University of MoratuwaMBA in Management of TechnologyDepartment of Management of Technology

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Name with Initials: K.W.A.R.I. Ranasinghe

Student Registration No: 119032F

Title of Assignment: The Supply Chain and the Value Chain of Sri Lanka Navy

Assignment No:…01……………. Group Individual

Subject Code: 5215

Subject: Supply Chain Management

Lecturer: DR. Raj Prasanna

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I certify that I have not plagiarized the work of others or participated in unauthorized collusion when preparing this assignment.

Signature:………………….. Date:…………………….

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THE SUPPLY CHAIN AND THE VALUE CHAIN OF SRI LANKA NAVY

Individual Assignment

Prepared by

Ranasinghe K.W.A.R.I. (119032F)

Submitted to

Dr. Raj Prasanna

Master of Business Administration in Management of Technology

Department of Management of Technology

University of Moratuwa

31st March 2012

Executive Summary A supply chain of any defence organization similar to Sri Lanka Navy is one of the

most strained systems as too many things are expected with extremely limited resources. Having the right balance between the available budget and quality of service delivered is the dilemma faced by naval planners at any given time. Adding value to various functions across supply chain is additional task but it is necessary to ensure the maximum output with available resources.

Therefore, this paper is an attempt to identify the existing state of value chain and supply chain of the Sri Lanka Navy and then make recommendations to improve the system. The chapter one of the paper provides inside in to the navy as an organization with introduction to various functions performed by the navy. This introduction is considered necessary as identification of supply and value chain directly related to the identifications of the expected roles from the navy.

The second and third chapters provides details on various elements of those chains. Having identified the various elements, the paper then attempts to design a suitable model for the navy and the identified models are at appendix I and II. The chapter four discusses the current issues in supply and value chains and actions initiated by the navy to overcome these difficulties. One of the main drawbacks of the system is very high inventory cost. The very high cost incurred by the navy due to poor and unorganized inventory management system should be cut down at the earliest. The paper discuss the Integrated Logistics Management System (ILMS) presently being introduced to the navy for this.

The chapter five of the paper make recommendations for the navy to improve the value and supply chain using modern concepts of the Supply chain management system.

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ContentsExecutive Summary................................................................................................................................. i

Table of Content ………………………………………………………………………………………………………………………………..ii

LIST OF FIGURES.................................................................................................................................... iii

1. Introduction to the Sri Lanka Navy.................................................................................................1

1.1 Sri Lanka Navy (SLN)...............................................................................................................1

1.2 The Role of Sri Lanka Navy......................................................................................................1

1.3 The main focus of the Navy:...................................................................................................2

1.4 Organizational Goals...............................................................................................................2

1.5 Future issues...........................................................................................................................3

2. The Value Chain of the SLN............................................................................................................4

2.1 Introduction:...........................................................................................................................4

2.2 General Value chain...............................................................................................................4

2.3 Value Chain for Sri Lanka Navy...............................................................................................5

2.3.1 Primary Activity...............................................................................................................5

2.3.2 Support activities............................................................................................................9

3. The Supply Chain of the SLN.........................................................................................................11

3.1 Naval Supply Chain :.............................................................................................................11

3.2 Requirement of Navy supply chain.......................................................................................11

3.3 The Need of a supply chain for Sri Lanka Navy.....................................................................12

3.4 Model for a Supply Chain of Sri Lanka Navy.........................................................................12

4. Current issues/challenges and solutions on Value Chain & Supply Chain management of SLN. . .14

4.1 Current Issues in Value Chain Management in SLN..............................................................14

4.2 Current issues in Supply Change Management in SLN.........................................................14

4.3 Current solutions to above issues/challenges......................................................................15

5. Recommendations for improving the value chain and supply chain of SLN.................................16

5.1 How to improve value chain.................................................................................................16

5.2 How to improve the supply chain.........................................................................................16

6. Conclusion....................................................................................................................................19

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REFERENCES.........................................................................................................................................19

APPENDIX I - Sri Lanka Navy Value Chain.....................................................................................20

APPENDIX II - Sri Lanka Navy Supply Chain...................................................................................20

LIST OF FIGURES Figure 2.1 Porters Value Chain ………………………………………………………..…4Figure 5.1 Integrating warfighter-facing and supplier-facing organizations ………………..17Figure 5.2 ability to rapidly respond to environmental changes and integrate intelligence from multiple sources into a single enterprise plan………………………………………………..17

