Support Services, UK, Defence, Logistics, Markets

Tremendous growth opportunities beckon in support services segment of UK Defence Logistics Markets

27 May 2006 | (News)

The defence logistics markets in the United Kingdom will register growth across all its major sectors, with the exception of the ILS systems segment, which is likely to shrink due to various contracts tied to the forthcoming FLIS programme. While challenges such as cultural resistance and technical difficulties may impede overall market expansion over the short term, the industry will overcome these due to the significance that the Ministry of Defence (MoD) places on logistical reform as a cost-saving measure.
 
Frost & Sullivan (http://www.defence.frost.com) finds that the UK Defence Logistics Markets earned revenues of GBP 3.23 billion in 2005 and estimates this to reach GBP4.60 billion in 2015.

"The defence logistics markets in the United Kingdom will grow steadily over the next ten years, as the UK government increasingly outsources the majority of its support functions and develops new systems to optimise its logistic capabilities," notes Frost & Sullivan Research Analyst Graham Cushway. "These developments will be a result of reduced military budgets coupled with increasing military commitments and a change of priority from conventional warfighting to OOTW."

Key segments including asset tracking systems, ILS systems, availability contracting and support services are set to grow over 2006, thereby exponentially boosting revenues in the UK defence logistics markets.

The asset tracking systems segment is set to increase substantially in value due to the UK MoD's enthusiasm for the widespread adoption of radio frequency identification (RFID) total asset visibility (TAV) technology. This is a direct result of the success of TAV on Op Telic, in comparison to the perceived failure of the country's asset tracking systems during the Gulf War.

The support service segment will also see rapid growth due to increasing pressure on the MoD to reduce support services across the nation in order to provide funds to the teeth arms. Moreover, the outsourcing of support services to private contractors is seen as the best way to achieve large savings.

Availability contracting is poised to become the most important method of procurement in the United Kingdom since this model allows the MoD a more predictable level of service while saving money on manpower and facilities.

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However, cultural challenges caused by cap-badge rivalry, entrenched practices and legacy thinking will prove the greatest obstacle to the adoption of new logistics practices and technologies. Security issues will also inhibit the progress of logistics technologies, as RFID tags and other new asset tracking devices are considered a security risk in some circumstances.

Security concerns may also restrain the procurement of a new ILS, as it will be deemed risky to retain all logistics information in one format. Decreasing defence budgets may impact some large-scale procurement programmes, particularly for ILS systems. However, this is unlikely to impact on any logistic programmes.

DLO representatives working on the UK's joint asset management and engineering solutions (JAMES) 1 programme have indicated that cultural difficulties proved the main obstacle to their progress in implementing this system across the British Army.

"There are various ways of combating cultural difficulties in implementing new ILS systems," says Mr. Cushway. "The British Army relied on a poster campaign to assist them with JAMES 1 at the soldier level, while the Australian Navy introduced the AMPS system in new ships rather than retro-fitted them to avoid cultural difficulties."

If you are interested in a virtual brochure, which provides manufacturers, end users, and other industry participants with an overview of the latest analysis of the UK Defence Logistics Markets then send an e-mail to Srividhya Parthasarathy - Corporate Communications at srividhya.parthasarathy@frost.com with the following information: your full name, company name, title, telephone number, e-mail address, city, state, and country.

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