During the Cold War, Britain’s Armed Forces were largely in static defence locations and with a few exceptions (Cyprus, Hong Kong) based mainly in the UK and West Germany. Each Service had its own logistics methods and each its own depots, warehouses and transport system.
Warfighting stocks such as fuel, ammunition, rations, spare parts and medical kits were held close to where the fighting was expected to take place – there would be little time to replace stocks from UK depots.
When the Cold War ended, the Services were massively cut back. Yet despite that they have been involved in various wars and peacemaking/keeping operations in Europe, Africa and the Middle East. These “Out Of Area” (OOA) operations have, over the years, led to a need for increased Joint-Service operations which has led to several Joint-Service Agencies being set up to try and cover overstretch across the armed forces.
The OOA operations highlighted the need for new logistics systems as pre-positioned war stocks were no longer a workable proposition – there was no way of knowing where the next theatre of operations might be. Thus the Defence Logistics Organisation was established in 2000 to develop a modern, flexible and efficient supply chain and which could operate worldwide.
Several major faults in the armed forces supply chain had become apparent in the war to liberate Kuwait in 1991; particularly the need for consignment tracking was highlighted. As a result, the Ministry of Defence (MoD) procured two tracking systems – Visibility in Transit Asset Logging (VITAL) for the Army and Air Force, and the Royal Navy Invoicing and Delivery System (RIDELS).
Both are MoD-developed systems tailored for each Service and progressively improved, but were limited by dependence on other IT systems not designed to be part of a coherent supply system. Since 1991 some £550M has been spent on the two systems.
At the start of Operation Telic (the second Gulf War) the UK decided to buy elements of the US Total Asset Visibility (TAV) system to improve stores tracking. This electronic tagging of consignments and reading by radio signal could be cross referenced to VITAL data to identify each container or pallet. This was done remotely by secure military internet. TAV equipment was installed at sites in the UK, Germany, Cyprus and the Gulf.
TAV was only partially successful because the system was rushed into service and only introduced part way through the deployment. It was also hampered by having a limited number of systems and trained operators, and it lacked a dedicated communications capability. Also, TAV could only track individual containers or pallets as far as Kuwait and the consignments in them were not TAV-tagged individually, so once loads were broken down for onward shipment to individual units, visibility was lost.
This led to MPs asserting that sufficient supplies of lightweight desert boots, desert camouflage uniforms and body armour had been shipped and was in the theatre of operations, which was true but not that anybody knew where the kit actually was within the theatre, which the politicians neatly side-stepped.
Also of concern was the lack of suitable equipment to move and store temperature critical medical supplies and to track such consignments. This led to medical personnel having no confidence that some drugs and vaccines had been kept at the correct temperature while in transit and so they were disposed of and replaced.
The lack of visibility of stores in transit was not the sole problem however. There was also insufficient infrastructure. The MoD quickly bought 20 container handling vehicles to deal with the 9,100 containers shipped, but only three of them were shipped to Kuwait. Lack of suitable RAF strategic transport aircraft was addressed by hiring in Russian freighter aircraft able to carry large or awkwardly shaped loads. Obtaining a fully integrated tri-Service supply system had been a priority project for the Defence Logistics agency since its inception in 2000. The DLO developed a programme called the Defence Stores Management Solution on which £120M was spent, including £6M on an In Transit Visibility system before the whole programme was scrapped as being both unaffordable and too technically challenging.
In 2002 the DLO set up the Future Defence Supply Chain initiative (FDSCi) to assess options for managing and operating the non-deployed Defence Supply Chain to reduce costs of ownership, while simultaneously improving the level of service to the client and enhancing operational capability. While Operation Telic in Iraq was not instrumental in the creation of a long needed programme such as FDSCi, lessons learned from Telic in terms of stock holdings levels and movements and the ability of the supply chain to react quickly to rapid changes in circumstances have influenced the final shaping of FDSCi.
The initiative was set up to deliver a private sector solution, the basic premise being that most of the supply chain responsibility would be contracted out. However the MoD came under intense pressure from the trade unions which resulted in the decision to set up and resource two in-house teams that would bid for the work against two civilian consortia, Defence Supply Chain Solutions comprising Exel and defence specialist Devonport Management, which manages Devonport Dockyard for the MoD. The other civilian team, Defence Logistic Solutions, consisted of TNT Logistics which teamed up with BAE Systems (previously British Aerospace) and Westland Helicopters, both of which have experience with MoD business. Final bids were submitted in December 2004 and in late July 2005 the MoD announced that an in-house option had won.
Announcing the decision, Secretary of State for Defence John Reid said: “This in-house option will help improve logistics support for the front line, significantly enhancing the vital support we provide to soldiers, sailors and airmen. These changes are the result of three years of detailed work involving management, the trade unions and staff. They will enable us to better cope with surges in demand and ensure that goods and equipment reach the right location at the right time.” At present the Armed Forces Supply Chain costs more than £300M a year to operate, Reid asserted that the improvements will reduce costs by £50M a year by 2010 and save an estimated £400M over the next ten years overall.
The Defence Logistics Organisation also outlined that the decision would streamline the existing storage and distribution network with the closure of three of the five largest storage depots, an expected loss of 2,000 civilian jobs and a reduction in scale of other establishments in the network over the next five years. Storage depots cited for closure are Stafford in 2007, Llangennech in 2008 and Longtown in 2009. Existing depots at Bicester and Donnington will be improved.
New practices and equipment will be called into play, as a DLO spokesman explains: “The two in-house options were basically based on the premise of “Do it better” or “Do it different” and the “Do it different” option won. The old scheme used the traditional goods-in and goods-out way of handling things and people worked on one side or the other but not both. Under the new scheme they will merge and there will be an improved flow. Also, rather than stacking there will be modern handling systems such as roll cages and live shelving which will also speed things up. Lastly every inventory item will be delivered to a virtual gateway where it will be RFID-tagged. Once in inventory it will remain visible to supply chain managers as it progresses through the system to the end user.”
And what about the logistics companies that bid for the contract? Exel is “naturally disappointed that the DSCS joint venture has proved unsuccessful in its bid for the MoD UK supply chain contract after a long and complex tendering process. The decision has no impact on any of Exel’s existing business with the MoD, which will continue unchanged”. TNT Logistics managing director Neil Crossthwaite says: “It’s always a disappointment if any prospective customer goes to market and isn’t persuaded that they should give us the work. This was a particularly large opportunity so it was a particularly large disappointment. We put a lot of effort and resource and time into it and they decided not to go with our solution, but, that’s the business we’re in, that’s life.” Trade union Amicus says the decision is “a sweet and sour victory”. Privatising the supply chain as originally proposed would have been worse for its members.