Projecting Global Logistics: Transforming the UK’s Defence Supply Chain 20th Annual National Logistics Conference Sparks, Nevada 2 March 2004 SLIDE 1 Colonel David Martin CBE Director DLO Logistics Operations Centre Unity of purpose, certainty of delivery ….. Excelling in intelligent logistics

Current MoD Organisation CDS/PUS 2nd PUS VCDS DCDS(P) DCDS(C) DCDS(EC) PJHQ CAS AMP CINC STRIKE 2SL FLEET CNS CGS AG LAND HQNI SLIDE 2 CDP CDL DPA Unity of purpose, certainty of delivery ….. Excelling in intelligent logistics

The DLO Communications Air DLO HQ Land Sea Supply Chain Unity of purpose, certainty of delivery ….. Excelling in intelligent logistics

To sustain UK military capability, current and future The DLO Mission To sustain UK military capability, current and future SLIDE 4 Achieving success in the tasks we undertake Being ready to respond to the tasks that might arise Building for the future Unity of purpose, certainty of delivery ….. Excelling in intelligent logistics

What Is Logistics in The DLO? Mid-life Update Stores Catering Aircraft Ships/Submarines Equipment Disposal Repair Army Equipment Fuel Information Services and Support Naval Bases SLIDE 5 Post Storage Depots Munitions Distribution Movements and Transportation Medical Supplies Clothing From the Factory to the Fort Unity of purpose, certainty of delivery ….. Excelling in intelligent logistics

DLO Facts Annual spend over US$17bn - 25% of Defence operating costs. 30000 people (75% civilian). 20% of MOD civilians work in DLO. 6 Defence Agencies. US$41bn assets. Over 80 locations. SLIDE 6 Unity of purpose, certainty of delivery ….. Excelling in intelligent logistics

What we used to do ... Procurement MoD(Centre) Executive Specify Procure MoD(Centre) Procurement Executive Support Operate Dispose Separate Services Unity of purpose, certainty of delivery ….. Excelling in intelligent logistics

What we do now ... DLO MoD(Centre) DPA DLO DLO/Front Line Front Line Specify Procure MoD(Centre) DLO DPA Support Operate Dispose DLO DLO/Front Line Front Line Unity of purpose, certainty of delivery ….. Excelling in intelligent logistics

What we want to do ... MoD(Centre) DLO DLO Front Line DLO DPA Specify Procure DLO MoD(Centre) DLO DPA Support Operate Dispose DLO DLO Front Line Unity of purpose, certainty of delivery ….. Excelling in intelligent logistics DLO

Why? Because the smarter we do our business in the DLO, the smaller the deployed ‘logistic footprint’ Unity of purpose, certainty of delivery ….. Excelling in intelligent logistics

Strategy Route Map Organisational improvements Process improvements Performance management Working with industry … to deliver predictability From overall assessment of the shape of the business and its processes, developed 4 key areas for strategy route map – tackle the issues of manpower and assets 1. First is to tackle process synergies highlighted on previous slide – main priority DMRS2 and DRS 3 jointly; consider DM/DSDA merger; consider MSA; Within framework of Smart Distribution 2. 2 strands to this. Use BPE to examine business support functions across HLB (2 AND 3 layers) Secondly, look at overall structure – Agencies and Directorates. Wide range of options – reduce overheads. Not the immediate priority. Key area. Lots of outsourcing etc, but somewhat piecemeal; lacks some coherence (tpt / 3663) Favour partnering rather than straight outsourcing – flexible, profit sharing, lower costs. But need a lot more info. Need help Key issue is strategic corel – supply gateway and intangible assets (know how, managing the customer interface). Tangible assets less clear – need to work on this Need to do a lot more on this – focus to date on getting BUs operating. Some useful work but not by 3 areas. Better tie up between performance levels and costs Some useful data and IT – ABC, but evolutionary Unity of purpose, certainty of delivery ….. Excelling in intelligent logistics

How are we going to bring about the necessary change and forge a coherent E2E supply chain? Unity of purpose, certainty of delivery ….. Excelling in intelligent logistics

.. by transforming Equipment Support Intelligent Customer Contracting for Capability Intentions Contracting for Availability Opportunities Spares Inclusive Traditional Provider Decider Unity of purpose, certainty of delivery ….. Excelling in intelligent logistics

Heavy Equipment Transporter PFI Firstly, the HET PFI Project in which the well known Scammell CommanderTank Transporter is being replaced with the Heavy Equipment Transporter (HET) under a PFI contract. The ISD was 2003 and a troop of 16 vehs was deployed on the Gulf war, its Full Service target date is for 92 x HET by Apr 04. The contract will be for 20 years from this date. Heavy Equipment Transporter Unity of purpose, certainty of delivery ….. Excelling in intelligent logistics

