Building
a Smarter
Supply Line
Ever since Alexander the Great’s vastly outnumbered Macedonian army conquered Persia against great odds in the 4th century BC — securing his legacy as one of the greatest military minds of all time — logistics have been fundamental to the success of military efforts through every conflict. And they are also key to delivering humanitarian aid in times of peace.
Historically, defence logistics must strike a balance between two objectives: effectiveness and efficiency. On the one hand, the military requires the best equipment and support available as quickly as possible. Yet, with tremendous pressure on budgets, costs must be kept low while still enabling the successful achievement of the objective.
For commanders of the UK Armed Forces, agile supply chain management is critical to every operation, from hurricane relief and humanitarian aid to new deployments and training programmes at military bases around the globe.
And with much of its military logistics infrastructure having been first established during World War II as a way to decentralise risk by spreading out facilities geographically, for the UK Ministry of Defence (MOD), the need for consolidation and modernisation has been profound, given the benefits that a unified Defence Supply Chain can deliver.
The supply chain demands of the military today are not unlike the demands on enterprise. And with help from Leidos, a global leader in scientific, information technology, engineering and technical services, the UK Armed Forces is able to leverage best-in-class technology solutions that rival those deployed by private sector leaders like Amazon, FedEx and WalMart, who have spent decades reducing costs and improving speed and accuracy of their just-in-time inventory management.
However, commercial practices can’t meet all of the challenges the military faces, like sudden surges in demand, natural disasters, and urgent operational or exercise requirements. And much more is at stake for the UK Armed Forces than keeping up with the competition. Depleted stocks don’t just lead to inefficiencies; they can lead to loss of life.
Like many top organisations, the UK MOD is increasingly outsourcing logistics responsibilities to focus on core activities. And in doing so, they are also able to take advantage of new technology and real-time information that makes it possible to provide mission-critical supplies in record time.
Our intent is to find the products that both work the best and cost the least.
A logistics specialist partnership between Leidos Europe and subcontractors Kuehne+Nagel and TVS Supply Chain Solutions — operating as the Logistics Commodities and Services Transformation Programme or LCST — is implementing sweeping technological advancements for one of the world’s most indispensable military forces, while generating hundreds of millions in savings for the UK government and taxpayers.
The 13-year contract was established in 2015 to run the storage, distribution and commodity procurement functions previously performed by the MOD’s Logistic Commodities and Services Operating Centre, as part of Defence Equipment and Support. But transforming and modernising a military supply chain is no small undertaking. The Centre holds and manages an inventory of one million NATO stock numbers valued at £5.8 billion ($7.6 billion).
To provision nearly 200,000 active regular and reserve personnel requires that sufficient amounts of food, clothing, medical supplies and general supplies like rope, batteries and adhesives are always available, with enough maintained as surplus for 24-hour short notice requests. “Our intent is to find the products that both work the best and cost the least,” says Damian Alexander, Vice President and Managing Director, Logistics, Leidos UK.
The financial and transportation details involved in getting an MRI scanner to South Sudan within a week or outfitting every recruit in all-weather combat boots within a month are now centrally coordinated and streamlined. In the case of the combat boot, an open and fair competition for bids is run to find the top suppliers. Then the boot is repeatedly tested by various stakeholders and potentially modified until it meets all the necessary criteria. While most of its users might habitually request top brand clothing for their units, the MOD is always looking for the best value for the taxpayer. As a result, it is the job of Leidos to get to the bottom of what the customer truly needs. Consumer education becomes part of the modernisation process. “The customer can’t say ‘that’s the brand we always bought, and we want to continue to use it,’” says Alexander. “We have to work with the customer to look at alternative products that meet the need.” To that end, the MOD participates in trade events in which the military customer can see future trends in the marketplace and learn about less expensive, more innovative products that still meet the customer’s requirement.
Nearly half of all Leidos supplier companies qualify as small and medium-sized enterprises, a remarkable figure for a government programme. Contracts only last from four to six years, so suppliers must always be looking for ways to remain competitive for the bid, which Leidos strictly evaluates at each contract renewal. Many contracts contain a surge clause, particularly with pharmaceuticals and medical supplies. “We have to have flexible contractual arrangements to allow us to meet urgent but unpredicted demands and meet operational requirements,” says Alexander.
The changes to procurement, warehousing and information systems offers a major step change in performance for the UK Armed Forces.
