The support chain has traditionally used historical consumption data rather than activity plans to predict the future materiel demand requirements of the Royal Navy. The consequence has been excessive stock holdings for some items but poor availability of others. The project sponsor in Defence Equipment and Support (DE&S) recognised that there is modern Commercial off the Shelf (COTS) software that can account for historical usage and planned activity to produce a purchase plan more attuned to the likely demand profile.
Niteworks was tasked to bring relevant industry experience to bear to provide a Capability Concept Demonstrator (CCD) of a technology-enabled, integrated business management system (processes with a supporting COTS Information System), to demonstrate the potential capability to improve the supply of stores and support for the Royal Navy and identify key requirements and benefits.
How did Niteworks approach the task?
The team consulted widely across industry, including members of the Niteworks Partnership and targeted external subject matter experts (SMEs), to identify a suitable approach to improving inventory management processes. Working closely with Ministry of Defence (MOD) stakeholders leading related work elsewhere in DE&S, the team delivered two parallel work-streams: sourcing a COTS capability to deliver the CCD; and developing high level process diagrams.
A partner was selected to help develop the CCD based on their existing COTS offering to explore the impact on people, processes and policy to derive the cost-drivers and benefits of a technology-led solution. The CCD was used to create a purchase plan before demands were placed to ensure stock would be available for the required delivery dates. This was compared with data from legacy systems to identify cases where current processes would fail to make the correct recommendation.
At the same time, processes were developed, using industry best practice, to improve S&OP, provisioning, stock management and supply management. More detailed core user roles were identified to focus effort on targeted areas of activity rather than the current very broad roles. These were designed to exploit the significant opportunities for improvement presented by better information flows from the CCD.
What was the outcome?
The project successfully demonstrated the effectiveness of a COTS capability in incorporating plans into the inventory management process to improve procurement decisions and stock optimisation. A comprehensive set of user requirements was drafted to inform any future procurement of a full-scale solution, supported by information architecture to detail how existing MOD data could be used by a modern COTS solution. This has put DE&S in a position to move forward with proof of concept demonstrators that will benefit the whole enterprise.
Comprehensive inventory management processes were designed and roles defined, including a tiered workflow approach with auto-provisioning for fast moving, low cost items to allow staff effort to be focused on higher value issues and contract management. These have been recommended for implementation independently of the procurement activity for future IS, to embed best practice and deliver early benefits.
What were the benefits?
- integrating activity plans within a supply chain planning tool will result in a better informed provisioning plan and an optimised inventory
- incorporating planned materiel requirements into a 24-month rolling demand plan will deliver a 25% improvement in materiel availability and allow improved balance of investment decision-making
- a properly managed supply chain planning system will identify significant areas where excess stock is held. (The CCD identified approximately £270m in excess stock of consumables and £14m in surplus purchase orders)
- releasing stock currently previously held back for contingency could satisfy significant numbers of outstanding orders, leading to 10-15% reduction in demands not met on time