.. and by transforming the Defence Supply Chain Unity of purpose, certainty of delivery ….. Excelling in intelligent logistics

What Is the Supply Chain grouping in The DLO? Mid-life Update Stores Catering Aircraft Ships/Submarines Equipment Disposal Repair Army Equipment Fuel Information Services and Support Naval Bases SLIDE 16 Post Storage Depots Munitions Distribution Movements and Transportation Medical Supplies Clothing From the Factory to the Fort Unity of purpose, certainty of delivery ….. Excelling in intelligent logistics

What is hampering us in achieving our mission effectively? Fragmented Supply Chain Multiple owners of same processes Partial Performance Measurement Non-optimised supply chain Long lead times Low visibility High stocks Low technology Low productivity High levels of duplication across Services and more across industry as a whole Unity of purpose, certainty of delivery ….. Excelling in intelligent logistics

Joint Force Logistic Component (JF Log C) Concept Of Operations UK BASE COUPLING BRIDGE ALSS FMB JTFHQ XXX SPOD FRSA FLS DOB 2 SA 1. FORCES MOBILISE IN UK 2. MOVING INTO THEATRE INTO THE APOD/SPOD 3. CREATION OF A FRSA/RSG 4. CONTROLLED BY JFLOGC (ONE STAR) 5. ALSO IN RSG ARE RAF AIR LOGISTIC SUPPORT GROUP 6. JFHQ 7. AS FORCES MOVE FORWARD RSG SUPPORTS FSG 8. FSG SUPPORTS UP TO DIV AREA 9. DIV SUPPORT GROUPS 10. BDE SUPPORT GROUPS 11. SUPPORT BATTLEGROUPS. APOD THEATRE DOB 1 TRC Bde X JFLogC X Assy Area LCC XX BSG Unity of purpose, certainty of delivery ….. Excelling in intelligent logistics 25 51 12

SINGLE SERVICE SUPPLY CHAINS ‘STEALTH’ LOGISTICS SINGLE SERVICE SUPPLY CHAINS DEFENCE CONTRACTOR MAIL UNIT MEDICAL STORES FOOD INTERNATIONAL COURIER FUEL MUNITIONS Unity of purpose, certainty of delivery ….. Excelling in intelligent logistics

DLO Logistic Operations Centre (DLOC) To manage the flow along the Supply Chain i.e; The ‘air bridge’ The ‘surface (ie sea) bridge’ To manage the receipt, consolidation and dispatch to theatre of UORs Promote consignment tracking Co-ordinate the output of DG Def SC’s HLB Unity of purpose, certainty of delivery ….. Excelling in intelligent logistics

MORE ‘INTELLIGENT’ LOGISTICS PJHQ PRIORITIES IPTs MAIL CO-ORDINATION DLO LOGISTIC OPERATIONS CENTRE UNITS DPA We need to protect the unit from stealth logistics. To achieve this we have established an organisation which reacts to Joint Force Commander and PJHQ priorities, co-ordinates and monitors the supply and acts as the focus for distribution decisions from within the DLO - IPTs, NPPO and the distribution agencies – from within DPA and industry, and with the Front Line Commanders who, in turn, will be liaising with the units and PJHQ. This is a lesson highlighted from GRANBY and Balkans operations. DLOC was established at end of Jan for Op TELIC. Based in Andover North site co-located with DTMA. Assisted in development of FET and integration of the DOA. +UOR coord + ‘green gate’ for entry from contractors. INDUSTRY COMMODITIES Unity of purpose, certainty of delivery ….. Excelling in intelligent logistics

The Future Consignment Tracking enhancements Invest in the ability to manage the Joint Deployed Inventory (the MJDI Project) Rationalise the remainder of the logistic IS architecture Improve Performance Measurement Future Defence Supply Chain Initiative Organisational change – Domain 2 Stars Unity of purpose, certainty of delivery ….. Excelling in intelligent logistics

Consignment Tracking Enhancements Unity of purpose, certainty of delivery ….. Excelling in intelligent logistics

Fully exploit the integration of RFID equipment Active Fixed Interrogator Mobile Reader 410R Mobile Reader 410R CLIN, 3003AA, $3,010.00 CLIN, 3003AD, $344.00, Battery Charger CLIN, 3003AE, $44.00, AC Power Adapter Savi Docking Station CLIN, 3001DD, $1,786 SaviTags CLIN, 3009AA, 2K, $122.00 CLIN, 3009AD, 8K, $132.00 w/Locator CLIN, 3009AE, 128K, $142.00 w/Locator CLIN, 3009BB, 128K, $157.00 Gate Tag CLIN, 3009BC, 128K, $162.00 Gate & Locator Active Fixed Interrogator CLIN 3001AA, $1,480.00 CLIN 3001AC, $105.00, Mounting Kit CLIN 3001AD, $168.00, Heavy Duty Mounting Kit SaviTag 410 with Bracket Docking Station Unity of purpose, certainty of delivery ….. Excelling in intelligent logistics