As part of a Leidos-led technology overhaul, procurement decisions are increasingly informed by near-real-time data monitoring that allows for more precise demand planning. Storage has been completely transformed with a state-of-the-art 80,000 square metre warehouse for military stock, which opened in April 2017 and will become fully operational in 2019. The £83 million Defence Fulfillment Centre (DFC) in Shropshire now serves as the central hub for storage and distribution. By consolidating all stock, the MOD is free to repurpose or sell its former land holdings and reduce the government’s footprint.
The DFC eliminates many of the inefficiencies of the old, dispersed network of warehouses in which inventory was not coordinated or tracked digitally, and all orders were fulfilled by hand. DFC operators now know exactly how much inventory they hold and the condition of the goods. They can view live data of the stock in transit, while warehouse stocking processes are getting a technological upgrade.
“According to Matt Wiles, Chief Executive of Leidos UK, “the changes to procurement, warehousing and information systems offers a major step change in performance for the UK Armed Forces.”
The UK Armed Forces are seeking to transform and improve the performance and efficiency of every component of its supply chain. The LCST Programme is a major component of this transformation, and is already having a significantly positive impact.
Leidos’ new supply chain management integration platform (SCIP) integrates a database that indicates the location of warehouse items, and, within minutes of a soldier pressing a button for an order, will coordinate its retrieval through the new MiniLoad Storage and Retrieval System. The MiniLoad is capable of picking out more than 1,000 items an hour, error and injury-free, which eliminates 80 percent of the need for staff to perform time-consuming manual retrieval. Robots quickly collect high demand items to be packed, reducing overall operating costs significantly.
When all inventory data is digitised and tracked, it is relatively easy to integrate feedback for improving the system. For instance, data on how often a particular item is requested can make the warehousing layout more efficient, by locating high-frequency items closer to the shipping dock; the MiniLoad will automatically reposition these fast movers.
A new transport management system plans the most efficient route for delivering items across the country and internationally, calculating the ideal loads, the optimum economical route that the vehicle can take, and analysing whether third-party couriers can provide more efficient transport. This may sometimes mean holding some non-urgent shipments back to consolidate and optimise truckloads based on the customer need.
Above all, the most important result of the changes to Logistics Commodities & Services operations will be getting the Army, Navy, Marines and Air Force what they need, when they need it, at lower costs and with service that is up to the standard of industry best practice.
“The UK Armed Forces are seeking to transform and improve the performance and efficiency of every component of its supply chain. The LCST Programme is a major component of this transformation, and is already having a significantly positive impact,“ says Roger West, Director of Logistics Delivery, United Kingdom Ministry of Defence.
And that impact goes far beyond supplying the UK Armed Forces during times of conflict. The programme’s logistics expertise plays a key role in the execution of other critical activities, from humanitarian relief to managing royal uniforms.
As part of the LCST programme, Leidos also manages freight operations, both military and civilian, which includes overseeing the moves of up to 30,000 individuals each year. Military families, embassy employees, teachers, medics and military personnel supporting NATO missions and global trainings are brought to new locations along with all of their possessions, wrapped up in boxes.
These moves begin with a military family liaison, who provides support, along with a unit welfare officer, to make sure moves go as smoothly as possible. In the case of families, much is done to support the transition of children between schools, whether they are headed to regular posts, remote locations or non-routine assignments overseas.
“It’s an emotional time, so it requires sensitivity to help the families, not just to move the contents of their home into a shipping container and deliver it long distance,” says Alexander, “but to attend to the particular needs of each family as they leave one community and enter another.”
Four hundred UK military personnel are currently supporting UN efforts in South Sudan to tackle the humanitarian crisis fueled by years of conflict and natural disasters that have displaced hundreds of thousands of internal migrants. Last year, Leidos helped the MOD transport all of the supplies for a field hospital from the UK into Juba in South Sudan in less than 72 hours in order to provide medical care to over 1,800 military and civilian UN staff.
The operation involved flying and shipping 228 containers, 50 engineering vehicles and 25 climate-controlled medical containers to Kenya, and then loading everything onto trucks that passed through difficult and dangerous roadways in Uganda during the worst of the rainy season.
The field hospital is now operating with over 75 medical staff, including specialists in infectious diseases, intensive care and surgery.
The LCST Programme also provides all uniforms for royal ceremonies, such as those on display at the royal wedding of Prince Harry and Meghan Markle. The 300-member Royal Guard wears towering bearskin hats and bespoke red tunics with buttons bearing the Queen’s insignia. Every uniform must be standardised for quality control across the specialist suppliers who create them. Carrying on centuries-old traditions, these artisans don't overlook a single detail.
Contributions by Paul Cunningham, Hayden Organ, David Jeanes