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THE SUPPLY CHAIN AND THE VALUE CHAIN OF SRI LANKA NAVY

1. Introduction to the Sri Lanka Navy

1.1 Sri Lanka Navy (SLN) is the specialized arm of the defence services of Sri Lanka

which has been given the responsibility of protecting the seas around the country as well the

Exclusive Economic Zone and Extended Exclusive Economic Zone of Sri Lanka. The

organization consist of over 2000 commissioned officers, 6000 noncommissioned officers and

45,000 ratings. It is well structured organization and possess infrastructure to support the

duties performed by them to keep the flotilla moving to blue waters around the country. Their

main task is to maintain the law and order around and safeguarding the waters of Sri Lanka.

SLN possess huge manpower as well as considerable weapons, machinery and ships/craft to

deliver the expected duties from those units. However, it is always the man behind the

weapon that matters lot in the critical movements. Therefore, right performance analyzing of

individuals as well as various groups are one of most essential component in building up of a

strong defence service.

This essay is an attempt to identify the existing value chain and supply chain

management system of the SLN, then identify the deficiencies, issues &challenges existing

on the system and then to make recommendations for improving the existing arrangements

so that this huge organization can perform better to meet the expectations of the people of Sri

Lanka.

1.2 The Role of Sri Lanka Navy

The role of the Sri Lanka Navy, as a specialized arm of the Defence services, is the

defence of the country against any threat to its sovereignty and territorial integrity arising

particularly from beyond its’ territorial limits. The secondary role is land operations acting

together with other services specially, in terms of internal strife in the preservation of law and

order. However, with the end of the three decades of humanitarian operations conducted by

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us, the Mission of the Sri Lanka Navy is being limited to conduct prompt and sustainable

combat operations at sea in accordance with national policies

It also assists administration and functions of government institutions particularly

those involved in maritime activity and participation in development programs. The present

day applications used in the Naval Systems comprised with high technology have created the

personnel in the Navy to be absolute professionals in their respective fields.

The end of the Humanitarian Operations heralded a new era for Sri Lanka Navy

(SLN), where it is called upon to carry out the traditional naval role of defending the nation’s

maritime interests from internal and external threats.

1.3 The main focus of the Navy: The main focus of the Navy is on efficient & effective

maritime surveillance and ensuring Maritime Security by carrying out counter operations

against piracy, human smuggling and drug trafficking. It is now necessary to monitor all

vessels in Sri Lankan territorial waters, and police the vast marine resources that are within

the waters of Sri Lanka.

1.4 Organizational Goals: In order to have an in depth understanding of the value chain

and supply chain of the Sri Lanka Navy, it is paramount that we understand what the expected

outcome from this organization is. In this context, the Sri Lanka Navy will continue to strive

to achieve the goals assigned by the government Sri Lanka.

1.1.

1.2.

1.3.

1.4.

(Sri Lanka Navy, 2011);

Effective and efficient surveillance of the maritime zones of the country, which will be

further expanded with acquisition of Extended Exclusive Economic Zones (EEEZ).

Protection of fishery resources and assisting fishermen in emergencies. Effective

prevention of poaching will be one the highlight.

2

Monitoring the SAR region under the responsibility of the country and provide

assistance to all mariners in need, creating a safe maritime environment.

Cooperating with other navies, coast guards and agencies involved in ensuring the

maritime protection which will include sharing intelligence which will ensure a

common operating picture for effective surveillance and sharing relevant maritime

information.

Ensuring effective protection of the Sea Lines of Communications (SLOCs) within Sri

Lankan waters, its harbors and other port infrastructure which in turn will encourage

agencies involved in maritime business use our ports, creating more economical

opportunities.

Develop a balanced force structure to suit the national policies that can meet the

existing and future security threats.

Continuous improvement of infrastructure for efficient maintenance of the fleet

enabling effective deployment in achievement of national policies.

Improving the R&D efforts of SLN, designing and providing own security systems to

reduce cost of military imports. Emphasis will be given for exporting such developed

systems to increase revenue.

Provide human and other resources of SLN to the development efforts of the country.

Improving the professional competency and skills of officers and sailors to prepare

them for future requirements and needs of the country.

Making new diplomatic relationship with friendly nations whilst maintaining and

improving the existing diplomacy and relations with friendly navies in the region

through various activities such as flee visits and exercises.

