Military could save millions with better supply chain IT

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The Ministry of Defence needs to bring in modern information systems to beef up the supply chain for military operations, such as those in Afghanistan, a new report by the National Audit Office concludes.

The report, “The use of information to manage the logistics supply chain” found that better information would allow more goods to be carried by surface transport rather than air. Transferring ten per cent of items sent by air to Afghanistan to surface delivery routes would save about £15m per year.

“The department made 130,300 deliveries to Afghanistan in 2010. Indeed, the amount of time troops wait for supplies has declined since the spending watchdog’s 2009 report on support to high intensity operations,” the NAO said.

“However, the Ministry of Defence is still not meeting its own performance targets. Highest priority items sent by air should arrive in theatre within five days. However, in 2010, this was achieved in only around a third of cases.”

The NAO found that failure to deliver the right item on time was primarily due to items being unavailable for transport. This meant that either the department was not accurately forecasting usage and repair rates to ensure the right amount of stocks were held; or suppliers were unable to respond to demand.

And it said that while the department collected much of the information required, gaps remained.

“Moreover, the department is unable to reconcile coherently the information it does possess on the location of its assets and its inventory and supply chain costs. The department’s use of information to manage its supply chain falls short of general logistics industry best practice.”

One consequence of this is that to ensure that personnel have the items they need, more material than necessary is being sent by air, including many items which have predictable demand.

“While surface routes are not suitable for all types of equipment and can carry greater security risks, at least 90 per cent of the Department’s total transport costs to Afghanistan comes from air deliveries – transferring just 10 per cent of items sent by air to Afghanistan to surface delivery routes would save an estimated £15 million per year.”

Amyas Morse, head of the National Audit Office, said: “The Department urgently needs better supply chain information systems with the appropriate skills and processes to match. It currently keeps the armed forces supplied by either stockpiling more than necessary, sending too many routine items by air, or both. This ties-up precious resources that could be better used to support troops.”

MP Richard Bacon, a member of the Commons public accounts committee, said: “The MoD isn’t collecting enough of the information it needs to manage the supply chain properly, and some of the MoD’s inventory management systems pre-date the fall of the Berlin Wall and are no longer supported by the manufacturers. If these systems fail, the consequences at the front line could be severe.

“While the military supply chain plainly faces challenges that commercial operations don’t, there is also much that is the same. Too much of the MoD’s supply chain is operating on a wing and a prayer and the ministry needs to do more to drag its logistics operations into the 21st century”.


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