Qioptiq logo DSEi Top Engineer Harris

Fujitsu 2017 Future of Logistics Challenge By Able Bodied Seaman Logistics (Supply Chain) Niko Howai (Joint Third Place)

From the science and technology perspective, identify an innovative logistic opportunity and explain why, how and when it would deliver benefit across the Defence Support Network. Given the delegated Defence Operating Model, how would you ensure rapid and successful implementation?

Able Bodied Seaman Logistics (Supply Chain) Niko Howai is at the beginning of his Naval career. As such, his essay benefits from a detailed perspective of some of the challenges encountered at the workface in the Defence Support Network.  Despite his relative lack of seniority, Howai has Bachelor and Masters degrees, and has aspirations to undertake Doctoral research in the future. AB Log (SC) Howai’s essay is in contrast to Major Reynold’s submission in that, rather than looking at the physical technologies that can deliver improvement, he considers the Internet of Things and draws out significant opportunities for benefit to the Royal Navy supply chain in particular, and wider Defence logistics in general.  He lays out the structure and process of Defence support in a simple, clear way before focusing on the Naval reverse logistics network and considering how the Internet of Things can improve efficiency in that particular set of functions. AB Log (SC) Howai was equal third in the 9th Fujitsu Future of Logistics Challenge annual Essay Competition in 2017.

 

Introduction

When one thinks of science and technology in logistics a few things come to mind such as delivery drones, driverless vehicles, 3D printing and the Internet of Things (IoT).[1] While it sounds exciting to have a fleet of delivery drones that will increase air traffic to deliver our supplies, we must consider the feasibility and realism of any science and technology endeavour given constraints. Through this essay I will look at the reverse logistics process and a possibility of improving the efficiency of returns through the Naval supply chain via the IoT to track and account for product condition, and how any technological innovation can be integrated into a dynamic and transforming Defence Support Network (DSN)[2] through the Defence Operating Model[3] with the understanding that all the exogenous[4] variables inherently depend on each other for overall success.

Background

The DSN is the support framework from which the UK Armed Forces are deployed, sustained and recovered.[5] The DSN fits into the Defence Operating Model which is based around the whole force concept with people being the strategic resource underpinning decision making.[6] Defence in its simplest form comprises of the Department of State and the Armed Forces.  Together, they carry out six core functions making up the Defence Operating Model. These functions include, directing, operating, generating and developing, acquiring, enabling and accounting for defence activity to parliament.

The directing function is organised by the Defence Board and Head Office[7], together they control strategic policy development and develop rules which govern the entire organisation. Output from the defence industry and financial resources feed into the enabling and acquiring functions. The enablers include sections such as the Defence Infrastructure Organisation (DIO), Defence Business Services and Science and Technology, while the acquirers are the Defence Equipment and Support (DE&S) organisation and Information Systems and Services (ISS). The output from the enabling and acquiring functions provides the products and services that the Armed Forces readily rely on for operating on a daily basis.

Force generation and development is done under the command of the three services which ensure the force elements are at a state of readiness to protect the United Kingdom, her Crown Dependencies and Overseas Territories around the world. Operating outside the UK is conducted by Joint Forces Command which comprises the Permanent Joint Headquarters and Directorate Special Forces that oversee military tasks and operations. Finally all defence activity and spending is accountable to parliament and the public. Due to the accountability of defence activity, scientific and technological opportunities are necessary to innovate, and help control waste and spending.

Reverse Logistics

One technological trend that can improve the efficiency of reverse logistics is the IoT. It is a fascinating concept that is becoming a reality and has the potential to be a real game-changer in the returns process. Information is the backbone of any military, and up to date information on the whereabouts of assets and their condition can provide logisticians from higher command down to the men and women on the ground with real decision making power. An area frequently overlooked is reverse logistics, for instance personnel can be keen on receiving new stock but returning old, used and out of date items may not take precedence in the everyday running of a warship or deployed unit.