Logistic Information Systems Invest in our Logistic Information Systems Invest in the ability to manage the Joint Deployed Inventory (the MJDI Project) Rationalise the remainder of the logistic IS architecture

Current Logistic IS Architecture INVENTORY WAREHOUSE TRANSIT UNIT1 SCCS CRISP SS3 WITS WTMS VITAL BODMS RIDELS USAS/DUSAS OASIS GLOBAL This is the problem which DSMS was intended to overcome. Each of these pillars supports a Supply Chain which is very different from its neighbour and each has a group of people responsible for its performance - jealously guarded. They all come together at the Coupling Bridge - and much like passengers awaiting a train - they do not know whether there is room for them or what sort of seat they’ll get. If each of these pipelines worked efficiently then it wouldn’t be too much of a problem - but they don’t…... 1. ‘Unit’ or ‘deployed inventory (DI) systems’ Unity of purpose, certainty of delivery ….. Excelling in intelligent logistics

Rationalised Logistic IS Architecture INVENTORY WAREHOUSE TRANSIT UNIT M M I T RIDELS TAV(-) CRISP WITS MJDI SEA SCCS AIR VITAL TAV(-) WMS MJDI Whilst the implementation of DSMS, the rationalisation of our third line warehousing systems and the implementation of ITV would have addressed many of the key operational requirements highlighted earlier, the £65Om WLC of DSMS was considered unaffordable within the DLO Change Programme and when ITV was submitted for funding, Defence as a whole considered the £90m WLC unaffordable. SS3 VITAL TAV(-) LAND WMS MJDI P2P and Enterprise Application Integration Hub Unity of purpose, certainty of delivery ….. Excelling in intelligent logistics

Improve Performance Measurement Unity of purpose, certainty of delivery ….. Excelling in intelligent logistics

TFD DPT MHT What should we measure? Def SC Def SC Area of Influence Stockholder selects stores required TFD MHT DPT Capability Loss What is wrong? Need for stores identified Unit asks for stores Unit request verified then processed Stockholder moves stores to distribution node Stores declared for movement Stores leave the stockholder Stores arrive at interim distribution node Stores leave the interim distribution node Stores arrive at local distribution node Unit receipt Stores issued Capability restored Issue instruction output to stockholder Stores arrive at unit What should we measure? Operations Ex/Trg IPT/ SC controls Depot/Stockholder Distributor Theatre Not NWE IPT/ SC controls Routine Depot/Stockholder Distributor FLCs Def SC The D SC Ops initiatives are broken down between these 4 areas, all of which have the theme of Smart Distribution. The first 2 are the province of the combined IFTIG / Defence Rail Group. Quick Wins and Miscellaneous appear in SC Ops (Pol). Note that it is only in the case of Defence Rail that benefits can include direct savings. As a reminder, Smart Distribution seeks to make the performance of the supply chain faster, better, cheaper, although it is acknowledged that the emphasis of the initiatives is on HLB savings. Def SC Area of Influence Def SC Area of Interest Unity of purpose, certainty of delivery ….. Excelling in intelligent logistics

Future Defence Supply Chain Initiative (FDSCI) Better VFM from Def SC storage & distribution Savings aspirations of US$63.5M from 05/06 Options include: In House Do Better - Smart Distribution Do Differently - Trading Fund Partnering with Industry Outsourcing – 2 bids currently being evaluated Unity of purpose, certainty of delivery ….. Excelling in intelligent logistics

CDL as Defence Logistic Process Owner V2.0 28 Jan 04 CDL as Defence Logistic Process Owner CDL VCDS and 2ND PUS Head Office Processes DLB 2* Defence Logistic / E2E Change Team Leader ACDS (Log Ops) FLEET Maritime Component Industry ‘Demand Pull Doctrine’ DLO LAND Land Component DLOC PJHQ JF Log C DPA STC Air Component ‘Demand Pull Doctrine’ DG Def SC Operational Success CDL ensures the required effect is achieved from the end-to-end logistic process Unity of purpose, certainty of delivery ….. Excelling in intelligent logistics

That’s easy for you to say “The key to achieving a small logistic footprint is the integration of the Defence Supply Chains” That’s easy for you to say [ Unity of purpose, certainty of delivery ….. Excelling in intelligent logistics

Projecting Global Logistics: Transforming the UK’s Defence Supply Chain 20th Annual National Logistics Conference Sparks, Nevada 2 March 2004 SLIDE 33 Colonel David Martin CBE Director DLO Logistics Operations Centre Unity of purpose, certainty of delivery ….. Excelling in intelligent logistics