If a Royal Navy submarine requires a spare part or munitions, the equipment must be supplied without fail and, most importantly, on time. And it is the job of FSL Logistics to ensure that whatever the armed forces need, they get it when they want it, and where they want it. After all, the submarine will only surface at an allotted time and if the equipment is not ready and waiting it will not hang about.
FSL Logistics, part of the Services Directorate division at Fleet Support Ltd (FSL), came into being two years ago when FSL began a new 11-year, £1Bn contract with the Ministry of Defence (MoD). The new contract took in the ship repair work, ship engineering and support, waterfront services, facilities management and logistics and associated activities.
Since the new contract started just over two years ago, cost savings of 25% have been generated for the MoD.
FSL, a joint venture of BAE Systems and VT Group, was created in 1996 to compete for privatisation of the Portsmouth-based HM Naval Base’ ship repair element. Its bid proved successful and FSL took over the work from the MoD in February 1998.
The renewed and much larger contract came into effect from September 2002.
The group has recently been restructured and now comprises two main operating divisions – Ship Support & Engineering, which looks after ship repair, fleet time engineering and technical services, and Services Directorate, which handles logistics, facilities management, waterfront operations and information systems.
It has an annual turnover of £140M, and about 1,800 employees including 300 Royal Navy staff. An additional 550 state employees transferred to FSL, which now has state and private contractor employees working together. State staff are paid by the MoD.
FSL Logistics operates 20 acres of covered warehousing, providing 90,000cu m of storage space at the Portsmouth Naval Base, and the MoD has “first call” on storage at the site. About 80% of the Surface Fleet’s non-explosive stores requirements are housed at the site, which is also certified to store munitions.
The MoD work fills three-quarters of the facility – about 285,000 MoD line items are stored there – and FSL Logistics wants to use the remaining spare capacity for commercial activities to generate extra income. There is potential to house £1.4Bn worth of stock in ten compartments within the warehouse. Each compartment is rated to contain a fire for up to four hours.
As the nature of the MoD’s work is time-sensitive, and very little warning can be given for a part to be sent out to the field, FSL Logistics uses the latest in automation technology to cope including conveyors and automated gondolas while the materials handling equipment is a mix comprising Hyster, Jungheinrich, BT Rolatruc and Linde, which are leased to the MoD by Barloworld.
The major part of FSL’s logistics business is generated via its One-Roof Complex which houses the freight centre, two semi-automated General Purpose Stores and a fully automated Miniload system. On arrival at the Portsmouth Freight Centre, all goods are recorded before being moved into the General Receipt Area.
Mel Davolls, head of logistics at FSL, comments: “This is the first point of call for all deliveries, and everything is recorded here on the Warehouse IT system (WITS). If the product is for another warehouse in the Base, the driver is redirected after his details are recorded onto the system.” Having all been logged, the goods are moved into the General Receipt Area. The checks – of which there are up to 15 – also give the MoD visibility that a product has reached the warehouse.
The General Receipt Area checks anything between 5,500 and 6,500 receipts a month. A Receipt can comprise one box, one pallet or even 100 pallets, depending on the type of item being delivered. Two IT systems are used here – WITS and CRISP (Comprehensive RN Inventory Stores Project).
Goods that can not be immediately brought to account, says Davolls, are “quarantined” in nearby Link 51 racking. Also, if any “suspicious” packages were to be found, FSL would bring in MoD police, says Davolls. And he adds that to maintain tight security drills are carried out in the form of a minimum two bomb alerts and two fire drills a year.
Once the goods have been checked and inspected they are then moved on via pallets to either of the two General Purpose Stores (GPS) or the Miniload system. At this stage each pallet also receives a barcode.
One GPS is adjacent to the Freight Centre and the pallets are moved using electric hand pallet trucks. Two shuttle cars take the pallets to their designated high-bay racking aisle where Cleco cranes (there are four of them) are used to place them in their allocated positions in the narrow aisles. There are more than 24,000 pallet positions – 22,800 that can each hold 1,000kg and 1,600 locations that can take 2,000kg.
The second GPS and the Miniload are linked to the Freight Centre by a Tunnel which transfers pallets via nine Gondolas carrying out 40 cycles per hour. Once in the GPS, pallets are transferred to their high-bay racking aisle by one of nine Automated Guided Vehicles (AGVs). This GPS is compartmentalised into five bays which includes the ability to store items up to a maximum of two tonnes, 12m high.
Items required by the Royal Navy are requested via the MoD. The order, says Davolls, is inputted into CRISP and then into WITS. The information is then relayed, via the warehouse entering civvie street!FSL Logistics has recently embarked on conquering the commercial logistics market as it strives to achieve a 5% year-on-year annual growth rate.
Claire Doutch, commercial executive at FSL’s logistics department, says target areas include manufacturing, automotive and electrical sectors, with the aim being to provide a one-stop shop to customers.
