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To 2016 and beyond – Enter a new ecosystem for military logistics

ifsGraham Grose, industry director at the IFS Aerospace & Defence Centre of Excellence, looks at the top technology and business trends he predicts will make a big impact on the defence industry and shifting geo-political landscape in 2016 and beyond

The global defence market is emerging from the challenges of the last five years. In Asia Pacific, sustained economic development and industrial and social maturity is leading to projected increases in defence expenditure. In Western markets, budgetary cutbacks of recent years have passed the peak, and in some countries, such as the UK, there are projected increases in defence expenditure. Reduced global levels of major military conflict has been counter-balanced by significant increases in terrorist-based, insurgency-type operations.

 Without a doubt the growth in machine to machine (M2M) and connected devices, the transforming power of emerging technologies and revolutionary arrivals such as the F-35 military jet are going to transform the military support environment. We will start to see the growth of demanding ecosystems involving multiple relationships between contractors and manufacturers based on complex contractual agreements and varying levels of capabilities. These ‘protected’ military ecosystems are likely to result in a more concentrated defence manufacturing market – the more protected ecosystems there are, the more competitive it will be for tier two manufacturers to play their role as suppliers.

Here, I outline what I see as the key developments that will change the way defence organisations will operate and, in turn, bring huge changes to military support chains.

 First: The Two top Technology developments

The Internet of Things & 3D printing

New technologies offer promising advantages for defence organisations, helping keep control and full visibility at every step in the support chain – a more protected military ecosystem. Connected devices are now playing a big role in maintenance hangars. The next generation of warplane has arrived in the F-35, and military logistics needs to move with this. An F-35 jet has internal and external sensors that send real-time data to a ground-based logistics support solution, which then seeks to optimise the end-to-end (E2E) support chain. Hours can be saved in the maintenance bay by making sure the right equipment is available in the right place at the right time, so engineers are prepared for the task in hand and ready with the right part as soon as the aircraft lands on the ground.

The use of 3D printing, or additive manufacturing, has big potential for military ecosystems, perhaps more than most might realise. The most obvious advantage is being able to produce parts when they are needed, meaning organisations can keep control of their support chains and end-to-end manufacturing processes by controlling distribution and quality of parts – affording increased opportunity for T2 manufacturers.


There is another advantage that I think will start to be developed if the speed of production can be aligned to react to immediate operational need. Producing parts in-theatre, on what is now increasingly mobile 3D printing technology, means potentially spectacular advantages in the military context and a reduced logistics footprint in terms of not having to ship large, complex assets that are vulnerable to enemy attack over long-distances. There is less risk associated with forecasting, less need to hold assets in large logistics parks and less staff involved in managing those assets and in managing the turnover. For example, the US Navy has started to adopt 3D printing technology on board the USS Essex to produce custom drones to greatly improve intelligence and decrease the risk of danger. Data files and models of the drones can be sent from land bases to ships hundreds of miles away and can be printed and fully operational in a matter of hours.

However, new technology such as 3D printing does have the potential to disrupt military ecosystems. The main concern is quality control – how can defence manufacturers, the military and Performance Based Logistics service providers adopt 3D printing technology while keeping to quality control and airworthiness standards? Will the threat of counterfeit parts disrupt this? A report from the Organisation for Economic Cooperation and Development put the value of counterfeit goods that crossed international borders at over $250 billion as far back as 2007, while the International Chamber of Commerce expects the value of counterfeit goods globally to exceed $1.7 trillion this year. If you link this to the parallel challenge of ITAR (International Traffic in Arms Regulations) and the EAR (Export Administration Regulations), organisations need an enterprise approach for the management of underlying software support solutions if the transition to an effective and safe environment is to be achieved.


Second: A new and emerging ecosystem

Defence ecosystem complexity will continue to increase

As outlined above, the complexity of military ecosystems will grow as new technologies emerge and support chains are disrupted. But, manufacturing and procurement constitutes only 20% of the total cost associated with modern fast jets – with the remaining 80% of costs being spent through-life on in-service support. Effective maintenance and operational support can help produce significant cost savings at a time of changing defence budgets. T1 defence manufacturers will look to protect the 80% upside to access greater revenue possibilities, creating a ‘locked-in’ and protected ecosystem. For example, a typical defence manufacturer might have a profit margin of just 7%, meaning defence organisations can only greatly realise revenue benefits from through-life costs.

With the emergence of a ‘protected ecosystem’ – manufacturers will become involved in the design, support & delivery of their own product. The increasingly direct link between customers and suppliers can lead to fragmented services across the enterprise, services which have to be integrated into the wider military ecosystem. Defence products – such as an engine, weapon system or military plane – often span years or decades in their use. The contracts to manage and maintain those products can be seriously long-term, adding further to the potential fragmentation.

All parties – whether it’s the government, Systems Integrators (SIs), top tier manufacturers, tier two or component manufacturers – sit within the same constraints of defence contracts, which are often expensive to bid for and can involve a significant level of risk. Tier two manufactures can find huge opportunity in this, but only if they can minimise the risk they currently present to T1s. T2 manufacturers must become more cost competitive and be able to demonstrate compliance – a significant part of which will be the need to adopt agile software solutions that are able to adapt to the business transformation.

Third: Software with a 360 degree view

With increased industry involvement in the support chain – as well as new technology – defence organisations need better control and visibility over increasingly fragmented logistics operations and services. A full 360 degree view of defence operations is needed if organisations are to become fully protected and better informed military ecosystems – particularly pertinent in today’s unpredictable geo-political landscape.

Defence departments will also have to continue to become more business-like in the way they operate – balancing value for money with operational effectiveness and safety. One of the leading examples of this capability is Enterprise Operational Intelligence part of IFS applications, which allows defence organisations to map, monitor and manage the entire support chain or defence enterprise.

.the future’s now – the 6th generation

In 2016 and beyond, organisations will need to embrace new technology and the shifting geo-political landscape in order to become fully protected military ecosystems, or risk disrupting operational effectiveness.

My prediction is that the future will see a 6th generation of logistical solutions which will be characterised by several factors:

  • The soldier, their equipment and the fully integrated support chain will allow for an increased agile response to changing tactical situations
  • Simple, precise information delivered effectively to soldier and commanders – enabling real-time, intelligence-led decision making
  • Real-time optimisation – E2E but as the ‘Logistics Support Enterprise’ or ecosystem
  • Access to quality performance data that is critical to its process of continuous equipment improvement
  • Less Military/Industry IS solution islands – moving towards solutions where data is contractually shared across a project/platform and encompassing a joint strategy rather than point KPI performance

But the driving theme and IFS belief is that we should consider the soldier out in the field in all this prediction and speculation. Military programs have too often imposed functionality-rich solutions onto the soldiers, who don’t want – or need – to be bothered with complex functionality and information management. These new developments need to ensure that the soldier in the field has access to the right information, in the right format at the right time – enabling them to execute their task effectively.








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