German army saves millions in outsourcing deal

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The German army has beaten its savings targets since outsourcing its clothing management. Savings of some £127 million (145m euros) more than the targeted savings of £630 million (718m euros), during the 12-year contract period, have been achieved so far.

Now in the eighth year of the contract, the public private partnership LHBw, which is part of the Cologne-based LHD Group, continues to supply the clothing and equipment needs for some 900,000 German soldiers, and 110,000 civilian co-workers. 

In 2009, LHBw supplied 252,000 soldiers and 18,000 civilians with more than 17 million individual articles (including helmets, boots, gloves, combat knives, tents, rucksacks). The service included measuring, fitting and equipping some 79,000 recruits. Over 68,000 soldiers were equipped with C&T (supply kits which include gas masks for protection against biological and chemical warfare) for operations or provided with a special range of articles according to their respective task.

A quality clothing management service is essential to the wellbeing of the troops and the effectiveness of a military unit. As such, the uniforms must be made to measure, durable, fit for purpose, clean and supplied when needed.

The LHD group co-ordinates a range of services from textile research, innovation scouting and clothing design through to procurement, quality control, storage, distribution, operating service ports, wash and laundry services, repair maintenance, return logistics, reporting, demand planning, cost control and administration.

Over the years, the group has been able to improve the efficiency of the supply and delivery system, which has helped safeguard against stock-outs. 

Part of the savings made has been attributed to a more efficient refurbishment and recycling of uniforms for nine-month conscripts. Purchase prices have been reduced by some 19 per cent. The overall annual purchase volume now totals approximately £87 million (100m euros). Inventory levels have also been slashed by 59 per cent from £549 million to £224 million (625m to 255m euros).

LHBw runs seven warehouses with 83,500 pallet slots for the German forces. The delivery quality and the satisfaction of the troops with the clothing service has improved, with more than 99 per cent on-time service delivery for the quarterly supply of recruits being achieved.

The outsourcing of the clothing management has also boosted supply chain transparency in areas such as throughput, inventory, distribution processes and costs.

The LHD Group has since won contracts with the US military forces in Germany for value-adding services, and the German Federal Police Force, and in 2009 for the provision of NBC protective equipment to the armed forces.

In addition it trades in new and used military and non-military apparel, including sport wear, and provides clothing services to high ranking officers in Germany who buy their own uniforms with a clothing allowance. This service comprises all articles corresponding to class A uniforms (as well as shirts, shoes, underwear etc.). The money the officers receive for wear and tear in addition to their salaries is held in trustee accounts by LHD. The entitlement currently amounts to £13.60 (15.50 euros) per month per officer.

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