Improving the existing sealift capability to assist in humanitarian operations in any

event of natural disasters in the country or region.

Development of Rapid Deployment Rescue Craft Squadron to be deployed in flood

relief, VBSS, and SAR missions in the areas of interest.

Contributing actively to Coastal Conservation.

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1.5 Future issues: The new claims on the Continental Shelf and its resources will

mandate SLN to be able to operate much far and wide in order to police the area that would be

inherited by the nation; over 750nm to the south and over 350nm to the East. Considering the

fact that the prolonged conflict has put aside many development activities and the affected

areas need to be rehabilitated, the allocations for the defence in general and the Navy in

particular may not increase. This will dictate SLN to plan development activities very

stringently and develop commercially viable and productive ventures to contribute to the

government coffers.

2. The Value Chain of the SLN

2.1 Introduction: The value chain of a defence organization is not similar to that of manufacturing

organization nor to that of service industry as there are so many dissimilarities. There are

similar areas like inbound logistic and operations which are similar to a service industry but

out bound logistic, marketing and servicing areas are totally different. The supporting

structure is similar to that of a service organization.

2.2 General Value chain In order to identify the value chain of Sri Lanka Navy, I have considered the Porter’s

Value chain analysis. The Porter’s Value chain model has two kinds of activities and each of them have multiple sub steps (Porter, 1985). General overview of the system is as follows;

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Figure 2.1 Porter’s Value Chain Model

The term ‘Margin’ implies that organizations get a profit margin that depends on their ability to manage all activities in the value chain. In other words, the organization is able to deliver a product / service for which the customer is willing to pay more than the sum of the costs of all activities in the value chain. However, it is to be noted that a public organization like Sri Lanka Navy will not be having any margin and therefore will not be applicable in this study.

2.3 Value Chain for Sri Lanka NavyConsidering above generic model and the activities related to the Sri Lanka Navy, I

have identified the various value adding activities and then allocate each of activities in to

above model.

2.3.1 Primary Activity

Inbound logistics

The Naval functions have large number of inbound logistics which adds value

in to the system and are explained as follows;

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Ships/craft Acquisition :

The value addition during the asset acquisition is done primarily by

quality checks, third party inspection/ certification etc. In order to add value

for this, the primary requirement is to acquire assets that meet SLN roles at

low operating cost and has ease of maintenance and longer lifecycle.

Spare parts:

To add value for this, SLN is purchasing OEM recommended spares

directly from the manufacturer at all possible occasions. Even when it is not

possible to purchase spares from the OEM, SLN is following rigorous

procedure to ensure quality of parts.

Fuel and Lubricant:

This inbound logistic vital component in maintaining the assets. The

life of the assets/ equipment used for delivering the expected roles is

directly related to the quality of the quality of the lubricant. Therefore, strict

measurements are in order to ensure the right purchases of quality/ approved

lubricant.

Uniform materials:

The value addition to this inbound logistic item is done by ensuring the

quality. This is important aspect as appearance play a key role in delivering

some services rendered by Navy.

Victualing items:

The quality of the output of naval personnel is related to physical

wellbeing of them. All possible actions like designing proper menu and

delivering them at right quality is done to assure naval personnel are well

fed. Proper storing facilities add further value to this.

Facilities Planning:

All facilities required for delivering the expected services are

numerous. However, all key aspects like assets, accommodation, logistic

planning, transportation, uniforms etc. are well planned.

Storing:

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Proper storing add considerable value to the organization by ensuring

the quality of equipment/ consumables. Reduction of wastage is another

value adding factor. Planning the storing facilities can reduce the

transporting cost as well as maintaining operational availability of assets for

performing the expected tasks.

Transportation:

The transportation of the inbound logistic is value adding factor that

largely influence the maintenance of troops, assets as well as various

facilities.

Operations

Mission selection: Mission selection add value to as resource

utilization and optimization totally depend on the proper selection of

the missions.

Sailing Scheduling : The preparation of sailing schedule is

another value adding activity of the Navy. Proper planning will

optimize the effectiveness and efficiency of utilization of limited

available assets to achieve the mission.

Appointing crew to Ships: Though it looks like a simple HR

function, the proper crew selection is a key factor in effective and

efficient goal achievement. As it says y many, it is man behind the

machine that is most important in delivering the desired the output.

