From ‘Just in Case to Just in Time’: Creating a logistic program that works
Doing logistics well demands a degree of agility, particularly for large government departments focused on accomplishing critical missions. Leveraging its decades of expertise in military logistics and IT as well as best practices from industry, Team Leidos is on target to generate savings of over £500M for the UK Ministry of Defence (MOD) in its supply chain.
Team Leidos, a partnership led by Leidos and including Kuehne + Nagel (KN), TVS Supply Chain Solutions and others was established to bid for the MOD’s £6.7billion Logistics, Commodities and Services Transformation (LCST) contract to modernise their logistics programme and to generate over £500 million in savings to the UK taxpayer. The Team’s goal is to bring world-class supply chain management tools and practices to the MOD through visibility across the MOD’s entire supply chain, automation of processes, and introduction of state-of-the-art technology to UK military logistics.
The new contract is the latest in Leidos' multi-billion-dollar portfolio of logistics-related projects, including as diverse as integrated logistics support for the United States military, maintaining scientific bases in Antarctica, to packaging and kitting for NASA.
Once upon a time, logistics mainly involved moving materials from one location to another. Today, it is a multi-billion-pound business that has critical implications for the industries it supports. In defence, lives depend on it.
Multi-national companies such as Walmart and Dell have made a science of ‘just-in-time’ inventory management, reducing inventory to levels that could not have been imagined even a decade ago. Elements of defence procurement processes, however, have remained rooted in tradition rather than up-to-date principles of supply chain management.
For the military, actual day-to-day supply chain practices can often resemble The Dirty Dozen more than Dell. Stock in warehouses is often held back in case demand surges due to a rapid deployment or emergency. But this can create ripples down the line for distribution and cost, resulting in shortages and undocumented inventory, making it impossible to locate an item when it’s really needed.
“The MOD is moving from “just-in case to just in time”, says John Gaffney, Head of Business Development and Strategy for Leidos Europe. “We recognise that military logistics cannot be leaned out as much as industry – at the end of the day we do need buffer stocks to enable the Front Line Commands to react to very short notice taskings anywhere in the world”.
“The contract had us take on the operation of some of UK MOD’s logistics, depots and warehouses ‘as is’, and ensure that demanding performance targets were met,” explains Gaffney. A staff of 1,200 had been working in MOD procurement, distribution, and warehouses, became Leidos, KN and TVS employees. “We flipped the switch without any impact on service,” he says.
An important milestone was reached in April 2017, with the opening of an 850,000-square-foot Defence Fulfilment Centre to store the majority of Defence inventory for the UK Armed Forces. “Construction was completed in 11 months using an innovative facility design from KN, and so far, the project is meeting or exceeding its goals”, says Gaffney.
“We have been filling in the IT, and are already storing some stock at the facility, that will eventually hold 75 percent of the UK MOD’s NATO Stock Numbers (NSNs)” he says. This next phase is set for completion in early 2019.
Part of the job involves moving items that are most frequently requested to the new facility, while rationalising inventories and disposing of old, obsolete or unnecessary items. This involves surveying existing inventories, and building a database that will show how often a particular item is requested, providing visibility throughout the whole supply chain. “Having a comprehensive understanding of what you have, where it is, and who has asked for it when, will lead to increased efficiency and lower costs, says Gaffney”.
Another challenge Team Leidos faced was that the current UK MOD logistics systems have been in use for up to 40 years and maintaining these is an increasingly difficult task. Charged with developing new solutions compatible with UK MOD’s legacy software systems, Gaffney says, “Team Leidos is building a new supply-chain management IT capability rivalling that seen at the world's leanest companies. Team Leidos will provide integration of a new Support Chain Integration Platform that interfaces with MOD legacy systems. It will also handle all software updates and maintenance. Drawing on its expertise in data analytics, Leidos will analyse the data in the system to develop insights that drive even greater supply chain efficiencies over time.
The project will automate as many processes as possible, so that all data is handled digitally rather than on paper. Training has been crucial in bringing approximately 1,200 MOD staff up to speed on new technology and efficient processes. The goal is not just more efficiency but getting better information to the customer. The programme's success hinges on being able to provide one version of the truth that all end users believe. Getting users to trust the system will be key to getting them to change past practices, which in turn can drive new efficiencies. Training is critical, especially when introducing people to new technology, new processes, and a significantly higher level of automation.
Team Leidos plans to semi-automate the Defence Fulfilment Centre with a MiniLoad Storage and Retreival System designed to handle stock-picking for the most frequently needed items, so staff will no longer have to retrieve them manually from shelves and bins; this will result in fewer errors and saves considerable time. High demand items will be stored in uniformly sized bins in racks up to 15 metres high. Robots will quickly pick the items to be packed and the system will reduce overall operating costs significantly.
However, as Gaffney notes, “One cannot automate everything. While the Miniload will handle the bulk of demands, it occupies a comparatively small amount of the total space. Anticipating the need for advances in technology, the facility has been future-proofed so we can house new systems.”
For now, the MOD project remains “focused and on track” for completion of the transformation stage in 2019, says Gaffney, allowing the UK MOD to do what it does best: focus on crucial security and humanitarian efforts.