Why The IoT Will Provide Benefit

In carrying out any supply chain innovative solution for the DSN it must fit into the grand design of the Defence Operating Model and in terms of the logistics process meet the requirements and limitations of the acquiring and enabling functions such as the DE&S and Science and Technology divisions which are but part of a whole. Therefore, convincing stakeholders of the necessity for any new project must be done initially. There is an existent problem in the returns process from naval units (caused by both supply chain and technical staff), where the return process starts and any accounting inaccuracy is snowballed by the time it reaches the returns depot. I have the personal experience of sifting through pallets of returns over the course of a forenoon with a member of the returns staff. It should have been a straight forward task, however we routinely found items without the correct paperwork and paperwork with no items, delaying the entire process as corrective action was required.

A survey carried out at the Returns Processing Facility (RPF) at Her Majesty’s Naval Base (HMNB) Devonport indicated major issues where more than half of the respondents stated the U050 External Issues [returns paperwork generated from the Management of the Joint Deployed Inventory (MJDI) system] carry inaccurate information on the quantity being returned and materiel condition of the items (serviceable, repairable or other unserviceable categories), lack of communication with units was noted as being another significant issue which leads to delays in completing the returns process. Another major issue is when items are being returned with missing issue paperwork and, where applicable, missing test certificates, quality assurance documents, disposal instructions for land managed items and Ministry of Defence (MOD) Form S3206 for items that contained fluids/oils (to certify that the proper clearing checks were made). It was suggested that these problems are not limited to one UK naval base but are occurring at the other naval bases as well. This leads to a degree of losses of both time and money in the returns process.

The problem contributed to a build up of permanent and limited (P&L) unserviceable stock held at the depot. The value of this stock is approximately £500 million and growing, of which 10-15% is in serviceable condition and was incorrectly sent as unserviceable items.[8] The correct completion of the MOD Equipment Conditioning Label was highlighted as a major issue by the DE&S Support Enablers Operating Centre (SEOC) investigation into the efficiency of the Maritime Waterfront Inventory Returns Process. The SEOC found the rate of inaccuracy in the MOD Equipment Conditioning Labels to be over 99%[9]. Presently the MoD is planning to spend a great deal on the Equipment Plan from 2016-2026 with costs projected to be £178 billion, an increase of 7% as compared to a previous percentage increase of 1.2% between 2013 and 2015. Further to this the MoD must acquire £5.8 billion in savings from existing projects over the next 10 years to ensure the affordability of the equipment plan.[10]

Therefore it is crucial to ensure resources are utilised efficiently with minimal wastage. Efficient reverse logistics provides such an opportunity with innovative technologies like the IoT coupled with a returns tracking system. Stemming losses from the returns supply chain can result in savings for the benefit of the MoD. An organisation that achieves sustainability while limiting wastage is beneficial for sectors such as Defence, which provides a public good. Any opportunity to quell losses should be investigated.

How And When Will It Provide Benefit?

Reverse logistics is the process where excess, unwanted, defective and expired items are returned through the supply chain from point of consumption or use to the point of origin to recapture value, conduct efficient disposal and refurbishment in a sustainable manner. In the Royal Navy efforts have been made, to reduce wastage at HMNB Devonport. Lieutenant Commander Lai Hung currently Deputy Commander Logistics at the base requested units to implement a trial for returns of unused/new consumable items in 2017, to prevent these items from being thrown away. In war-time scenarios these practices may not always be possible; however, setting an improved framework with technological advancement such as the IoT will undoubtedly provide benefit to the sector and best practices that will improve efficiency in the reverse logistics service for years to come.

Connecting The Unconnected

The IoT connects the unconnected, items that were once thought to be ‘’dark assets’’ can now come into the light, providing, processing and storing vast amounts of information that physical objects other than computers did not do historically.[11] Kevin Ashton, credited with coining the phrase, summarises the IoT’s benefits as this “If we had computers that knew everything there was to know about things—using data they gathered without any help from us—we would be able to track and count everything, and greatly reduce waste, loss and cost. We would know when things needed replacing, repairing or recalling, and whether they were fresh or past their best.’’[12] These benefits are very akin to a circular economy which encourages the 4 R’s of reducing waste, reuse, recycle and recovering assets. Circular economies are noted for promoting sustainable development with the aim of keeping products at their highest utility at all times.[13] Therefore the IoT encourages sustainability and in turn promotes a circular economy.

