Recommendation 6

While the MoD has reduced the amount of stock it holds, it still holds large amounts of excess and unserviceable inventory. From 2011 to 2023, the MoD told us it achieved a 25% reduction in the net book value of its inventory, which it reduced from £16 billion to £12 billion. However, it is still holding substantial amounts of inventory that is unserviceable, overstocked or beyond the service date of its related platform. The MoD argues that there are many complex reasons for these build-ups of stock. For example, unserviceable inventory may still be useful if repaired, and other items are overstocked for contingency scenarios. It also stated that activity supporting the front line will always take priority over managing disposals, and the move towards building resilience will increase the level of inventory being held in future. Nonetheless, it acknowledged that its decision-making needs to be informed by better data; for example, missing data on why inventory is unserviceable makes it difficult to understand what should be disposed of. The MoD has now put in place projects to target disposals, but these are disparate and some areas, particularly the Royal Air Force, have achieved more than others. Recommendation: In its Treasury Minute response, the MoD should set out how it is improving its ability to understand which inventory items need disposing of, and ensuring this is done so consistently. It should also set out details of any targets it has to reduce the amount of the inventory overall and in particular areas. Improving Defence Inventory Management 9 1 The structure and organisation of inventory management