3. Army supply system inventories

As one of the techniques in improving inventory control, Army has reclassified commodity categories to more clearly reflect the groupings of the supply items under the several technical services.

The six stratification accounts reported by the Army are: (1) Peacetime operating, (2) mobilization reserve, (3) economic retention, (4) contingency retention, (5) disposable excess, and (6) claimant. In addition, Army reports stocks in transit and stocks in hands of contractors. These six Army inventory accounts are defined as follows:

(1) Peacetime operating stocks are stocks in depots and posts, camps, and stations held for issue to using units to equip and train the planned peacetime United States forces.

(2) Mobilization reserve stocks are stocks held for the account of that portion of the mobilization reserve materiel requirement for which procurement is authorized. They include the prepositioned stocks held in specific locations in condition for immediate shipment

or use.

(3) Economic retention stocks are stocks in long supply which are to be retained to meet future requirements since it is more economical to retain them than it is to dispose and later have to purchase them.

(4) Contingency retention stocks are stocks in long supply for which there is no programed requirement but which should be retained for military or defense contingencies. Only military type itemsthat is, items not ordinarily produced commercially for civilian consumption-may be placed in the contingency retention category. (5) Disposable excess stocks are stocks classified as excess to the needs of the reporting Army command and those previously declared as surplus for which disposal has not yet been accomplished.

(6) Claimant stocks are stocks on hand which the Army is holding for the Navy, Air Force, and other agencies (such as Atomic Energy Commission). Stocks held for the National Guard and other Army Reserve components are not carried in this claimant classification but are combined with those of the active Army.

In transit stocks are those to which title has passed to the Army, which are en route (a) from manufacturers or suppliers, but which have not been received physically by the Army; (b) from CONUS (continental United States) depots to overseas commands or vice versa; (c) from CONUS depots to CONUS commands; and (d) among CONUS depots, which have not been reported as received by the consignee depots.

The data in the summary table (table 30) representing Army inventories covers all depot inventories. Korean stocks were incorporated into the financial inventory accounting system on July 1, 1956. The Army on March 31, 1957, brought under the financial inventory accounting system the prepositioned ammunition stocks accountable by the Seventh Army in Europe. The depot stocks of Seventh Army are maintained exclusively for the close support of tactical units and are considered by Army to be more nearly comparable to supplies in the hands of troops rather than under supply system inventories.

A brief analysis of the Army supply system data in table 30 shows that over 64 percent of the total is represented by Ordnance Corps supplies and equipment. Over 27 percent of Army's overall total is in the single category of ammunition, guided missiles, and related equipment. Other large categories, each with inventories of over a billion are (1) Ordnance tanks, (2) vehicle parts, (3) Quartermaster clothing, (4) Signal Corps items, and (5) Engineer Corps stocks.

Army's total supply system inventories increased 9.3 percent between June 1956 and June 1957. This increase was due primarily to the inclusion of the Korean stocks and the revaluation of unserviceable inventory.

As of June 30, 1957, 29.8 percent of the distributed portion of Army's supply system inventories were classified as peacetime operating, 28.6 percent mobilization reserve; 19.8 percent was in the economic and contingency retention; 20.0 percent excess, and 1.8 percent claimant stocks. Chart 8 presents the Army supply system inventories by these major classifications.

Army stock fund inventories. Included in the $21.9 billion inventories shown in table 30 are $7.7 billion carried in the Army stock fund. This $7.7 billion of stock fund inventories in the Army represent 35.0 percent of the total inventories reported by the Army in its supply system.

About 40 percent of the Army stock fund inventories is in the Ordnance Corps category. The Quartermaster group of categories amounts to $2.6 billion and represents 33.4 percent of the total Army stock fund (table 31).