Increased Deployment And Utility

The IoT is purported to have a large surge in utilisation by 2020 to around 50 billion connected assets as compared to 15 billion today[14]. Ambitious, and with a vast potential, it can transform the way logistics operations are conducted in defence. For instance an item that is connected to the IoT can help determine its precise shelf life details and requirements for re-testing or disposal and highlight this information to supply chain staff. It can even be tracked through the returns process and be identifiable through the connection to the internet.

Improved Consignment Visibility

A Joint Returns Tracking System (JRTS) with the IoT is even more accurate as the precise location of a returned item can be ascertained through in transit visibility via cloud based Global Position System (GPS) and Radio Frequency Identification technologies (RFID).[15] Units will not necessarily have to hasten the RPF for updates on their transactions, for instance units overseas on deployment may send the returns paperwork by post while the items are shipped by container and may be delayed in arrival back to base port but the paperwork is already delivered to the Returns Processing Facility waiting sometimes months for the items to arrive to be cleared. The IoT and JRTS can provide information for those parties involved on the location of the items therefore smoothing the process.

In the scenario where the IoT does not get off to widespread utilisation within Defence by 2020, a Returns Tracking System will still be beneficial to counter communication issues with units that were noted by the Returns Facility to be a significant problem, affecting the processing of returns and track items through the reverse supply chain. It can be done similarly to the established Joint Demand Tracking System (JDTS) where units can determine the status and/or location of demanded items with unique information such as demand number and date of demand by specific unit. Instead they can utilise the unit, date of transaction of the External Issue voucher (U050) and the transaction number as a starting point to determine the status of processing. Information can be added on by the Returns Facility that will be visible to the unit via this search method.

Error Recovery

Where items are degraded, missing or lack NATO Stock Number (NSN) information there will be a way to recover the unique identity of products via other means through the IoT via coding, sensors, serial and product numbers. Technical personnel such as engineers can get a clear picture of the condition of the product and determine if it is serviceable or not, becoming able to provide more accurate information for completion of the MOD Equipment Conditioning Label. For items in the returns process that require quality assurance test certificates such as harness equipment and items that need to be checked for waste, radioactive and hazardous substances, being connected to the internet this information can be accessed electronically by the stores supply chain system and technical staff from point of return to point of origin. This information is useful for record keeping on the status of the quality of the item. Finally if an item becomes lost along the reverse logistics network the IoT will provide a means to help locate the missing item, identifying ityts last known location. A process like this does not come without cost. Finances and time to implement will require careful and phased introduction if it is to be successful.

Implementation

Any new technology must not be forced onto an established system, even if improvements are likely every existing process is already rooted into an organisation and for a new technology’s success rate to be high, it must be introduced in a manner that demonstrates and proves the benefit – from the personnel on the ground using the system all the way up to the Defence Board realising organisational objectives – through effectiveness and simplicity. To achieve this, enablers of the Defence Operating Model in conjunction with the Armed Forces and acquirers should work closely together. Steps that need to be taken include valuation analysis, pre-testing to work out the bugs in the system, conduct of training for users and to correct any issues, ensure security of the system, and a project implementation outline that enables cost control and learns from past mistakes. Evaluation is a good starting before carrying out any new project.

Evaluation Of Benefits

Evaluation of the benefits of IoT is a necessary building block. Proving its value in monetary terms adds weight to pursuance of the project. Cost-Benefit Analysis (CBA) does that by calculating the present value at a given time period of negative (costs) and potential positive (benefits). The values are discounted and totalled to find the net total benefit[16] and can be used to compare opportunity cost (what is given up or forgone) of competing projects. Once implemented, continuous valuation metrics are required to monitor progress in the efficiency of the reverse supply chain against the planned outcomes. Some of these measurements include amount of product reclaimed and resold, percentage of material recycled, percentage of material disposed as waste and percentage of costs recovered from returned items.[17]

The Alignment Trap[18]

Pre-testing to work out the bugs in the system also adds the possibility of Information Technology (IT) enabled growth. Pre-testing the system intensely by end users, enablers from Science and Technology departments and other stakeholders can identify potential problems that can be dealt with prior to any full scale implementation. IT enabled growth is achievable where there is both high alignment and high effectiveness,[19] where alignment refers to compatibility with the organisation’s objectives and effectiveness refers to the benefit gained from implementation of new IT.

