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UK Defence Logistics Markets
Frost & Sullivan, April 2006
This Frost & Sullivan research service titled UK Defence Logistics Market provides an in-depth analysis of the defence logistics market and emerging logistics trends over the next ten years. In this research, Frost & Sullivan's expert analysts thoroughly examine the following markets: asset tracking, availability contracting, integrated logistic systems and support services.
Market Sectors
Expert Frost & Sullivan analysts thoroughly examine the following market sectors in this research:
- Integrated logistic systems (ILS)
- Support services
- Availability contracting
- Asset tracking
Technologies
The following technologies are covered in this research:
- PLCM
- Contractor Logistic Support (CLS) software
- ERP software
- CRM software
- Financial software
- RFID
- GPS tags
- Barcode readers
- TAV systems
Market Overview
Emerging Logistics Systems to Assist in Significant Cost Savings
The UK defence logistics market is witnessing a rise in the requirements of the Ministry of Defence (MoD), which will result in significant logistics expenditure. Moreover, the wide array of logistics programmes in progress will create greater opportunities for private sector defence contractors as well as IT specialists. With about £3.50 billion allocated annually to private contractors, the UK defence logistics market is exhibiting tremendous potential for contractors to attain a significant share in the market. The potential of new logistics practices that will enable savings in funds is resulting in their growing adoption by governments and military forces. As a result, the market is witnessing outsourcing to private security companies such as Aegis and Executive Outcomes to cover roles that were earlier within the remit of the armed forces.
Over the next decade, the defence logistics market is expected to witness significant growth as the Government ramps up the outsourcing of the majority of support functions, remarks the analyst of this research service. Further, in keeping with reduced military budgets allied to increasing military commitments and a shift in priority from conventional warfighting to Operations Other Than War (OOTW), the Government is developing new systems to optimise their logistic capabilities. With the exception of the Integrated Logistic Systems (ILS) segment that is likely to decline in size due to the tie-up of various contracts with the forthcoming Future Logistics Information System (FLIS) program, the defence logistics market is anticipated to exhibit growth across all market sectors.
Technological Advances to Spur Logistics Procurement Activities and Outsourcing of Support Functions
Despite recent technological developments, logistics software and equipment remain relatively immature, creating considerable scope for improvement. Presently, the market remains characterised by the absence of a satisfactory logistics solution. ILS implementation requires extensive and lengthy contracts for integrators. Hence, the creation of a fully autonomous universal logistics system to fulfill the aim of various ILS projects is not likely to occur in the short term due to the complexity of the task. Meanwhile, due to the success of Total Asset Visibility (TAV) on Op Telic and the perceived failure of the country’s asset tracking systems during the Gulf War, the UK MoD is displaying greater interest towards the widespread adoption of radio frequency identification (RFID) TAV technology. Consequentially, the UK asset tracking market is set to increase substantially in value.
Meanwhile availability contracting is expected to become the most important procurement method, as it enables the UK MoD to provide a more predictable service level while assisting in savings on manpower and facilities. At the same time, the UK support services market is anticipated to grow rapidly due to the increased efforts of the MoD to outsource support services to private contractors to aid in achieving savings and provide greater allocation of funds to the Armed Forces. Further, Defence Logistics Organisation (DLO) representatives working on UK’s Joint Asset Management and Engineering Solutions (JAMES) 1 program have anticipated the possibility of cultural disparities affecting the implementation of the program across the British Army, says the analyst. As a result, the British Army has relied on a poster campaign to assist it in combating this challenge at the solder level as well as to facilitate the implementation of new ILS systems.
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