Defence Online

Performance Based Logistics and the emerging defence ecosystem

January 11, 2017

Performance Based Logistics is an emerging global defence procurement strategy, undertaken to carry out cost-effective life-cycle product support. Defence writer Domhnall Macinnes caught up with Graham Grose, Director of the IFS Aerospace and Defense Center of Excellence, to discuss how the industry is changing through the spread of PBL.

IFS is a business application software provider producing Enterprise Resource Planning (ERP) solutions. The key strength around the company’s application is that it is product-centric – a single product providing a host of solutions applicable to prime contractors and SMEs alike.

Tier one players including Saab, GE Aviation, Lockheed Martin and BAE Systems are customers of IFS. Recently the company signed a contract with General Dynamics OTS (Ordnance and Tactical Systems) to rationalise their asset management approach through IFS software. The IFS Aerospace and Defense Center of Excellence is a global hub which exemplifies the focus IFS places on aerospace and defence while extending the solution’s footprint.

Graham Grose, Director of the IFS Aerospace and Defense Center of Excellence, said: “IFS has a large application product set but we have a single application solution. We don’t have solutions for aerospace and defence and automotive etc. We pride ourselves on one solution that we take to the market and it’s through the Center of Excellence that we configure that product to meet the client requirement.”

Beginning by discussing the defence sector, technology trends and strategic challenges, Mr Grose explained that budget constraints, asymmetric warfare, terrorist threats and issues with the introduction of major weapons systems such as the F35 fighter carrier variant and AJAX vehicle fleets are some of the primary challenges UK defence is facing today.

Mr Grose also explained the challenges faced by industry. He said: “Bearing in mind I’m a software provider, at the tactical level I’m seeing the Ministry of Defence rationalising its information systems through projects like FLIS (Future Logistics Information Systems) and also grappling with and being very successful in the move across to more Performance Based Logistics (PBL) programmes. We’re seeing in global markets the inexorable move to PBL and Contractor Logistic Support.”

He continued: “Fifteen or twenty years ago in the aerospace and defence market, the Army, Navy and Air Force were probably our end customers, and we looked to contract with them. Now, in truth, that has diminished significantly. The end customers still have their requirements but they are acquired through, more often than not, a tier one defence Original Equipment Manufacturer (OEM) or a system integrator.

“The bottom line is that the market has shifted – I’m seeing my major system integrators moving their focus of attention to regions such as the Middle East. In the UK and US we’re seeing that inexorable push towards PBL.”

Performance Based Logistics is a means of delivering cost-effective weapon system support where a Product Support Advisor (PBI) is identified – rather than a company contracted to provide a service – who delivers performance outcomes which ultimately lead to integrated and continuous support.

Mr Grose detailed how the introduction of PBL forces Enterprise Resource Planning providers, such as IFS, to move their solution much closer to the asset than before.

He said: “Historically, BAE Systems or Lockheed Martin would sell a plane to the Air Force. The Air Force would take control of the plane and maintain it exclusively themselves and possibly after six months that plane would go back to deep service at BAE Systems or Lockheed Martin, which would be the first time the defence OEM would see the plane again.

“Now, under PBL, it’s completely changed. With the F35, BAE Systems is carrying out work under contract to Lockheed Martin, building facilities at RAF Marham basically for the upkeep of the aircraft. We are part of the F35 solution and are working both to BAE and Lockheed, therefore we’re watching those developments with huge interest.”

He continued: “But the bottom line is that maintenance and availability of the aircraft is now the responsibility of BAE Systems or Lockheed Martin. Our IT solution is taken much closer to the asset. This puts much more pressure on certain areas of functionality, line maintenance, and the ability to take an asset off a place and get it quickly turned around to get that plane or defence or civil engineering asset back up into the air.”

Mr Grose explained that one of the biggest dynamics IFS has seen in the last two years is taking the solution to the asset and, more importantly, being able to manage a performance-based solution with all the key indicators associated with massive risk from a 20-30 year PBL programme, which can be measured in billions of pounds.

When you move the solution to the asset, that drives a host of technology-enabled advantages. This is further facilitated by the emergence of the ‘Internet of Things’ and all the opportunities provided by augmented reality, 3D printing, drone technology and so forth.

Mr Grose went on to discuss a ‘new emerging ecosystem in defence’ which is becoming more complex as time goes on.

He said: “I think in any of these big PBL programmes you’ve got end companies – from tier ones right through to the smallest SMEs – who all have their part to play. The big contract holder flows down risks to the lowest levels and they are all expected to take on their appropriate share of the risk.

“The contract holder needs to be able to manage all those Key Performance Indicators (KPIs). That’s what we’re putting more and more emphasis on – the use of something we call Enterprise Operational Intelligence (EOI) to allow the PBL holder to actually manage all the risks as well as the new business.”

IFS’s EOI software is an application offering a range of tools to help deliver visual insight, understand enterprise performance and enable better decision-making.

Mr Grose finished with a little advice for SMEs striving to break into the defence market.

He stressed: “It’s important to understand where your company is in the food chain. The key thing is understanding the dynamics and then being able to have complete visibility of your asset in that supply chain.

“A considerable project we’re working on at the moment is Eurofighter. We’ve been part of the Eurofighter consortium now for 15 or 16 years and that project is built around a performance-based supply chain, managing the maintenance-significant assets up and down the supply chain across all four partner nations.

“So you might have an Original Equipment Manufacturer in Germany providing a maintenance-significant asset into that supply chain. We monitor that asset up and down the supply chain in the four nations – the availability of the asset, its repair time and transport time, etc. These are all parts of the KPIs that really dictate ultimately whether that OEM is paid or not. Or, in the worst scenario, starts paying damages.”

Mr Grose concluded “That is the nature of Performance Based Logistics and the new entrant into that game needs to be aware of the risks and, more importantly, to be able to manage them.”

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Graham Grose IFS Logistics

Post written by: Vicky Maggiani

Vicky has worked in media for over 20 years and has a wealth of experience in editing and creating copy for a variety of sectors.