Avoiding the alignment trap is critical and efforts should ensure that the IoT system is highly effective in accurate accountability of items in the reverse supply chain and then align the benefit into directing objectives and functions of the various stakeholders. One study showed organisations that were not considered highly aligned but had higher efficacy were found to spend 15% less than average and have 11% increase in growth supporting the proposition for pursuing effectiveness[20]. Simplicity is also key to achieve overall success, it may seem counter intuitive to have a new technology yet it must be simple, achieving this with organisation-wide standards and easy to use functions rather than complex layering on existent systems so that end users can have ease of use in adopting the system[21]. Though simple in use, the system must be secure for defence business, confidentiality and privacy protection.

System Security

One of the fears associated with IoT is its potential to be hacked, leaking confidential information that, for the Defence sector, is a real threat. Securing multiple points of vulnerability – from an internet-connected valve on a ship or submarine that can disclose its location to the enemy, and the wider misuse of IoT sensors that can provide hackers with confidential information demand that security should be built into the system from its inception. Cyber-security mechanisms should be developed and continuously updated by security specialists that work on the project with the product developers and managers. Multiple disruptive attack scenarios can be used to determine the impact of attack and how security should be embedded into the IoT.[22] Finally, end users should also be made aware of the security risks associated with insecure use, and be trained adequately to use the technology.

User Training

Training is required for staff to use the IoT securely and efficiently.  They need to remain vigilant with data protection. Even if the IoT end user interface is predominantly simple, training is still required to ensure a higher success rate. This can be done via face-to- face and web based tutorials or a combination of both. Though the IoT will be breaking new ground, there is no requirement to change staff at the Returns Facilities or at forward Naval units to be effective. Once training is made available for end users and implemented in a package involving reliable communication, it will be effective. What is important to remember is the current staff will have the experience of the volatile logistics world in the Armed Forces setting whereas introducing new staff may not necessarily possess that level of experience.

Connecting To The IoT

The first step in creating a connected environment is to prioritise products that should be visible to the IoT.  This project will be a large scale one with significant investment costs, and connecting all products simultaneously will be a huge challenge and most likely unfeasible. The best option will be to classify products based on some parameter such as value, whether it is permanent, limited life or consumable, and whether the product is critical at some pinch point or bottleneck in the supply chain. Other drivers include lead time from production to customer, items no longer produced but still required through refurbishment, and state of attractiveness to criminal and terrorist organisations (ACTO). These are only some of the variables to consider when allocating IoT to products and can assist in determining when to connect a particular item. For instance an item that is low in supply, high in value, repairable and critical to the consumer should be a high priority target to be connected via the IoT to track its condition and whereabouts on the reverse supply chain.

Implementation Management

Implementation of the IoT within Defence requires active management.  A project management team should be established with the necessary expertise on establishing projects, utilising principles from Projects in Controlled Environments (PRINCE2) and other such best management processes to get the ball rolling successfully. PRINCE2 espouses an organised and controlled start, middle and end of project, regular reviews of progress, the involvement of management and stakeholders at the right time and place of the project, good communication channels amongst the project management team and rest of the organisation, awareness and recording of any disparity in the implementation process to learn from it.[23]

Combining valuation, testing, security, training, prioritising products and a good project management base will ensure successful implementation. For it to be rapid, the prioritising of which products IoT is required initially.  The cost constraints of budget holders in the Front Line Commands must be overcome by the DE&S and Joint Forces Command’s Information Systems and Services[24] . Within the Equipment Plan, they will be the responsible bodies for implementing logistic projects of an Information Systems (IS) and Information Technology (IT) nature[25]. Recently demonstrated Fujitsu Edgeware enables the IoT and has considered issues such as security and privacy, accuracy of the information (less human error in data input), timely and automatic data on asset’s geographic location.[26] The technology is accessible and growing rapidly, the UK Armed Forces has long been a trendsetter in industry, and the IoT presents an opportunity to do the same again.