Machinery maintenance activities: Proper maintenance will have

tremendous impact on the quality as well as the quantity of the output

as it will reduce the maintenance cost, increase operational availability

and increase useful life of equipment and machineries.

Transportation : On time transportation with minimized cost is

always the key for naval transportation planners.

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Patrolling Seas: Providing the required security for country as expected

by the State with maximum utilization of resources. Protecting EEEZ

with minimum cost but at required level.

Community Services: Will increase the organizational value among the

general public. Navy undertakes lot of activities to help the general

public (E.g. Thalassemia Kits production and distribution)

Fisheries protection

International defence activities (Joint Exercises, Seminars, Workshops)

Outbound logistics : The outbound logistic include some items which fall in

one of the following categories;

Scrap materials:

Used oils

Warranty articles

Outdated equipment

Donations

Training equipment

Sri Lanka Navy can add value to them using various actions. The scarp

materials can be sorted according to the metallic groups they fall prior

transferring outside the organization. This simple process would enhance the

value of this outbound cargo as they are purified (which is a value adding). As

another example, handing over of some training equipment to outside

organizations such as technical institutes and schools can be accompanied with

in-house training for users, providing storage rack, painting etc.

In order to add value, promotion of environmental concerns can be used

Marketing and sales

Reports delivered to the security council

Security briefings

Naval media coordinators

8

Involvement of media in naval activities

Promotional television programmers

Paper advertisements

Religious activities

Community services

Sports

Service

Various follow up activities :

Once any service is delivered by the Navy, it is a usual

practice to follow the cases and initiate necessary corrective/

improvement actions

Complain Follow – up:

Any complaints received from any level on the services

delivered are taken very seriously and necessary actions are

initiated to correct the situation as well as to prevent future

occurrences.

Feedback analyzing:

By analyzing the feed backs receiving from various

sources, Navy take actions to improve the services rendered.

Civilian training activities :

This is done to ensure the future preservation of quality of

services rendered to civilian authorities so that they are capable of

undertaking future maintenance.

2.3.2 Support activities

Procurement

Sri Lanka Navy has a well-organized procurement system which has been

designed to meet the government financial regulation as well as the good corporate

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governance. However this system is very time consuming and add lot of

constraints in going towards “Just in Time” kind of a maintenance system. What

we follow is actually is kind of “Just in Case” system which has tremendous

inventory cost.

Human Resource management

This is one area which can be considered as the most organized support

activity of the Navy. Well-established systems exist for each of the

functions/activities involved in recruiting, hiring, training, developing,

compensating and dismissing or laying off personnel. The procedure is written

down in Naval regulations and orders and difficult to manipulate.

Technological Development

Sri Lanka Navy has 05 major departments to support the technological

development;

Marine Engineering Department

Naval Electronics and Electrical Department

Information Technology Department

Civil Engineering Department

Naval Armament Department

Under these departments, the technology required to deliver the expected

services are highlighted and acquired. The specific training requirements too

are submitted by them to the HR department for implementing.

Infrastructure

The infrastructure is mainly consists of the organizational structure of the Sri

Lanka Navy. The Navy organization structure is very much similar to Matrix type

which consist of departmental as well as divisional systems. There are many

individuals who are responsible to two heads from each of departmental and

divisional systems. Navy is structure consist following departmental groups;

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Operational, public affairs, government relations and planning

Technical, IT and quality assurance

Logistics, general management and finance

Accounting,

Legal

HR

Medical

The Naval Divisional system is called Area Organizations where the entire

navy is divided in to six operational divisions (Western , Eastern, Southern,

Northern, North Western and North Central)

Designed model for the value chain is at appendix I of this report

3. The Supply Chain of the SLN

3.1 Naval Supply Chain : The supply chain of any organization can be considered as the

linked activities associated with providing material(Inbound logistics) from various suppliers

to an end user as a finished good. However, in case of Sri Lanka Navy , it is the delivery of

expected roles as explained in above paragraph 1. 4 to the satisfaction of end users who will

probably be the government, fisheries community and general public. Supply control is the

process by which an item of supply is controlled within the supply system, including

requisitioning, receipt, storage, stock control, shipment, disposition, identification, and

accounting. The supply point is a location where supplies, services and materials are located

and issued. While the needs of the Sri Lanka Navy fleet and other operational units, deployed

to meet the goal assigned (as indicated in above chapter 1. 4), certainly have changed in

recent years, especially with the end of 30 years old terrorism, following basic priorities of

supply chain excellence have not been changed;

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Improving service

Reducing cost to serve.

