Cost Efficient Logistics Management in Defence

Gp Capt Anil Kumar
 

All problems  and situations in war are blend of strategic, tactical and logistics elements.

Experience in the recent wars has shown that Logistics has assumed the character of a dynamic force without which the strategic conception is simply a paper plan. Military logistics costs a lot of money, something that developing country like India can ill afford.  In fact, the concerns and challenges worldwide are the same, only the dimensions differs. The primary concern of even the progressive and developed countries like USA, UK, France and Canada etc. was the resource crunch. It has been a constant endeavour of all militaries to curtail expenditure. The challenge therefore is to somehow get ‘More for less’ to nullify the effects of limited resources. In our environment, the bottom line is that important aspect of an efficient material support for the military, has to be cost- effectiveness. 

Outsourcing 

The concern to extract best value for money has evolved certain new business practices in private world. Foremost of these is ‘outsourcing’. These practices involve identification of the cheapest source for the desired output. Observing the benefits of these practices advanced armies have started adopting these practices . Some of these  have been adopted by our defence forces  also. But these are on a very small scale and that too on ad-hoc basis.  

Core mission of any armed force  is to  fight war. It, therefore  should focus only on "core competencies" and outsource activities not critical to its mission. Activities not engaged directly in this mission should be classified as non-core and should be considered for outsourcing or privatization—if such services can be provided more efficiently and more cost- effectively by the private sector. 

It is well established fact that the cost of a man in uniform or even a government employee is much more than his counterpart in civil trade.  When there are constraints on resources – manpower and money, then it becomes natural to resort to outsourcing/ privatization.  In view of the budgetary constraints, outsourcing of logistic services in the Armed Forces has now become a necessity. 

Armed Forces can outsource any function from logistics to Human resources to Information technology to payroll processing to maintenance to even manufacturing. Outsourcing is one of the most rapidly growing areas. It is now a multi billion dollar industry. 

Advantages of Outsourcing

Main factors which are driving the military’s growing dependence on the contractors are

Economy

Firstly, the belief that for many tasks a contractor costs much less compared to uniformed personnel i.e. cost effective option.

Core Activities

 By outsourcing the routine logistics functions, commanders can exclusively focus their attention on their core activity i.e. ‘Operations’ and other strategic issues.

Advanced technologies

 With the technological evolution in progress there are many functions which need super specialization. A few contractors have achieved this specialization by virtue the technical expertise held by them. Armed Forces can take advantage of these technologies, which they might not be always able to do if they were conducting activity in-house since that would mean recruiting, training and maintaining additional specialized staff exclusively for that task.

Lesser liability

Moreover one can hire the services of the contractors as and when required and fire when not required. So the military avoids the cost of moving troops and retaining them for new assignments. In Bosnia and Kosovo during the 1990s, and more recently in Iraq, contractors such as Halliburton subsidiary Kellogg Brown & Root (KBR) carried out a variety of support activities for the U.S. military, obviating the need for the military to call up thousands of reservists.      

Competitiveness, Efficiency and Cost reduction

 To remain competitive, contractors are continuously looking to improvise their services and adopt best practices to make them more efficient.    As a result, these  tasks outsourced from these contractors ensures availability of efficient and  professional services at a much lesser cost, than if it  was provided from within the military resources. 

Disadvantages of Outsourcing

Outsourcing is not without some disadvantages and issues. Some of them are: 

Loss of expertise   Outsourcing of activity can lead to decrease or total loss of in-house expertise subjecting Armed Forces to becomes partially or totally dependent on a service provider.

Policy/procedure  Armed Forces need to modify existing policies and procedures or develop new policies and procedures to coordinate with service providers.

Military morale   Morale of uniformed personnel of the Armed Forces plays a very important role in outsourcing arrangement. They feel that to make them work alongside the civilian contractors is an infringement to their right of being an exclusive armed soldier.

Vulnerability of civilian contractors  Contractors are finding their way into every facet of operations. Where the United States once relied on contractors solely for logistical support, contractor personnel now maintain and operate systems supporting the combatant commander.

As the role of the contractor has expanded, they become more and more integrated into operations,  the contractor's proximity to the battlefront has decreased. As a result, the contractors may find themselves close to the forward edge of the battlefield conducting activities and face the same dangers that military personnel encounter.

Contractors, thus bring both advantage and vulnerability to zones of conflict. Today the civilian contractor, in greater abundance on the battlefield, is a lucrative enemy target and that brings in another factor i. e. the protection of the civilian contractor. Commanders’ worries are not limited to the enemy's fielded forces and their inherent threats but also to the fact that support contractors who are not armed, pose a softer target and provide them additional responsibility of protecting them. Thus outsourcing  contractor support for logistics functions is not suitable for high intensity warfare.  

Global Outsourcing Trends

Globally, after the end of cold war, there were increasing demands by civilian leaders around the world for leaner and less expensive armed forces. That led to a massive downsizing of the armed forces by almost all countries. Armed forces all over the world resorted to outsourcing of their non-core support functions. 

 commercial contractors have been asked to perform functions that a once deeper military was capable of. Uniformed personnel and civilians are working on the battlefield hand in hand. Increased reliance on outsourcing proves to be one of the few reasonable alternatives.  The use of contractors to support military operations is no longer a “nice to have” option. Their support is no longer an adjunct, ad hoc add-on to supplement a capability. Contractor support is an essential, vital part of force projection capability--and increasing in its importance. Extensive use of  civilian contractors by US Army in Iraq is the latest example where about 20, 000 personnel of private firms are carrying out various support functions.

 US Army has implemented an outsourcing programme called Logistics civil Augmentation programme (LOGCAP), Air Force outsources through Contract Augmentation Programme (AFCAP) and the Navy through Construction Capabilities programme (CONCAP).

In Canada, private companies provide essential support to Air Force and Army bases operate the NATO flying Training programme and will soon provide electronic warfare training aircraft as well as target towing for the Army, Navy and Air Force. 

In UK , a concept of CONDO, Contractors on deployed operations  has been implemented  wherein under long time contracts, contractors would provide various services at the battlefield which include

·        Camp operation and maintenance

·        Food services

·        Motor transport management and maintenance

·        Air movement

·        Airfield services

·        Communications

·        Helicopter and light aircraft operations

·        Non armed security waste management

·        Welfare services

·        Medical services

For a number of years it has been official British government policy to outsource certain defence functions. Britain’s public-private partnership, dubbed “Private Finance Initiative” (PFI), is all about “paying privately for the defence they cannot afford publicly”. Thus, transport planes, ships, trucks, training, and accommodations may all be provided on long term leases from private firms. 

The Private Finance Initiative developed initially by the UK Govt. to provide financial support for “public-private partnerships (PPP)” “between the public and private sector. This has now been adopted by parts of Canada, France, the Netherlands, Portugal, Ireland, Norway, Finland, Australia, Japan, the United States and Singapore (amongst others) as part of a wider reform programme and privatization drive. 

 Best Logistics practices in Defence  

 Another factor that contribute to economy is the implementation of best logistics practices by the armed forces.  Following are a few areas which need to be focused on :