 

Limitations And Opportunities For Future Research

This research essay centralised around HMNB Devonport’s returns processing. Time and work constraints did not allow for a wider sampling of Return Processing Facilities’s across the Fleet, as well as from British Army and Royal Air Force (RAF) counterparts. A wider sampling of RPF’s will provide a more accurate picture of the scale of the problem if it exists at all in the other services. There is an opportunity for further study into the state of returns processing throughout all the services to ascertain if the problem is tri-service.

There is opportunity for continued research into the practicality of IoT enabled returns with a Joint Return Tracking System (JRTS). Despite a great deal of buzz in the private sector, what may work for them may not necessarily work for the Armed Forces, which by nature is a public good and not a profit making machine. There is also the possibility of running a JRTS individually without the IoT via other means of tracking where information is added by signage for receipt of item at the RPF and signing for it along the reverse supply chain wherever the product goes, this method can also be usefully investigated.

REFERENCES:

Crown Copyright Services. (2016) Specialist Support for the Defence Support Network (Transformation) Programme Concept Phase. [Online] [Accessed 08 March 2017]

Available from: http://ccs-agreements.cabinetoffice.gov.uk/procurement-pipeline/specialist-support-defence-support-network-transformation-programme-concept

 

 

Datasheet Fujitsu Edgeware. (2013) Fujitsu Edgeware Enabling Better Logistic Decision Support. Unknown place of publication: Fujitsu Services Limited. [Online] [Accessed on 6th April 2017] Available from:

https://www.fujitsu.com/uk/Images/edgeware-datasheet_tcm23-683652.pdf

 

 

Ellen MacArthur Foundation. (2015) Circular Economy Overview. [Online] [Accessed on 8th May 2017]

https://www.ellenmacarthurfoundation.org/circular-economy/overview/concept

 

 

European Commission. (2014) Guide to Cost Benefit Analysis of Investment Projects: Economic Appraisal tool for Cohesion Policy 2014-2020. Luxembourg: Publications Office of the European Union. [Online] [Accessed on 8th May 2017]  ec.europa.eu/regional_policy/sources/docgener/studies/pdf/cba_guide.pdf

 

 

ILX Group (2017) Why Should I Study PRINCE2? [Online] [Accessed on 8th May 2017]

https://www.prince2.com/uk/why-should-i-study-prince2

 

 

Macauley, J., Buckalew, L. and Chung, G. (2015) Internet of Things in Logistics – A collaborative report by DHL and CISCO on implications and use cases for the defence industry. Germany: DHL Customer Solutions and Innovation. [Online] [Accessed on 11th April 2017] Available from:

http://www.dhl.com/en/about_us/logistics_insights/dhl_trend_research/internet_of_things.html#.WRUEePn1DIU

 

 

Marr, B. (2017) What Is the Internet of Things – A Complete Beginners Guide in 2017. Forbes. [Online] [Accessed on 11th April 2017] https://www.forbes.com/sites/bernardmarr/2017/04/10/what-is-the-internet-of-things-a-complete-beginners-guide-in-2017/#129835285982

 

 

Ministry of Defence. (2015) How Defence Works. Unknown place of publication: Ministry of Defence. [Online] [Accessed on 6th April 2017] Available from:

https://www.gov.uk/government/…/how-defence-works-the-defence-operating-model

 

 

National Audit Office. (2017) The Equipment Plan 2016-2026. Unknown place of publication: Ministry of Defence. [Online] [Accessed on 24th April 2017] Available from:

https://www.nao.org.uk/report/the-equipment-plan-2016-2026/

 

 

Robinson, A. (2015) 6 Benefits of Effective a Reverse Logistics System & The 9 Core RevLog Metrics to Track. Cerasis. [Online] [Accessed on 8th May 2017]

http://cerasis.com/2015/07/20/reverse-logistics-system/

 

 

Robinson, A. (2015) The Future of Logistics: Are 3PL Companies Ready to Adopt these 4 Emerging Technologies? Cerasis. [Online] [Accessed on 08th March 2017]

http://cerasis.com/2015/01/14/future-of-logistics/

 

 

Shankar, U. (none) How the Internet of Things Impacts Supply Chains. Inbound Logistics. [Online] [Accessed on 11th April 2017]

http://www.inboundlogistics.com/cms/article/how-the-internet-of-things-impacts-supply-chains/