3.2 Requirement of Navy supply chain: Therefore, the naval supply chain is maintained

to meet these basics requirements. Due to the extreme complexities exist in the operations

conducted by the units (who are the actual customers of the naval supply chain), Sri Lanka

Navy highly dependent upon the respective performance of their numerous partners, many of

whom are outside their immediate control (Equipment manufacturers, shippers, oil and

lubricant manufacturers etc.). Having required to manage some of the most diverse and

expansive supply chains in the world, increasing supply chain outreach and highlighting the

very high synchronization of information can yield incalculable operational benefits for Sri

Lanka Navy or to that matter any defence organization. These benefits will not be limited just

to the dollars and cents, but also in operational readiness and mission success. High

performance of any defense supply chain management depends on following ( Shakuja

Vijay 2005);

An understanding that technology is just one of several drivers in supply chain

excellence.

Organizational design of the supply chain

Skills and expertise of the people running the process.

3.3 The Need of a supply chain for Sri Lanka Navy: The need of supply chain for

conventional naval force similar to Sri Lanka Navy is for a cohesive logistics infrastructure to

fully support naval operations in war and peace (Sukuja, Vijay. 2005). Some of the key

aspects of a navy supply chain are;

Determining the actions necessary to satisfy the needs of the fleet and other units

deployed for items and projecting requirements for repair and procurement.

Allocating material which includes the processes for managing assets, processing

deployment requirements (similar to customer orders in manufacturing supply chain),

and developing and managing repair workload.

Managing repairs which include Identifying, budgeting, scheduling and funding

requirements.

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Outsourcing for repair services which includes contracting for Materiel & Services in

support of requirements, in accordance with laws, regulations, policies, and

procedures. The activities normally associated are procurement planning, solicitation

of offers, the award of contracts, contractor surveillance and the management of active

contracts.

Developing allowances which includes developing and publishing allowances and

load lists for normal and contingency operations

Managing financials which includes planning and executing the material budget,

monitoring financial and budget indicators, developing adjustments and strategies, and

conducts financial management of afloat units.

3.4 Model for a Supply Chain of Sri Lanka Navy 3.4.1 Inbound Logistic: Navy supply chain involves huge amount of money which exceed Rs. 40 billion per annum. The naval supply chain management should be properly designed to manage this huge budget effectively and efficiently.

Ships/craft Acquisition

Spare parts

Fuel and Lubricant

Uniform materials

Victualing items

3.4.2 Operations

Mission selection and operation planning

Sailing Scheduling

Machinery maintenance activities

Transportation

Patrolling Seas

Fisheries protection

International defence activities (Joint Exercises, Seminars, Workshops)

Providing land security

3.4.3 Outbound Logistics

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The outbound logistic include some items which fall in one of the following

categories;

Scrap materials:

Used oils

Warranty articles

Outdated equipment

Donations

Training equipment

These materials to be properly managed to have effective out bound process. If not managed properly, they can create considerable financial losses as well as pubic ill-reputation to the navy.

The Supply chain model of Sri Lanka Navy is at appendix II of this report.

4. Current issues/challenges and solutions on Value Chain & Supply Chain management of SLN

4.1 Current Issues in Value Chain Management in SLN

One of the biggest issue that exist across the value chain or to that matter a big

hindrance to add value to the Navy value chain is the extremely high number of people

exist in the organization. These people were essential to have onboard during the war

but now idling. Over 85% of naval budget is spent on proving pay, uniforms and food

for them. The navy is lacking funds to improve the capital assets, new acquisitions as

well as process improvement due this.

Absence of proper computerized inventory management system is resulting in very

high cost for maintenance, parts wastage and very high amount of inventories.

Absence of proper coordinating mechanism for assisting fisherman in distress is an

issue as assets are redeployed for those purposes incurring additional cost.

Lack of required ships for delivering the effective deployment is one of the major

issues. Sri Lanka is an island with large sea area. The open sea towards southern

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region has given us an opportunity to claim an Extended Exclusive Economic Zone of

over 10 times the size of land area. Sri Lanka needs naval assets to guard this property.

