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Maritime Logistics Community News : Autumn 2010
24 NAVY SUPPLY NEWSLETTER AUTUMN 2010 Defence's current logistics infrastructure is widely dispersed, costly and inefficient, falling short of contemporary commercial practice. Facilities are ageing with some dating back to World War II. This has resulted in inefficiencies due to layout, process and technology use. There is an urgent need to create greater efficiencies and drive productivity benefits in the provision of logistic support. The Defence logistics system must be capable of providing integrated end-to-end management in order to maximise effectiveness and minimise costs. In the Defence White Paper released in May last year, the Government outlined the importance of fundamental reform to the delivery of the force structure outlined in the White Paper Force 2030. The Defence logistics community has been provided with clear direction to undertake deep reform in support of the wider Defence Strategic Reform Program. Deep reform is essential to maximise productivity gains and provide improved logistics support. By providing a more resilient, flexible and responsive logistics system and supporting infrastructure, greater efficiencies and productivity gains will be realised. We will be better placed to support operations and sustain capability, while at the same time contribute to the savings that need to be made in the next decade. We will be introducing best practice systems and facilities that will be capable of rapidly responding to routine and priority logistics business in accordance with industry benchmarks. The Defence logistics system will be flexible, capable of change and seamlessly integrate with weapon system supply chains. Defence Logistics Services Project (DLSP) The Defence Logistics Services Project, has been formed to progress proposed rationalisation of the Defence storage and distribution network that was announced as part of Government's Force 2030 White Paper. Defence is investing $630m to deliver modern, purpose built wholesale storage and distribution facilities on Defence land which will employ efficient, best practice processes and improved technologies. This will result in significant reductions in management overheads and efficiencies through improved inventory management, and more streamlined processes and procedures. Outdated warehousing facilities will be replaced and the 24 wholesale warehousing and distribution sites will be consolidated into seven that align with Australia's transport network at Darwin, Townsville, Amberley, Bandiana, Edinburgh, Perth and Moorebank. They will be supported by seven smaller specialist sites at Hobart, Puckapunyal, Oakey, Williamtown, Richmond, Nowra and Wallangarra to support specific Defence capabilities. This will more than halve the number of warehouses we operate; from over 200 now to less than 100. This will result in a 22% reduction in cubic capacity and a 31% reduction in square meterage. In part, the rationalisation of storage and distribution facilities will be made possible through other, complimentary, reforms within Defence such as Adaptive Army reviewing holdings necessary to meet deployment requirements and the optimisation of inventory being conducted by the Defence Materiel Organisation (expected to provide gross savings of $700m across the decade). The running down of excess inventory is expected to reduce stock holdings in the order of 15 per cent. Collectively this work is to be taken forward in tandem with the tendering of Base Logistics Services, currently provided through the Defence Integrated Distribution System (DIDS) contract, and be aligned with the smart maintenance reforms for Land Materiel Maintenance activities. The resultant logistics system will be both cost effective and efficient in order to maximise productivity gains and achieve $350m in mandated savings over the decade with ongoing annual savings in excess of $50m expected to be realised. DLSP is driving towards completing an Interim Business Case in the second half of 2010. The Interim Business Case will provide sufficient information about value for money considerations to assist the government in making a decision on a preferred procurement option, whether that be a Private-Public Partnership or a traditional procurement where the public sector retains ownership and responsibility for construction and ongoing management of the project. Automated Identification Technology (AIT) In order to effectively and efficiently plan, execute and monitor logistics and make timely, accurate and effective decisions, relevant information must be visible to commanders, managers and logisticians. Fundamental to achieving effective visibility is that items and the key data surrounding those items must be identified correctly in the logistics information system. Given normal human error rates, where possible this identification should be automated. Tightly linked to the modernisation of our wholesale storage and distribution network, is investment in Automated Identification Technology. The activities planned include the capturing of volumetric and weight data, greater use of barcodes, and the introduction of Automated Data Collection. Much of the AIT program was covered in the previous edition of the Supply Newsletter. Defence is investing $70m in Automated Identification Technologies. The Barcoding project has developed a barcode structure and is progressively barcoding the current Defence inventory, using an approach that targets those inventory items that will return the best productivity gains in the supply chain and/or would benefit most from improved inventory accuracy. Defence Strategic Logistics Reform Program Defence's current logistics infrastructure is widely dispersed, costly and inefficient, falling short of contemporary commercial practice. BY LCDR ED LAWLER, RANR