Helping the MoD transform inventory management
How we helped the Ministry of Defence transform inventory management without compromising operations.
During operations in Iraq and Afghanistan, the Ministry of Defence’s (MoD) imperative was to maintain large stocks of essential equipment and supplies needed by the Armed Forces – which it could be argued outweighed the risk of over-ordering. However, during a period of less conflict and more austerity, it asked us to help them improve their inventory management.
“The objective was to reduce the amount of money spent each year on new inventory and reduce the amount of inventory already held. All without compromising the flow of essential supplies to our troops”, says Iain Burgess, Partner, EY.
The MoD called on us for help with initial strategy and then to devise a unique way to implement it, because “their knowledge of our supply chain, our inventory data challenges and our culture made them the right choice”, says General Sir Chris Deverell, former CoM Land MoD Defence Equipment & Support (DE&S).
Hitting the ground running
The process of transforming inventory management began quickly and at the ‘coalface’. Experienced EY teams worked alongside DE&S project teams to address unnecessary spending. We monitored, analysed and directly intervened with over 1,300 inventory managers.
Our approach included negotiations with suppliers to reduce excess stock, improving and digitising the MoD’s inventory management systems and liaising with the Treasury to simplify accounting principles. This intervention-led transformation programme saw us working closely with DE&S project teams to review £2bn of annual spending.
With over a million individual inventory items, ranging from socks and shoes to engines and armaments, the challenge was to understand the dynamics of each supply chain. For example, our energy trading experts were able to help DE&S optimise fuel buying strategies.
“The next stage was to learn the lessons, improve IT systems and work with DE&S project teams to implement and own the new processes”, says Iain.
A stunning victory
The results were outstanding. Over the four years of the programme, the transformation programme cut inventory spending by £2.5bn and reduced overall stock holding by an unprecedented £13bn. We worked with nearly 2,000 DE&S staff in what Iain describes as the “the biggest supply chain project EY has ever been involved with”. Now, MoD inventory management processes are more efficient and responsive, with better visibility over what stock needs to be held and what needs to be ordered in when required.
Mentioned in despatches
The project received praise from the Treasury, Public Accounts Committee, National Audit Office and the Secretary of State for Defence, and was presented as an outstanding example at the Cabinet Office. Speaking after it was honoured at the Minister’s Defence Acquisition Awards, Lt General Paul Jacques, Quartermaster-General to The Forces, described it as “a prime example of excellence in acquisition”.