Just enough, just in time: the use of information to manage the logistics supply chain

The chain by which military operations, such as those in Afghanistan, are supplied with essential equipment and supplies would be much more efficient if directed by a modern information system supported by appropriate skills and procedures.

The National Audit Office (NAO) has reported today that the Department faces considerable challenges ensuring front line personnel get the material they need. The NAO last reported on this subject in 2009 in HC 508 (2008-09) Support to High Intensity Operations. Despite these challenges, 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. However, the MoD 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. Failure to deliver the right item on time is primarily due to items being unavailable for transport. This means that either the Department is not accurately forecasting usage and repair rates to ensure the right amount of stocks are held; or suppliers are unable to respond to demand.

Good business intelligence is crucial if the Department is to succeed in running an effective and efficient supply chain. While the Department collects much of the information required, gaps remain. 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 lack of information is, 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% of the Department's total transport costs to Afghanistan comes from air deliveries - transferring just 10% of items sent by air to Afghanistan to surface delivery routes would save an estimated £15 million per year.

The Comptroller and Auditor General, Amyas Morse, is the head of the NAO which employs some 900 staff. He and the NAO are totally independent of Government. He certifies the accounts of all Government departments and a wide range of other public sector bodies; and he has statutory authority to report to Parliament on the economy, efficiency and effectiveness with which departments and other bodies have used their resources. Amyas Morse said yesterday, "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."

The full NAO report can be accessed here.