Both the National Audit Office and the House of Commons Public Accounts Committee have taken the Ministry of Defence to task over supply chain failures.
Military logistics is crucial in deciding the outcome of wars, so after a series of embarrassing reports highlighting supply chain failures, the Ministry of Defence (MoD) is under pressure to get its logistics “combat ready”.
This year both the National Audit Office (NAO) and the Commons Public Accounts Committee (PAC), the bodies that scrutinise government spending, have published damning judgements on the state of MoD logistics.
Late deliveries, too-high stock levels, missed targets and inadequate cost and performance information are among the litany of failings detailed by the financial watchdogs.
The MoD wasn’t able to provide enough evidence to account for over £5.3bn worth of military equipment, said the NAO: the failure to collect basic data about where supplies are stored has resulted in the MoD’s accounts being qualified for three consecutive years.
Supplies are often delayed because manufacturers miss their delivery schedules. In the six months to November 2010, over 40 per cent of deliveries were 30 days or more overdue, the PAC found.
The shortcomings have affected the ability of the UK’s armed services to fight. The PAC reported that the risk of failure of warehouse inventory systems leading to shortages in Afghanistan within 30 days is extremely high and pointed out the need to cannibalise Typhoon aircraft for spare parts to keep as many flying as possible.
The logistics involved in running the armed services throws up challenges that few in the commercial world have to face. The MoD has a supply chain that controls £4.5bn of expenditure a year, responding to over 200m demands annually and delivering to 11,000 locations worldwide.
Management systems must contend with hot and dusty environmental conditions, limited bandwidth, satellite latency, and users who are constantly changing and may not be familiar with procedures.
However, the inescapable conclusion of both studies is that the MoD has failed to invest in up-to-date IT systems to run its logistics. The department has 270 different software systems used by 57 contractors in 15 locations; worse, many of these systems are old and inefficient.
“That data is not collected properly is due to the limitations of the data systems the MoD uses to store information,” says the PAC report. “Some data systems, such as the Visibility in Transit Asset Logging system which tracks individual deliveries, can provide good data on the movement of supplies if used properly.
“However, many data systems, such as those used to track supplies in warehouses, are much older and are not fully compatible with other systems across defence – leading to problems knowing what supplies are held where.” Many of the systems contain duplicate information and data is even transferred between some of them by rekeying.
Other measures which could improve the efficiency of supply operations include putting more pressure on suppliers to deliver on time, keeping stocks at lower levels to reduce the risk of them deteriorating, and benchmarking performance against other armed forces, says the PAC. It is important that the department retains key skilled staff on the supply chain so that it can make improvements of this kind.
The MoD is beginning to invest in new data systems. So far £66m has been spent on the Joint Deployed Inventory system which tracks equipment in theatres of war. The department is also in the process of implementing a new supply chain modelling tool which, when fully operational in 2012, will help planners compare the cost of using different supply routes between MoD warehouses and the front line.
Last year the department signed an £803m, 11-year contract with Boeing for the provision of the Future Logistics Information Services (FLIS) project. Under this contract, Boeing is required to bring together the MoD’s sprawling data systems estate to provide “a complete and coherent set of data for managers to use”. FLIS is part of the Logistics Network Enabled Capability (Log NEC) programme to streamline military logistics and introduce a networked logistics support chain.
“By 2013 we will have an integrated, complete information capability built on truly modern technology that will give us timely and accurate data that will give us the picture we need at last,” says Brigadier Alan Clacher, director of Log NEC.
“We have a very large supply chain and it’s always worth remembering that if we were a company, we’d be a very big one – we run our own airline, our own shipping business, hospitals, retail outlets and so on. At the same time, we have a lot of legacy systems – we’re very much like a commercial organisation that has made lots of acquisitions in that respect.”
Results are beginning to flow through. A pilot scheme to improve stock management associated with the Hercules aircraft exceeded its target during its first year and delivered £355m of disposals and recovered £28m of lost stock. The project addressed problems and inaccuracies in the stock management systems that had been around for well over a decade, said the MoD.
However, MPs will need many more reports such as this before they revise their conclusion that “until the (FLIS) systems are fully rolled out in 2014, the high risk of system failure will remain in systems that are critical to supporting front line troops.”
John Lamb is a former editor of Computer Weekly, Information Week UK and Information Economics Journal.