 

 

Royal Navy Temporary Memorandum 04-015/17. (2017) Reverse Supply Chain – Improving Accuracy and Effectiveness in RN Ships and Submarines. Royal Navy. [Defence Intranet] [Accessed 3rd May 2017]

 

 

Shphilberg. D., Berez. S,. Puryear. R. And Shah. S., 2007. Avoiding the Alignment Trap in Information Technology. MIT Sloan Management Review, 49(1), pp. 51-58

 

 

Turner, M. (2015) How to secure the internet of things. Computer Weekly. [Online] [Accessed on 8th May 2017]

http://www.computerweekly.com/opinion/How-to-secure-the-internet-of-things

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[1] Robinson, A. The Future of Logistics are 3PL Companies ready to Adopt these 4 Emerging Technologies http://cerasis.com/2015/01/14/future-of-logistics/

[2] The Defence Support Network is an evolution of the UK MOD’s  Joint Supply Chain and recognises the increasing complexity of logistics, information, and enabling activities for defence on operations, and preparing force elements for operations. It includes Regular and Reserve Forces, other government departments, allies and industrial partners.

[3] The Defence Operating Model has its origins in Lord Levene’s 2010 Defence Reform Review, and became fully operational on 1 April 2014. While Defence will continue to refine parts of the operating model, this is now the long-term basis on which Defence business is managed. The operating model is based on: simple structures; fair and transparent delegation of responsibility to those best able to deliver strong organisational leadership, coupled with practical business skills; a culture of innovation and efficiency, removing needless process and flushing out bureaucracy; and joined-up corporate thinking and behaviour, placing the best interests of Defence at the heart of business.

[4] That is, originating outside an organism or system.

[5] Crown Copyright Services.2016.  Specialist Support for the Defence Support Network Transformation Programme Concept Phase

[6] Ministry of Defence (MoD) UK. 2015. How Defence Works

[7] In this context, ‘Head Office’ is the Ministry of Defence, which is both a Department of State and a military headquarters, responsible for providing the military capability necessary to deliver the government’s objectives and defining future military requirement

 

[8] RNTM 04-015/17 Reverse Supply Chain.

[9] Ministry of Defence (MoD) UK. 2015. How Defence Works

[10] The National Audit Office – The Equipment Plan 2016-2026.

[11] Internet of Things in Logistics – A collaborative report by CISCO and DHL on implications and use cases for the logistics industry. 2015.

[12] What is the Internet of Things – A Complete Beginners Guide In 2017.

[13] Ellen Macarthur Foundation –Circular Economy Overview 2015.

[14] Internet of Things in Logistics – A collaborative report by CISCO and DHL on implications and use cases for the logistics industry. 2015.

[15] Udaya Shankar – How the Internet of Things Impacts Supply Chains

[16] European Commission Guide to Cost-Benefit Analysis of Investment Projects. 2014.

[17] Robinson A. 6 Benefits of Effective Reverse Logistics & the 9 Core Revlog Metrics to Track. 2015.

[18] The challenge of aligning Information Technology (IT) to business has often been cited as a key issue by IT executives.

[19]MIT SLOAN Management Review Avoiding the Alignment Trap in Information Technology 2007.

[20] ibid

[21] ibid

[22] Computer Weekly. How to Secure the Internet of Things. 2015.

[23] Why PRINCE2 – https://www.prince2.com/uk/why-should-i-study-prince2

[24] Information Systems and Services (or Information Systems & Services or ISS) is a Cluster within the Joint Forces Command Top Level Budget of the UK MOD. With its headquarters at Corsham, Wiltshire, and satellite sites including Andover, Bicester, Henlow, Stanbridge, Bath and Yeovilton, it currently employs around 5,000 people. SS was created on 1 April 2008 from the former Defence Communications and Services Agency (DCSA). In turn, the DCSA had been formed in 1995 from many single-Service signals organisations including RAFSEE (the Royal Air Force Signals Engineering Establishment). On 1 April 2014, ISS moved from DE&S to JFC.

[25] The National Audit Office – The Equipment Plan 2016-2026.

[26] Fujitsu Edgeware – Enabling Better Logistic Decision Support. 2013.

Back to article list