This chapter discusses the use of outsourcing and privatization in the provision of logistics support in the United Kingdom, with comparisons to the U.S. Army. We begin by providing background information on military logistics in the United Kingdom and United States. We then describe major outsourcing and privatization initiatives, as well as changes in management structures intended to improve internal incentives for cost-effective use of logistics resources, in both countries. We conclude with lessons learned based on the British and American experiences.
As part of the British government's Strategic Defence Review, published in 1998, a decision was made to combine the three-star logistics commands of the three services (Chief of Fleet Support, Quartermaster General, and Air Member for Logistics) into a joint Defence Logistics Organisation, led by a four-star Chief of Defence Logistics to emphasize its importance in the new MoD structure. The purpose of creating a joint logistics organization is to improve support of joint operations and to rationalize functions and processes on a defense-wide basis.116 The consolidation of logistics functions is expected to release funding to help pay for the modernization of the U.K. armed forces.
On April 1, 1999, the Chief of Defence Logistics took command and budgetary responsibility for the three service logistics organizations that, during a transition year, continued to manage their day-to-day businesses. DLO Headquarters provided overall direction and led a significant change program. During the transition year, new management structures were put in place to create a fully unified joint command by April 1, 2000.117 The new logistics structure will be described in greater detail below.
Table 5.1 shows some indicators of the size of the three logistics commands that are being combined into the DLO. The new organization is responsible for 12 Defence Agencies, including the joint Defence Storage and Distribution Agency, Defence Transport and Movements Agency, and Defence Clothing and Textile Agency. Some consolidation of logistics activities had already taken place before the creation of the DLO. For example, since 1990, £4.4 billion of inventories has been sent for disposal, the number of items managed has been reduced from 3 million to 2 million, and the number of supply depots has been reduced from 81 to 50.118____________________