There has never been a more important time to discuss the changing face of logistics. The global logistics landscape has been subject to significant pressures, starting with Brexit, continuing with the COVID-19 pandemic, and now the war in Ukraine exposing the need for resilience, modernisation, and up-stream intelligence.
SHD: Let’s start by speaking about the changing nature of logistics more generally. What are the general themes you’re seeing on the ground?
SH: We’re seeing a much greater recognition of the importance of logistics and supply chains, reflected by Government as well as the public. Recent events – the pandemic, Ukraine, and Brexit – have changed the perception on its importance. When we see global disruption, then this hidden art and science is brought to the fore, and more into the minds of decision-makers in Government.
SHD: What are the principle changes you have noticed as an operator through these challenges? And what does the industry look like in 10 years if these trends continue?
SH: I think the changes we’re seeing can be regarded as a response to the ‘new normal’, where supply chains are characterised by instability and continued global shock.
This ‘new normal’ means a new approach to supply chains will need to be taken. Three variables generally determine how a supply chain should function: reliability, performance, and cost; and when weighed appropriately you get resilience by design. In this ‘new normal’, we’re seeing an increasing need to prioritise resilience. Just in time and just enough is no longer something to be trumpeted for resilience costs and we have to determine what we want to be resilient and pay a premium for it.
SHD: To what extent is sustainability the fourth big factor that you have to take into consideration?
SH: The new normal has forced us to formalise a new strategy. Within that, we recognise that sustainability and the MOD’s contribution to Scope 3 emissions must be tackled.
It’s important to remember that reducing our carbon footprint is an ‘end’ in itself, and we do need to consider it as a core objective. Environmental sustainability is absolutely something that permeates our Supply Chain value proposition.
SHD: In terms of environmental leadership, who is it that needs to do that? Government’s alone, or in collaboration with industry?
SH: I think it’s both, and they’re both happening simultaneously. I’d like to see targets and incentives emerge allowing us to apply environmental outcomes, going further than the social value criteria currently in place, which only allows a 10% technical weighting for sustainability.
A good example is defence food contracts. We’ve recently written a sustainability sub-strategy for Defence Support, I’ve spoken to defence food suppliers challenging them to collate MI that records the carbon cost tied to the production of the food. It’s something we need to know. If two food products are similar, we might choose the product with the lower carbon input in its manufacturing process.
SHD: What would you describe as the single biggest threat to modern supply chains and logistics operations?
SH: The biggest challenge facing us is the curation of data. We are bad at using data in a timely fashion and taking data-informed decisions when it comes to supply chain choices. In short, we need to improve our supply chain intelligence and management information. This will allow us to de-risk and prepare ourselves for when the next global shock happens.
Defence will adopt a ‘bi-modal’ approach. Mode 1 is when you’re delivering business as usual i.e., just in time, just enough predicated on assured lead times. Mode 2 is the agile or resilient mode, it can either be predictive or reactive. With Mode 2, we plan on looking upstream and applying an intelligence or threat-based calculus via a Supply Chain platform that consistently scans for network vulnerabilities, through the 5 threat lenses – environmental, ESG, financial, cyber and operations. When we see such vulnerability, Mode 2 allows us to take a reactive approach to de-risk the network by, for example, switching suppliers or near-shoring.
SHD: So on the point about data sharing, does that sit at the heart of effective collaboration between defence and industry, or is it just one plank of it?
SH: It’s probably both. Industry needs to continue providing us with the understanding of the network, updated on a frequent basis and we must share the perceptions of risk and have than shaped and informed by industry
So, it amounts to the industry telling us what they know, and us taking that in. Data then goes through advanced machine learning to build the broader threat picture. Then we go back to industry to ask if they are seeing it as we are We can then have a conversation if we're not seeing the same thing, and discuss what we do about it. So it's collaboration as a consequence of what we perceive to be the threat and then talking it through.
SHD: Major General, thank you for your time. Is there anything else you’d like to say that we haven’t covered off?
SH: I’d just like to put it on the record that the MoD’s partnered approach with Leidos has been particularly resilient, even throughout the global shocks we’ve spoken about. It’s always about the quality of the collaboration that you have, and having the trust between parties because these shocks require you to adopt different approaches. This partnered approach has given us the resilience and agility to be flexible in our response to any given shock.