Select Committee on Defence Minutes of Evidence


Examination of witnesses (Questions 100 - 104)

WEDNESDAY 14 FEBRUARY 2001

MR STEPHEN HILL, MR DAVID RUTHERFORD, MR BERNARD GALTON, MR JOHN OUGHTON AND MR NICK EVANS

  100. Let's focus on that. What are the elements outside your control which you would encourage us to encourage others to improve?
  (Mr Hill) The most important issue is the availability of spares and obviously we are in competition frequently with front-line units and they will always get priority over third-line in terms of provision of spares. What we have to do together with industry and the IPTs is manage the spares process better and that is what Project Whirlwind is all about, managing the supply chain. The other area is getting proactive technical advice from design authorities like BAE Systems, Boeing and Agusta-Westland and getting access to repair schemes in a proactive way to enable us to recover aircraft quickly. Frequently we have aircraft grounded awaiting repair schemes and that is an area we are actively working with industry to try to improve.
  (Mr Oughton) I should just explain a couple of figures to reassure you that the issue of spares that Mr Hill refers to for DARA is one that we are absolutely focused on in the Logistics Organisation as a whole and one of the key step changes that we are addressing across the whole of the organisation is to tackle both the holdings we have of spares (to ensure that we are neither over or under-providing in appropriate areas) and to develop a much better inventory and tracking system so that we have a much better understanding of the timeliness of delivery from suppliers and the lead times we need to set for the acquisition of spares and the management of those spares when we have them in our inventory. So it is an issue we are tackling for the whole of the organisation.

  101. Whilst the holding of the spares must be quite expensive, it is a comparatively modest cost compared with the availability or unavailability of aircraft when they are needed. If this issue of spares and the other issues beyond your control were to be cracked completely, can you give us a measure as to the extent this would free up the availability of front-line aircraft?
  (Mr Hill) One of our aims is to move as quickly as possible—and this is under guidance from the Treasury—to spares inclusive trading and we are putting the systems in place that enable us to forecast very accurately exactly what spares we need and when we want them. We build that into our offset lead times and manufacturing resource planning system, and that is up and running on two out of four sites. Defining clearly exactly what you want is absolutely fundamental and then getting into the direct relationship with industry for the procurement of those spares, rather than having third parties which sometimes add cost and time to the process. That is one of the fundamental targets—that we have got to get to spares inclusive trading as quickly as we possibly can in the Agency.

  102. Just a lateral look at your organisation. How do you compare in terms of turn round times with your commercial competitors?
  (Mr Hill) In some instances our turn round times are significantly better than anything that industry can deliver. If you take the Lynx main rotor gearboxes, we have reduced the turn round time from 52 weeks to two weeks and there is not anybody in the market-place that can compare with that timescale right at the moment. If you look at our engine repair and overhaul we have taken that down from 185 days to 57 on the Gnome (engine). If you benchmark against best practice people are doing that in 45 days not far from your constituency at Hands in Portsmouth so we have got to get a bit better, but we are getting closer. In some other areas we are nowhere near as efficient as we would want to be. We know where we have got to improve and we have plans in place. In manufacturing, in particular, we are not as sharp as best practice in industry but we have the skills and the equipment; it is a question of getting the processes right for the future.

  103. You are, of course, currently in a very good position to lean on MoD and Government in all its aspect in order to get priority for your own particular requirements for spares and other issues. Is there a risk that you might lose this special relationship if you move on to a more commercial standing?
  (Mr Hill) No, I think once we get the commercial processes in place particularly through partnership arrangements where there is a win/win for both parties, there is a vested interest in a partnering arrangement in industry giving us the spares because they do not get paid if they do not deliver through the prime contract.

Mr Hood

  104. In the ideal world what percentage of aircraft should be planned to be out of service?
  (Mr Hill) That is a very difficult question. If you benchmark against commercial aviation practice in some of the airlines they are achieving 18 hours a day out of their jumbo jets. We target at front-line 70% availability on our weapons system and with the complexity of military aviation that is probably as good as you are going to get. In some instances we are collectively achieving that, in other areas we are nowhere near it, but that is the kind of target we have got to shoot towards.
  (Mr Oughton) The reason why it is difficult to give a precise answer to that question is because as we develop post-Cold War approaches to doing our business, we have to look at graduated readiness times for the proportion of our forces immediately able for use on operation overseas. But other elements of our Armed Forces are on much longer periods of notice, not required for immediate action, and that is a much more selective graduated approach to the use of Armed Forces than constructing a single figure that says we need 70% available, for everything at any time. It is a much more complicated question to answer. What we have to do with our project teams in the Logistics Organisation is give Mr Hill the best possible guidance and clarity we can on what our demands are, what outputs we require from him and when, so that he is in the best position to meet those. Again the trading fund we are setting up will add that clarity and discipline to the relationship that currently does not exist.

  Mr Hood: Mr Hill, thank you very much to you and your colleagues. Just to repeat thank you for the hospitality we were afforded last week—we really appreciated that—and for coming along today. Your evidence has been very useful in our inquiry and I look forward to seeing you in the future. I am sure you will look forward to reading our report.





 
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