‘Poor logistic performance in the commercial world is measured in pounds and pence; with total failure resulting in the collapse of companies. However, poor logistic performance in Defence reduces the capability to deliver; with total failure being counted in the number of lives lost.’
Defence logistics has an enviable reputation for consistently supporting UK Forces both at home and on operations. This reputation is being upheld by the continuing support to ongoing operations in Iraq and Afghanistan, coupled with the requirements of enduring operations, exercises, and normal peacetime activity. This remarkable level of capability delivery has been maintained, despite many supporting systems being designed to meet legacy commitments, a lack of effective funding, and extreme time and environmental constraints.
The dynamic diplomatic environment and rapidly changing military requirements, coupled with budgetary constraints, further increase pressure on the UK’s logistics capability, and any variations in performance are subject to the highest levels of public scrutiny via media interest.
The Defence Industrial Strategy (DIS) recognised this increase in pressure and the ongoing need to manage UK Defence manufacturing and preserve key sovereign capabilities. It called upon industry to take a greater role in the logistics planning process, recognising the need for efficiency reviews, and the requirement to establish a higher performing and lower cost end-to-end supply chain.
It is often said that the answer to delivering improvement in the Defence environment is to apply commercial best practice. However, experience shows that it is essential to combine commercial best practice with extensive domain knowledge of the Defence environment to provide innovative, realistic solutions that can be successfully implemented.
Challenges
The level of complexity required to deliver enduring transformational improvement is high, and not within the scope of this article. However a number of key challenges can be identified that will, if properly met, improve logistic capability and provide a higher performing, more effective and lower cost end-to-end supply chain.
Challenge 1: Inventory must be aligned with demand, and be available where and when required
Sensational media headlines, for example the lack of CBRN equipment and body armour in Iraq, have highlighted perceived inventory deficiencies and, in some cases, potential surplus stocks. Although these cases often do not portray the complete picture, there are instances where demand and supply are not balanced. It is important that these issues are examined in the widest sense, as the lack of a key component in a specific place at a particular time may not be due to a failure in inventory but instead due to transportation constraints, industrial action or the changing need of a commander in theatre.
The challenge of aligning inventory, location and quantity with demand in the Defence environment is not as simple as putting in place the supply chain for a supermarket, car factory or online retailer. There are very different factors, including the lack of demand predictability and the uncertainty of geographically dispersed physical supply chains. Although there are fast-moving commodity items in the inventory that can be managed comparatively readily, there are also items that are low and infrequently demanded, sometimes of very high value (eg crew vision blocks for armoured fighting vehicles that tend to only require replacement due to damage from artillery or mortar fire – attrition only experienced during operations) that require stocking on a ‘just-in-case’ basis due to source of supply, obsolescence or potential surge requirements. Further, the unique specification often needed in the Defence environment prevents COTS (commercial off-the-shelf) product substitution and requires manufacture by specialists, with the associated lead time to consider.
Improvements can be realised by implementing a Consumer Driven Supplier Network (CDSN) strategy that focuses equally across the entire supply chain, optimising it to deliver exactly what is required at point of use. This type of strategy aims to deliver:
- Greater availability of materiel for high-tempo operations
- Improved flow of information across the end-to-end supply chain
- Reduced stock holding where appropriate
- Improved value for money in procuring, storing, servicing and transferring materiel
- Increased certainty for suppliers, providing greater incentive to innovate and reduce cost.
Empirical evidence strongly supports a CDSN strategy. When PA implemented this strategy for a key set of stores items in the maritime sector, service levels increased by 15%, 55% less inventory was held, and the annual spend was reduced by 43%.
Challenge 2: Existing, planned and future logistic information systems must be fully enabled to support physical logistics performance
In general, the UK’s Defence information systems were not designed for the type of operations that are now being conducted, and so, unsurprisingly, they do not deliver the level of capability that is required to support agile, flexible operations. Technologies that are now considered commonplace in commercial logistics, such as the widespread use of the internet, have not been adopted due to security concerns and budget constraints.
Despite increased focus and investment in recent years, for example the activity being delivered by the Logistic Applications IPT, the challenge of overcoming disparate legacy systems and high levels of duplication is still substantial. Effort is being made to provide new systems that handle inventory management and asset tracking; however significant challenges remain to be overcome in linking discrete systems to deliver an integrated supply chain solution.
The incremental delivery of the Defence Information Infrastructure (DII) and its associated communication bearers will provide an opportunity for a ‘platform’ on which to base future logistic information systems, delivering an improvement in coherence and information management.
Challenge 3: Support chain costs must be reduced
Cost-saving initiatives in the support chain need to be implemented extremely pragmatically, with an in-depth understanding of the impact of a particular intervention across the wider system. For example, the disposal of ‘surplus’ inventory based on previous demand patterns, can lead to the requirement to re-purchase the ‘surplus’ to satisfy operational requirements. Utilising ‘lean’ tools is only one possible method of delivering this challenge, analysing processes and reducing waste. By identifying the behaviours that drive existing systems and produce inefficiency, lean tools can provide clear and sustainable benefits, such as:
- Better defined and consistent processes that are uncomplicated, co-ordinated and manageable
- Metrics better able to drive performance improvement and focused at the appropriate level of the output
- Improved utilisation of resources, reduced rework and a greater understanding of the causes of waste
- A culture that promotes engagement and uses knowledge and experience to create improvement.
Challenge 4: Industry must play a larger part in the Defence logistics end-to-end process
The Defence Industrial Strategy (DIS) sets the challenge for industry and the MOD to work more closely in future logistics planning. Establishing exactly how this will work in practice is taking time and proving difficult in many capability areas, although the Pathfinder projects have helped identify the key elements of a new paradigm. The greater involvement of industry is producing physical integration issues, in addition to the issues of resolving long-standing cultural behaviours on both sides.
Today’s high performing commercial supply chain organisations place collaboration, innovation and responding to new environmental challenges near the top of their strategic agendas. The market leaders are increasingly looking towards collaboration – both across the supply market and with others who share similar supply chain characteristics – as a means of gaining competitive edge. Many are looking at leveraging innovative new supply chain solutions, for example performance-based logistics (PBL), to de-risk their supply chain in the face of environmental factors such as globalisation of the supply market.
An effective means of delivering synergy between industry and Defence logistics is to focus more heavily on the development of mature partnering relationships. These relationships are characterised by an understanding of each other’s motivations and cultures, a willingness to work jointly to achieve win-win solutions, and a viewpoint that considers whole life and end-to-end issues, rather than being driven into sub-optimal ‘silo’ type solutions.
Summary
The list of challenges identified is clearly not exhaustive. However, each challenge does represent an area where opportunity exists to significantly improve the already impressive Defence logistics capability of the UK Armed Forces. The key to delivering these improvements successfully is to combine relevant knowledge of the commercial and Defence environment with an innovative, realistic approach that focuses on implementation and realisation of benefits.
