Source · Select Committees · Public Accounts Committee
Recommendation 14
14
Accepted
MoD reassessing inventory management strategy for greater resilience after recent global shocks.
Conclusion
The MoD is looking at incorporating the learning from the LCST contract into its Future Defence Support Services (FDSS) programme, which aims to find the best inventory management arrangements when the LCST contract comes to an end.31 Recent events such as the war in Ukraine and the impact of covid-19 have also brought about a reassessment of how the MoD should manage its inventory.32 In its 2022 Supply Chain strategy, it set out that its previous approaches prioritised cost efficiency, which was appropriate for an environment of relative stability, but that these approaches are vulnerable when sudden shocks emerge.33 It is now seeking to ensure greater resilience in its inventory management, which may involve holding greater amounts of inventory in some instances. Ukraine and previous conflicts have also demonstrated the importance of protecting support networks and lines of communication. For example, the MoD stated that throughout its recent operations in Afghanistan, 60% of casualties were among personnel involved in force protection of communication lines.34
Government Response Summary
The government agrees with the committee's observations, confirming that lessons learned from the LCST contract have been shared with the Future Defence Support Services (FDSS) programme and will be forwarded to the Committee with confirmed implementation plans.
Government Response
Accepted
HM Government
Accepted
4.1 The government agrees with the Committee’s recommendation. Target implementation date: July 2024 4.2 The department’s implementation of the Defence Command Paper (Refresh) will lead to a closer collaboration with Industry. Specific activity will be delivered through several routes including the Munitions Strategy, Supply Chain Capability Programme and improved digital processes through BMfS which will enhance inventory management. The Supply Chain Capability Programme will develop a defence capability to jointly design Supply Chains with industry early in the Capability Development process. 4.3 With regards to the latter action, there have been several reviews of the LCST contract, and a formal contract reset between all parties in 2022 implemented several lessons learned to generate mutual benefit for the department and contracted delivery partner. Over this past year a formal assessment of the lessons learned from the LCST contract has been shared with the Future Defence Support Services programme which is scheduled to replace LCST in 2028. These lessons will be forwarded to the Committee together with confirmation on plans to implement.