Usage of various standards and various specifications by different users in different

naval areas for acquisition of similar items/ equipment causing more and more

complicated inventory management issues. Number of spares needed for maintaining

these machineries are very high and also the cost for training.

4.2 Current issues in Supply Change Management in SLN

Lack of experts in the field of supply chain management is the biggest concern. This is

the biggest obstacle for the navy to have a proper supply chain management system in

place. The day to day related functions are carried out and even supervised by navy

logistic branch people who are merely trained to carry out logistic management

functions. Lack of awareness among them will retard the improvement processes.

Related to this is the issue of pursuing the philosophy of 'just in time' as compared to

the old practice of 'just in case’. The earlier philosophy was based on the premise that

military hardware and related spares were stored in large quantities so that they could

be utilized in maximum number of eventualities. The current philosophy dictates 'just

in time’ so as to reduce inventory, as well as to make the lean supply chain more

effective. Given these modern trends in military logistic supply chains, prudence

demands that modern techniques and methodologies are incorporated in supply chain

systems.

Concerns about availability of spares to keep the naval platforms operational. These

issues has been continued unabated and have on several occasions offered major

challenges to maintenance and upkeep of the ships & craft.

The need for cohesive logistics infrastructure brings to fore the importance of a robust

military logistic supply chain. This chain includes several business functions such as

purchasing, inventory control, transportation, material handling, distributions and

other allied functions.

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4.3 Current solutions to above issues/challenges

Sri Lanka Navy is in the process of installing a comprehensive system called “

Integrated Logistics Management System” or ILMS which has been outsourced to the

Softlogic. The introduction is in progress for last 3 years but the full integration is yet to

achieve mainly due to the poor performance of the contractor. The contractor failed to retain

their employees consistently due various issues within their organization. After evaluation of

the system, what Navy did is to assign own IT managers to project and wit their contribution

the project is now proceeding ahead. This has some additional advantage as SLN is

simultaneously making a trained crew to maintain the system. Some phases like

computerizing the inventories, integration of workshops to system have been completed.

A great deal of work related to the standardizing of specifications for all incoming

logistics are in progress at the moment. This will allow all workshops to order similar

equipment with similar specifications or a kind of standardization across the navy. The

maintenance will be much easier due to this standardization. In addition, the operator training

will also be much easier and effective.

From year 2012 onwards, the navy has taken steps to purchase a system called “rate

contract’ for purchasing large part of consumables of inbound logistics. The things like

victualing items, oils and lubricants, fast moving spares & hardware items, uniform materials,

shoes, ammunitions etc. are purchased by signing a rate contract valid for various durations

ranging from 01 year to three years. Whenever the requirement arises, the navy can order the

items keeping the agreed lead time without storing them to meet “ just in case’.

5. Recommendations for improving the value chain and supply chain of SLN

5.1 How to improve value chain

Navy should consider altering/ improving the currently followed “Planned Preventive

Maintenance System” to “ Performance Based Maintenance system” in order to cut

down on maintenance cost. Current maintenance cost exceeds Rs. 8 billion per year

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and should be cut down so that balance money can be used for capital assets

acquisition or upgrading.

Introducing suitable mechanism to for pushing the purchasing management system as

close as possible to a “Just in Time’ kind of a system from the current “ Just in case “

system. Considering the uncertainty, it is important to obtain a leaner supply chain,

which can easily support the naval assets deployed in such a manner, that they are

provided for at distant bases and long deployments at sea and that too within the

shortest possible timeframe. A lean supply chain becomes all the more important as

the current and future emphasis is to bring about a significant reduction in the cost of

maintenance of the assets of the Sri Lanka Navy.

Early completion of full implementation of ongoing “Integrated Logistics

Management System“ is a must to create visibility across the organization. This will

have tremendous effect on reducing the inventory cost.

A speedy process to adopt to acquire more capital ships to guard the Extended

Exclusive Economic Zones.

5.2 How to improve the supply chain

The existing system does not provide adequate measures for proper linking of the

operational units’ requirements with capabilities of suppliers. This creates unnecessary

delays in purchasing as well as overstocking and incorrect item receipts. A mechanism

similar to the following should be introduced to have effective mechanism in this

regard. This will make proper coordination between operation and logistic department.

