Report slams UK supply chain
The UK Ministry of Defence (MoD) could save some £15 million per year if it were to better use information to manage its logistics supply chain, a National Audit Office (NAO) report released on 31 March has revealed.
The report said that many items with predictable demand are unnecessarily being sent by air, opposed to the cheaper surface transport option, and it is estimated a £15 million annual cost saving would be made if 10% of air transport was transferred to surface delivery.
The NAO said that despite waiting times for supplies having declined in 2010, the MoD is still not meeting its own performance targets, with only 54% of the deliveries in this period having arrived on time.
The report highlighted two main errors: unavailability of items for shipping, due to inaccurate forecasting by the ministry; and its inability to manage the location of its assets, inventory and supply chain costs, due to the failure of information systems.
The NAO said the department is exposed to considerable risks in the supply chain if information systems fail, citing that some of the data systems are some 30 years old and no longer have the support of their manufacturers.
‘Troops in the field need the proper equipment to fight on the front line. However, they depend on a system where, for example, only half of all deliveries to Afghanistan arrive on time. It is even more worrying that only one third of urgent supplies reach their destination on time,’ said Margaret Hodge, Chair of the Committee of Public Accounts.
‘This is mostly owing to supplies not being available for dispatch, exposing failings in the [MoD’s] supply chain information systems and in its management of suppliers.’
Although getting supplies to the front line in sufficient time is important, doing this efficiently and cost-effectively is also imperative, said Hodge.
The report recommends that the MoD collect better information on the costs of the supply chain, and use this to control costs, as well as improving and upgrading all facets of the information data systems involved in these supply chains.
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