread taps from three different suppliers costing $9.12, $2.33, and $0.73 each are identical. The Bureau has also discovered that maintenance packing items supplied by different manufacturers at $8.28 and $2.34 each are identical; similarly that repair part screws purchased for $2.88 per gross and $1.21 per gross are identical. Knowledge of this information has resulted in considerable savings.
By determining the actual manufacturers of repair parts, the Bureau has found that by procuring direct from prime manufacturers rather than from other sources of distribution, it can save $1.05 on each poppet assembly purchased and $15.41 on each caster purchased.
Bureau of Medicine and Surgery
The Bureau of Medicine and Surgery and the Office of the Surgeon General of the Army have combined their efforts to make a joint catalog. As a result, the Bureau of Medicine and Surgery discovered that at least 3,500 items of the approximate 4,000 items in its supply system were common to those of the Army Medical Supply System.
Thirty per cent of the combined items previously stocked by the two services were deleted through consolidation of common items. In addition to the substantial savings that are being realized by reduction in the number of items stocked, the Bureau also anticipates a saving of $77,900 as a result of combining the production of its catalog with that of the Army.
Bureau of Ordnance
This Bureau has reduced the number of items in its supply system through the discovery of identicalness as follows:
|
|
|
Estimated Annual Savings Procurement Only |
|
Ball Bearings |
88% |
$750,000 |
|
Oil Seals |
80% |
115,000 |
|
Cotter Pins |
82% |
30,000 |
|
Taper Pins |
70% |
140,000 |
|
Screws |
84% |
306,000 |
Of some 50,000,000 numbers by which this Bureau’s items of supply have been known, 4,000,000 numbers have been researched with the result that only 510,000 numbers were found to apply to items which can be considered as replaceable parts. Furthermore, research of these 510,000 numbers has revealed that there are only 20,000 actually different parts.
It was also determined that:
a. One manufacturer has supplied the Bureau of Ships with two screws as replacement parts, identified as Nos. 339 and 550, at a cost of 5 cents and 10 cents respectively. Research revealed that these screws are identical and are the same as one screw carried in General Stores at the price of 7.2 mills.
b. Ninety-four different numbers were assigned to a single refrigeration compressor piston.
c. One pinion shaft supplied by one company was known by 13 different identifying numbers.
d. One manufacturer of turbines supplied this Bureau with bearing liner assemblies at a cost of $25.00 each. Another manufacturer supplied bearing liner assemblies at a cost of $63.00. Research disclosed that both assemblies are identical and are manufactured by another firm which could supply them to the Navy at a cost of $9.06 each.
The Ships Parts Control Center, the inventory control point for ship’s hull and machinery parts, estimates that it will effect in a period of six years, by means of its cataloging program, a net saving of $25,000,000 on an inventory of S282,000,000.
Bureau of Supplies and Accounts
Although the Bureau of Supplies and Accounts catalogs only General Stores material, it has a greater interest in cataloging than any other Bureau. The reason for this fact is that the majority of Supply Demand Control Points, where most cataloging operations are performed, are under the management control of the Bureau of Supplies and Accounts.
This Bureau also has the major responsibility in the consolidation and development of cataloging within the Naval Establishment and is now actively engaged in two major projects: Anti-Friction Bearings and Electronic/Electrical Equipment. In the former project, this Bureau has found that approximately 300,000 bearings identification numbers, submitted by other Bureaus and researched by its own staff, represented less than 9,000 actually different items. In the Electronic/Electrical Equipment Project, 150,000 reference numbers used for identification of electronic equipment were found to represent only 29,000 truly different items.
Bureau of Yards and Docks
As a result of preliminary cataloging operations, this Bureau reduced the number of items of common construction material and equipment by 25 per cent. This reduction was accomplished by the elimination of items found common to other Bureaus and subject, therefore, to inclusion in the Bureau of Supplies and Accounts controlled material.
Marine Corps
The Marine Corps recently made obsolete one type of radio set in favor of a new design. Fifty-five of these sets having a total value of $169,180 were in stock. Through proper identification of removable parts and disclosure of their uses, it was found that $150,000 of new procurement could be prevented.
The Navy’s business efficiency is increasing daily. And so is cooperation between the Army and Navy. This cooperation has always been much more extensive than most people have realized. There have been many joint efforts like the joint Army-Navy Medical Cataloging Program previously described. In the last war, for example, the Army purchased the food, lumber, and small arms used by the Navy. The Navy took care of all of the Army’s petroleum requirements in the Pacific, etc.
Since passage of the unification act—the National Security Act of 1947—cooperation and unity of purpose between the services has gone forward to even higher ground. The Munitions Board has already developed plans for a cataloging program which will ultimately allow exchange of supply data among the three armed services. This program will not only facilitate exchange of information and redistribution of materials but it will also provide the means for determining such things as the proper allocation of materials, facilities, manufacturing plants, and procurement assignments among and between the armed services.
From these facts one can see that the Navy is actively striving to be as efficient in its business operations as it is in its combat operations. The naval authorities realize only too well how closely related are these two subjects, how one is dependent on the other. Dollars saved on business operations can be used for training personnel, for buying improved weapons, for operating more vessels and aircraft. For this reason, one can be absolutely sure that the Navy will not waste one cent knowingly and without cause— cause that in some cases perforce must take precedence over economy.