Defence Fulfillment Centre at Donnington 'nothing short of transformational'
By Howard Wheeldon, Defence & Aerospace Analyst
A recent visit to the highly invested Defence Fulfillment Centre (DFC) operation that has been built at Donnington, near Telford, and that is at the heart of the Logistics Commodities & Services Transformation (LCST) programme that is run by Team Leidos was nothing short of an eye-opener for me.
As the vehicle designed to deliver the Ministry of Defence with considerable financial savings through a highly specialised and structured partnership team spread across all the various MOD logistics avenues, Team Leidos can in my view be very proud of what they have already achieved in the LCST programme over what has been a relative short period of time.
The new state-of-the-art DFC operation at Donnington is nothing short of transformational itself and, from end-to-end, this highly invested logistics system facility is extremely impressive.
The result of an £82 million infrastructure investment built on time and on budget, the DFC facility is already regarded as being a best-in-class industry standard facility in the UK.
The bottom line of LCST is about delivery, reducing cost by having better procurement processes, and by improving lead times to the end-user military customer. Efficient logistics operations require fully automated processes and these can only be achieved when you have a fully digitalized and robust strategic base.
In turn, automation must always be designed to simplify, to provide better coordination and transparency for the customer and user throughout whilst at the same time introducing and maintaining industry best practice. That is what LCST is about and what Team Leidos have already achieved and, following full service commencement in October 2019, what they will continue to achieve.
And while LCST is primarily about providing savings to the MOD user, improving service to the end-user and combining this by also providing cheaper and better commodities procurement and distribution, it is also about improving relationships whilst at the same time modernizing the supply chain and using less people. Finally, it is also about exploring wider benefits following full service commencement such as the DFC & Technology (e-Catalogue) on which I will write on another occasion.
Having wider market engagement within the procurement process and increasing the amount of available competition through encouraging SMEs can provide considerable cost savings if done properly, and this is already being achieved. End delivery requirement of what is procured or stored within the LCST process is not just to UK bases as it will just as likely be to operations in which UK armed forces are deployed.
With DFC and the military end-user customer benefitting from the development of a dynamic scheduling system that is already satisfying around 2,000 issues a day from the DFC and, roughly speaking, around 1,000 picks per hour from the system [75 percent of National Stock Numbers - NSNs) distribution from DFC will go out to more than 600 individual MOD locations in the UK and internationally.
Importantly, LCST has been about significantly improving information systems on the basis that better data allows better decisions to be made and planned. Team Leidos have designed new systems that enable visibility of near real-time data. No more half truths about expectations of delivery and timing – LCST in respect of provision of data and information both internally and externally, is formed on the sensible notion that better management information improves quality, reliability and trust whilst also saving time and cost. So, a complete end-to-end system that provides the end-user with one version of the truth and with transparency available throughout.
I am no logistics expert these days despite having been involved in this industry for a long time before my ‘city’ days had begun in the mid 1980s but it is not hard for me to see that what has been developed in LCST is a rapid and much needed digital transformation, a system that not only removes 30 years and more of what is often termed ‘technical debt’ and replaces this with one that is far more efficient, that is fully backed up, and also one that can interface with remaining MOD legacy based logistics systems through the Supply Chain Integration Portal (SCIP).
OK, so the title Logistics Commodities & Service Transformation may not slip off the tongue with ease but without it, UK Armed Forces would not be getting any of the kit and supplies that they need. In respect of the MOD having now outsourced transactional and logistics activities to Team Leidos, LCST has been really well designed in order to combine all MOD logistic commodities and services operation requirements.
For Team Leidos, LCST is a £6.7 billion contract that is spread over 13 years. When every aspect of planned development work is complete and full service commencement has taken place in October this year, LCST will combine 70 different warehouses managed on eight individual UK sites with the ability to deliver military materials to more than 600 military bases and other locations nationally and internationally and wherever UK armed forces might be deployed. More than 1,500 personnel within the four major subcontractors are employed on LCST.
The importance of the MOD having an efficient, cost effective and fit for purpose system of equipment procurement and distribution was long ago realised, but designing a more cost efficient and timely system that would be every bit as good as the best logistics based operation in use in the private sector whilst at the same time ensuring that there was no gap in service to the military, was never going to be an easy task. Thus the Ministry of Defence LCST programme was born in 2015 and awarded to Team Leidos with a brief to support the transformation of the UK’s defence supply chain.
A reminder of who Team Leidos are? Led by Leidos Europe as the prime contractor and with responsibility for all supply chain integration, information systems, business intelligence and customer relations management, Team Leidos comprises one of the world’s largest storage, distribution and freight operators in the form of Kuehne+Nagel; TVS is responsible for inventory management of defence clothing, medical, general commodities and food, together with Agility who are responsible for movement support services and total support force. Leidos Supply are responsible for all commodity vendor agreements and procurement.
Since 2015, the LCST programme has successfully delivered more than £1 billion worth of products to the UK military using leading procurement techniques with strong governance combined with an effective process of engaging the market and driving equal opportunity to all MOD suppliers across commodity sectors such as food, fuel, medical, general supplies and clothing. The requirement is simple – get the goods required and exactly where they need to be at the right price and right time.
From the start, the LCST programme committed to making it easier for new suppliers to engage with MOD tender opportunities. LCST inherited 182 Commodity Contracts in 2015 and since then Team Leidos has subsequently re-let more than contracts. These, coupled with off-contract arrangements, has increased the number of small and medium sized enterprises that supply into the MOD to grow to just under 50 percent of the MOD’s total commodity supply chain process. Importantly, since the start of the LCST programme, almost six in 10 of new on-contract suppliers are now SMEs – thus ensuring the widest possible competition and innovation for contracts and customers.