Now well advanced into the transformation phase of the MOD Logistic Commodities and Services (Transformation) contract (LSC(T] award and with further operational and systems related benefits yet to come from the investment pipeline, it is reassuring to know that long overdue action to improve efficiency and to reduce cost of operation through the outsourcing of defence logistics to ‘Team Leidos’ is already producing benefits for the MOD user.
Charged with bringing defence logistics from what had been a long underinvested position right up to and beyond current best industry standards whilst at the same time generating savings in the order of £0.5 billion for the MOD customer over a period of 15 years (from the August 1st 2015 commencement date) a recent visit that I made to the MOD logistics operation centre at Bicester was a real eye opener.
‘Team Leidos’ is a partnership made up of Kuehne + Nagel, TVS Supply Chain Solutions, UK Agility which is part of Agility Defense & Government Services Inc and innovative solutions through information technology company Leidos UK, part of Reston, Virginia based scientific, engineering, systems integration and technical services company Leidos.
Now more than three years into the transformational phase of bringing the UK’s defence supply chain into the 21st century, the LSC(T) contract requires that significant efficiency based savings be made through the programme life, this made possible primarily through the introduction of tighter working controls and integration of a complex mixture of services and these being leveraged through a modern and far more efficient suite of operating systems and transparency.
For the first time, the MOD and those serving within the UK armed forces are from a logistics supply requirement now or soon will be being provided with an on-demand supply chain capability designed to dramatically speed up delivery. Together with a completely new basis of comprehensive, transparent, meaningful and importantly, immediate management information now being made available, all stakeholders will be able to make the necessary and informed decisions needed to drive improvements across all aspects of the support chain.
Driven by the requirement to create much greater levels of efficiency across all aspects of logistics and storage operation, the bottom line is that stakeholders using the system will now be able to immediately see accurate stock levels and stock in transit through a live data based system. Never before has the commodity based logistics operations for the Armed Services been operated under a consistent performance based measurement system, one that enables better and faster decision making and that provides Front Line Commands with they need, when they need on a fast on-demand basis.
Transparency and visibility are a hugely important requirement by the user in any commodities based delivery system today just as is knowledge that the system operates a cohesive basis of data reporting.
From the outset LSC(T) has been designed to save the MOD money whilst at the same time providing the military user with considerably improved delivery service levels both in time and operational efficiency. Near-real-time data monitoring, reporting, and analysis will directly inform procurement decisions and allow for more accurate demand planning.
Team Leidos is clearly breaking new ground in the delivery of the LCS(T) contract and even though I have yet to see the new Defence Fulfilment Centre which is currently in the process of being commissioned aside the existing MoD logistics site at Donnington near Telford in Shropshire, I can envisage the level of progress and improvement that this investment will eventually provide. The new operating system has already shown itself to manage improvement in demand and despite the inevitably of issues appearing during the agreed transition change phase process, it appears that considerable progress has already been made in respect of overall efficiency and cost of operation.
Complex in its nature, the LCS(T) programme was based on transformation and continuous improvement and as mentioned, apart from making sites such as Bicester far more efficient in terms of movement, storage and despatch, the most exciting part will be to observe the full efficiency related benefits that are expected to arise for military logistics when the new state-of-the-art Defence Fulfilment Centre (DFC) at Donnington is fully up and running.
The new warehouse based operation at Donnington has been designed to better manage inventory and make rapid improvement in respect of both the availability of supplies and time taken to deliver to the final military destination. Clearly, the new logistics, storage and distribution facilities can be expected to provide considerable cost of operation reductions through the lifetime of the contract when compared to those of existing legacy based logistics operations.
Having already produced operational effectiveness improvements through the transition phase Team Leidos have ensured that the process of system operation change would not have any adverse impact on service needs. The importance of recognising the need for on-going training and people development, introduction of new systems and ways of working together with new infrastructure and improved processes was recognised from the start and while there is still a long way to go before the full investment is up and running there is no doubt that formidable progress has been made.
In respect of the Team Leidos structure, Leidos itself has responsibility for support chain integration, information systems, business intelligence and customer relations, whilst Kuehne+Nagel is responsible for storage, distribution and freight movement. TVS Supply Chain Solutions has responsibility for inventory management for defence clothing, oil, lubricants and gases, medical supplies and general commodities. Leidos Supply Ltd is responsible for procurement including commodity vendor agreements contract management and supplier relationship management.
Looking at future commodity based requirements, clothing is a massive area that includes for instance uniforms and cloth, ceremonials and accoutrements, combat garments and occupational clothing, headwear and all forms of protection equipment, maintenance of physical training equipment which includes everything from internal equipment, diving equipment, skiing equipment, canoes, tents, and their storage and distribution, all forms of medical supplies, hospital equipment, dental requirements and pharmaceuticals, General Supplies which can include everything from insecticides to flooring, beds and mattresses, ropes, paint, electricals, fire-fighting equipment and locking devices right the way through to basics such as toilet rolls, oils, gases, batteries to food and in-flight catering requirements.
At the time of the LCS(T) contract award Team Leidos most likely ‘inherited’ a related annual MOD logistics spend of around £280 million. This had formally been distributed through in excess of 600 suppliers and 182 Commodity Supply Contracts. Historically I am reliably told that there were over 45,000 NSN’s ‘On Contract’ and an additional 28,000 NSN’s ‘Off Contract (NSN = NATO Stock Number) items involved. In terms of staffing, 110 TUPE employees (Transfer of Undertakings -Protection of Employment Regulations) had been inherited for a total number of 210 posts.
As can be imagined, the MOD inventory is huge and the LCS(T) contract includes not only storage and distribution but also procurement and inventory management. It is through this contract operation that distribution of vast amounts of MOD materiel including food, packed fuels, clothing, medical supplies, materials and general supplies is facilitated. From the outset, Team Leidos set out to implement industry best acquisition and contract management practices. Supplier and contract rationalisation was already evident on my recent visit and the imposition of integrated systems to assist inventory planning, a more relevant purchase ordering system and tendering principles based on achieving best value for money have already been implemented.
CHW (London – 17th May 2018)
Howard Wheeldon FRAeS
Wheeldon Strategic Advisory Ltd,
M: +44 7710 779785