17

Figure 5.1 Integrating warfighter-facing and supplier-facing organizations

(Source: Miller Jeffrey, and Smith Scott, 2012)

At the moment, it is necessary that right balance between the supply and demand is created by careful study of the system. One of the main reasons for the ever occurring fund shortage is the acquisition of non-essential logistics at the early stage of the year and then struggling at the year end to meet the requirement which often resulted in half done job. Therefore a right balances between the available resources and delivery to be planned at the early stage of the year.

Figure 5.2 Ability to rapidly respond to environmental changes and integrate intelligence from multiple sources into a single enterprise plan

(Source: Miller Jeffrey, and Smith Scott, 2012)

One of the most important measure which is outstanding since long time to improve

the Sri Lanka Navy supply chain is to incorporating the independent third party

validation of some critical inbound logistics. Some of the high value, critical items

such marine quality plates for ships repairs, lubricants, welding consumables,

machinery etc. should be certified by a competent and approved third party to ensure

the proper quality. Though Sri Lanka Navy does follow this concept in purchasing the

ships/craft (by hiring Lloyd’s for inspections and certification), it is not followed in

above mentioned areas.

To provide specific training to few experts in operation, technical and logistic

department of the navy on supply chain management and then carry out promotional

activities as well as awareness campaign/ programmers to create necessary

18

organizational culture for introducing a suitable advanced supply chain management

system.

Sri Lanka Navy can restudy and resign the “distribution” in supply chain to have more

effective inventory management which should include relocation of main distribution

center from Trincomalee to Colombo (Preferably to Welisara Naval complex). Navy

can also look at the possibility of relocating some repair facilities in order to reduce

the movement of ships/craft for repairs and refits which cost considerable amount of

funds for fuel and other requirements.

Network designing for repair facilities which include slipways, workshops for better

economies of scale. However, this need to be given little more time as right now the

priority is for showing the presence in all parts of the island.

The concepts adopted by Sri Lanka Navy for sourcing are very traditional and need to

be modernized considering the technological advances as well as the modern

warehouse practices.

6. Conclusion

With the advanced t6echnologies as well as information system and new defence

doctrine, it is mandatory to convert the existing logistic management to a high performance,

highly efficient system. A closer study of the advanced navies will reveal that many defence

supply chains have launched initiatives to become high performance organizations which

logistically superior organizations that meet the needs of the warfighter with speed, efficiency

and consistency. The role played by the new information systems is key to this initiative.

However, it is also to be taken in to consideration whilst preparing the plans for Sri Lanka

Navy, that so much dependency solely on technology is not advisable. If we continue to rely

solely on information technology to create an efficient supply chain, some efforts are bound to

fall short of expectations. This may occur as it is possible by the planner to forget some

19

critical, non-system aspects of the supply chain transformation. New systems are a critical

part of acquiring and managing information, yet understanding and quickly acting upon the

right information requires a broader focus. This focus begins with a supporting organizational

structure, aligned with customers and other organizations which depend on the navy (e.g.

State, fisheries community etc.) suppliers, and tightly integrated with consistent, organization

wide processes. Sri Lanka Navy, as an organization also must be knowledge empowered to

properly blend and act upon the larger set of information being acquired. Then the success of

the organization must be quantifiably judged according to its speed and accuracy in

supporting the warfighter, while simultaneously reducing cost to serve. It is a formidable but

achievable suggestion whose time has come.

And with that details indicated above, it can be concluded that, from the perspective of

defense and military, the importance of supply chain logistics is critical to maintain

operational readiness.

REFERENCES M. Porter, Competitive Advantage, Creating and Sustaining Superior Performance, The

Free Press, New York, 1985.

Miller Jeffrey, and Smith Scott. Results-Focused Initiatives for Maximizing Value to the

Warfighter. Accenture, available at http://www.accenture.com/us-en/Pages/insight-defense-

supply-chain-transformation-framework-summary.aspx (Accessed on 12th March 2012)

Dr Sakhuja, Vijay. Naval logistic supply chains: adopting best business practices, South Asia

Analysis Group, 2005 http://www.southasiaanalysis.org/%5Cpapers15%5Cpaper1492.html

(Accessed on 23rd March 2012)

US Navy Official Supply Chain website

http://www.navsup.navy.mil/navsup/capabilities/nscm (Accessed on 12th March 2012)

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APPENDIX I - Sri Lanka Navy Value Chain

APPENDIX II - Sri Lanka Navy Supply Chain

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