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Maritime Logistics Community News : December 2008
48 NAVY SUPPLY NEWSLETTER SPRING 2008 Support Chain Transformation – A British Approach Exchange postings to the United Kingdom (UK) can be highly rewarding. This may seem an obvious statement; but usually such an observation is founded upon a travel log of European adventures and not necessarily the professional benefit of the experience. Whilst my family and I have been fully committed to enjoying Bath and filling our passports with European stamps during our two year exchange in the UK, this posting has also provided me with a revealing first hand view of one way the UK Ministry of Defence is tackling support chain transformation. This article provides an overview of their approach. First some background. The DMO’s equivalent in the United Kingdom is Defence Equipment & Support (DE&S). DE&S headquarters is at Abbey Wood in Bristol. This organisation is in its infancy, having been formed in April 2007 by the amalgamation of the in-service support and acquisition organisations. This merger will sound very familiar to those who experienced the creation of the DMO. The DE&S has a budget of around £16bn (43% of the Defence budget) and is staffed by 29,000 personnel. The equivalent of a DMO System Program Office in DE&S is an Integrated Project Team (IPT). The team in which the RAN exchange post resides is the Equipment & Support Continuous Improvement Team (ESCIT). ESCIT’s mandate is to work with Integrated Project Teams to design and implement more efficient and effective support solutions for MOD equipment and systems. ESCIT is headed by a one star and consists of around 100, predominantly civilian, personnel. The engine of the team is the 70 or so O5 equivalent civilians and military officers who are trained as in-house support chain consultants; known as Support Solution Specialists. This team of consultants has the capacity to tackle approximately 170 projects over a five year period. ESCIT is successful, having recorded £1bn in agreed efficiencies during its first five years, and around £100m per year since. The following characteristics have contributed to this success: • Standardised Processes. A rigorous gated process is used to define and investigate potential projects, quantify the benefit of each, agree the deliverables and jointly deliver the outcome with the Integrated Project Team. • In-House Tool Development. Tool development has resulted in applications that assist Integrated Project Teams make decisions that support optimised resource allocations. Optimisation is usually considered in terms of a trade-off between cost and equipment availability. BY CAPT IAN MURRAY, RAN Captain Ian Murray was the ESCIT Performance Manager and member of the ESCIT Management Board during his two year exchange with Defence Equipment & Support in the UK Ministry of Defence. He completed his exchange in December 2007 and is now serving as Director of Logistics in Navy Headquarters. • Having Options. A range of project types are possible. Simpler projects are point solutions such as inventory rationalisation or lean operations implementation, whilst more complex projects may transition equipment or a system to a new support solution. The most complex type of project is an integrated methodology that transforms the business operations of an Integrated Project Team. This approach is called Optimised Support Planning and is derived from the Sales and Operations Planning methodology used in commercial industry. Optimised Support Planning enables informed trade-off decisions to achieve improved equipment availability without increasing the total cost. • Tracking the Benefit. The financial benefit of each ESCIT support solution project is forecast at the outset and certified at the conclusion of the project by the leader of the Integrated Project Team and the Director of ESCIT. This benefit is logged in a central system and is used to justify the investment made by DE&S in ESCIT. • Academic Basis. ESCIT has a partnership with Cranfield University. Each consultant undergoes post graduate training with the university in subjects such as lean supply chain management, supply chain relationships, project management, business strategy, financial analysis and change management. This provides an academic basis to ESCIT work. • Knowledge Transfer. For five years the team worked alongside commercial supply chain consultants who were responsible for delivering projects and also transferring their knowledge to ESCIT Support Solution Specialists. Internal expertise has grown to the point where external assistance of this nature is no longer utilised. The Support Solution Specialists also have a responsibility to transfer knowledge to Integrated Project Team staff as a project outcome. • Reward. There are three developmental levels of Support Solution Specialist. Those who reach the highest level are awarded a retention allowance worth £3,000 per year. Promotion prospects for Support Solution Specialists are also very good. • Leadership Support. The personal support of the CEO of DE&S and his Board is fundamental to ESCIT success. So what does it all cost? To run the team each year it costs about £7m which includes salaries, external training, travel & subsistence, retention allowance and external consultancy assistance. The forecast benefit that