She says that pursuing the commercial logistics market “is something that we have to do”. Doutch explains: “We recognise that there are assets here, there are facilities and they are under utilised so it’s an ideal opportunity to spread the overheads of Portsmouth Naval Base a lot further. We recognise it is competitive but we believe we’ve got some strong differentiators with the partnering contract and an incredibly secure site here. We feel we have something that we really can offer and we’ve had successes so we’re obviously right, and we hope to be proved even more right to a larger extent.”
Oddly enough, one of the first commercial contracts that the organisation has won is a contract to store surplus MoD equipment held by UK Surplus, part of defence disposal group Liquidity Services. An extra 40,000 items, such as clothing, bolts and sophisticated ship systems, are expected to pass through the warehouses.
Other new commercial contracts are with Fujitsu, BAE Systems, Denholm, VT Shipbuilding and Rolls-Royce.management system (WMS), to an operator in a narrow aisle forklift truck who can then locate the pallet containing the required item. The WMS was supplied by FKI Logistex.
The pallet is moved by the AGV to a conveyor and on to a work station where another operator picks the required product and places it in a movement pallet before placing it on the Thyssen automated gondolas and taken to the packaging facility and despatch. The Miniload uses the same systems and proccesses as the two semi-automated stores. The items are generally small parts which would traditionally be housed in tote boxes within Steel Bin Equipment (SBE).
Davolls says the area currently holds 178,000 items here, covering the full range of Naval equipment support. The items are stored in trays containing between one and 24 locations per tray. In total there are 55,000 trays with up to a maximum of 392,000 different locations.
The store is divided into two “fire compartments” with three aisles per compartment. As FSL works 24/7 and has “very much a just-in-time operation” and FKI engineer is permanently on site to ensure any system breakdowns are sorted out quickly – it is also within FKI’s interest to ensure any systems are up and running as it incurs penalties on downtime. “We must meet flights at RAF bases and civil airlines on time,” explains Davolls.
Trays are taken by conveyor to one of 12 workstations where the operator completes the Demand process and places the orders into a tray and onto a pallet for transfer via the Gondolas for packaging and despatch. Davolls explains that the three IT systems are integral to the success of the overall operation. CRISP provides all the information required of a particular item, such as shelf life, HAZ category, whether QA documents or Test Certificates are required. WITS informs the operator of the pallet in which the required item is held, and the WMS tells the operator where the pallet is located.
FSL Logistics has just installed a new Vanderlande conveyor for the packing line, which was previously done manually. Product moves onto the conveyor and leaves at one of 19 chutes that cover 57 different customers. Products that have priority over everything else use a separate line.
Once packed, products then go to despatch having been logged onto RIDELS, the Royal Navy’s invoice delivery system. The products are then despatched by road to link into the MoD’s Freight Distribution Service (FDS) covering Devonport to the West and Faslane to the North via the hub at Bicester.
FSL Logistics uses commercial couriers and contractors, and its own vehicles for deliveries around the base – the company has a fleet of 350 vehicles ranging from cars up to 40-tonne articulated lorries. For customers overseas, low priority goods, deliveries are via sea Fleet support Ltd at a glancelThe operation was created in 1996.
It is a joint venture between BAE Systems and VT Group.
It operates a fleet of 350 vehicles.
It started its first MoD contract in 1998 involving ship repairs.
The group comprises two divisions – Services Directorate and Ship Support and Repair.
Group turnover is £140M a year.
There are 1,800 staff, of which 300 are Royal Navy employees.
Its largest contract is with the MoD – the 11-year deal is worth £1Bn. freight while urgent goods are moved by air.
A major contributor to the success of the operation is the continuous collaboration between FSL Logistics and the MoD. However, while FSL Logistics has the freedom to manage the contract it does have set criteria that it must meet. There are also clear incentives for the company to try and out perform. These come in the form of Target Cost Incentive Fees (TCIF) and key performance indicators (KPIs).
Commenting on the KPI, Claire Doutch, commercial executive at FSL’s logistics department, says that the KPIs are there for FSL Logistics to maintain levels. “If we slip, then MoD keeps the money until we catch up.” The KPIs have been exceeded despite the privatisation, IT failures, the second Gulf War, redundancies and increased tasking.
The TCIF is designed to drive the private contractor and customer towards the same goal in terms of reaching a happy medium between the third-party service provider’s profit level and the client’s cost.
However, that does not seem to be too much of a concern – FSL exceeded the targets that the MoD set it for “year five” within 18 months of the new contract starting.
Perhaps the most ardous task that FSL has faced has been changing the working practices having inherited the existing MoD workforce when it won the contract. Back then, the company found that while the workforce was “excellent and experienced” as well as “multi-skilled” the salaries, overtime and pensions were higher than the industry norm, there was lower productivity and restrictive work practices. In order for FSL to become competitive and enter the commercial market place, there had to be change. FSL adopted a sympathetic and patient attitude and won the workforce over, even though there were redundancies. Today, sickness rates have fallen to 3% and productivity has improved.
While FSL enjoys a collaborative partnership with the MoD it has also benefited from the military organisation’s investment in new systems. The MoD has invested in the “one-roof” operation including updating WITS to account for FSL’s commercial activities. n