Despite enough learning from developed countries to adapt the life cycle management of assets from 3rd Party providers for logistics support, the Government decision to transfer Army Base Workshops (ABW) and Central Ordnance Depots (CODs) on the lines of Government Owned Contractor Operated (GOCO) Model is still at exploratory stage even after 2 years.
Director General Electrical & Mechanical Engineers (DGEME) is responsible for all matters relating to maintenance, repair, recovery and inspection of all types of technical equipments and accessories in the Army. The organization is also responsible for the enunciation of repair policy (Light, Field and Base Repairs). The broader categories are:-
- Field Repairs: Carried out by light repair/ field repair / workshops deployed in field formations.
- Medium Repair (MR): Extensive maintenance, repair and change of certain Major Unit Assemblies (MUAs) carried out about three times during entire life cycle. The periodicity of the MRs is dovetailed with the periodicity of base overhaul to ensure operational reliability of the platform deployed in field.
It is also responsible for indigenization of spares and assemblies of imported equipments, product upgradation during overhauling, where applicable.
The Government of India has decided to transfer Army Base Workshops (ABW) and Central Ordnance Depots (CODs) on the lines of Government Owned Contractor Operated (GOCO) Model. These are in supply chain and Life Cycle Support of specified weapons, vehicles and support platforms in use by the Indian Army. The Workshops are also involved in undertaking repair and OH of major assemblies, repairs of PCBs and modules of various equipments held by the Indian Army. In some cases, spares are manufactured by these workshops. The Army has a total of eight ABWs, of which seven are responsible for repair and overhaul of equipment/weapons, and one workshop i.e.515 ABW has been tasked with the responsibility of indigenization and manufacture of spares.
The Indian Army has a large inventory of weapon systems and equipment which need to be maintained and sustained in battle worthy condition. The decision to overhaul equipment is based on the maintenance philosophy promulgated at the time of induction for the envisaged life cycle as enumerated in Equipment Management Policy Statement (EMPS). The targets of overhaul to be undertaken by ABWs are decided by MGO depending on combination of factors such as periodicity of overhaul as stated in EMPS and condition of equipment, backlog of overhaul, capacity of ABWs and supply of spares by DGOS and various spares supplying agencies.
The present model adopted by ABWs is complex and chaotic and leads to delay. The dependency on multiple depots for spares support of equipment has been a major area of dissatisfaction for the ABWs, as they had to raise multiple demands and correspond with various feeding depots. For example the two major workshops i.e. 505 and 512 ABW responsible for overhaul of Class “A” vehicles are dependent on six Central Ordnance Depots for obtaining the spares for the overhaul of respective equipment. Present model for spares supply in existence at the ABWs is shown in diagram on Model for Supply of Spares.
RFI for COD Kanpur
Indian Army has issued a Request for Information (RFI) on Dec. 19 to short list the private contractors to run COD Kanpur on Government-Owned, Contractor-Operated' (GOCO) model with a aim to adopt best business practices in warehousing and supply chain. COD Kanpur is responsible for supply chain management of General Stores and Clothing items for the Indian Army. The service providers with experience in warehousing, logistics and supply chain management have been given six weeks to respond to the RFI. The plan is to allow the selected service provider to take over present infrastructure and related services from the COD Kanpur on “as it is and where it is” basis. The selected service provider, will also have to absorb the existing civilian manpower and workforce at the facility.
Relevant Lessons from West
The military logistics systems and organizations of the USA and the UK do hold some lessons and guidelines for India to evolve its own logistics structures and organizations for meeting the challenges of war fighting in the 21st century. Experience of the western world, in adopting an integrated and computerized logistics system has drawn following advantages:-
- Efficient & effective logistics system.
- Higher customer satisfaction.
- Prompt response to flexible operational demands.
- Large reduction in stock holdings.
- 15 percent savings in inventory costs.
- Better source contracting leading to further 20 percent savings.
- In light of the above there is urgent need for unified/integrated logistics management structure for the three services.
- Logistics Strategy to harness all available resources at the National level and should account for delivery of logistics infrastructure in the desired theatre with a responsive supply chain.
- The time taken between forecasting, receipt of the approvals and actual procurement needs to be reduced.
- Build and stock theaterised logistics grid of supply nodes with state of art warehousing through PPP model.
- The defence forces should move towards nationally reputed firms in the private sector for servicing its central contracts and utilize their expertise in supply chain management best practices.
- Integrate civil infrastructure and warehousing available in the theatre.
- Original Equipment Manufacturer (OEM) to be involved in forward repairs thereby reducing the need to stock higher inventory levels of spares, reduce requirements of transportation and related infrastructure.
- The onus of holding stocks to be shifted on to the supplier.
- Establish collaboration with all available corporate medical facilities around the theater to achieve a medical supply chain.
- Provisioning of improved mobility, mechanical handling facilities and universal use of bar-coding system etc in achieving higher efficiency and productivity.
Resistance to Change
The Ministry of Defence has proposed privatization of army base workshops under the GOCO model in January 2018, acting on the recommendations of the committee headed by Lt Gen D.B. Shekatkar (Retd). Under the scheme, the MoD had then stated that government will provide land, infrastructure, plant and machinery, equipment system support, oversight and facilitate the contractor. The Phase-I of the transfer was stated by Apr 19 and Phase-II of the transfer by Dec 2019. Strangely now after one and half year MGO wants to see whether a corporate operator can tackle depot level repairs and overhauling various equipment and their variants, can be undertaken by GOCO.
The prime reason for resistance to change has been inertia. Some relevant factors are:-
- Military organizations are historically known for their conservatism, besides the natural human nature to resistance a change.
- There has been no harbinger of change. Change has to be effected by highest possible authority where whole system converges. In our case all systems converge only at the level of the defence minister through various committees.
- Since logistics involve a large canvas requiring experience and expertise and there is general lack of clarity at the higher level, radical steps are avoided due to risk of failure.
- There may be turf battles among the three Services, the bureaucracy, production agencies and the political class.
- There have not been adequate efforts to create an internal consensus within three Services on this important issue. The desired changes thus require a major overhaul and will certainly fall in the realm of revolutionary changes which unfortunately only take place after a setback.
Issues and Concerns
The ABWs have annual turnover upwards of Rs 10000 Crores. Civilian staff accounts for over 75% of the strength and military manpower about 25%. Potential partners desirous of being a part of this initiative be requested to contact Nodal Officers to enable the Indian Army to organize presentations / visits of the interested partners to the Army Base workshops. Notwithstanding the merits, some of the issues and concerns are:-
- The present infrastructure will require investment in upgrade of Plant and Machinery and training of employees.
- The issues of criteria for selection of private partner for a particular segment say Tanks, Opto Electronics etc. The private sector may be able to partner with OEMs as a result the ABW will benefit from Transfer of Technology and upgrades.
- Private companies will insist on the government rationalizing the workforce and replacement of Army personnel. There could be some disruptions in its equipment maintenance resources.
It needs no underlining that a deeper analysis is required to work out a plan that has the potential to succeed. As part of privatization policies, Indian Army's Master-General of the Ordnance (MGO) has hired Pricewaterhouse Coopers Pvt. Ltd. (PwC) to evaluate whether government owned corporate operator (GOCO) model can be implemented at eight army base workshops across the country. PwC intends to hold conferences and consultations with industry participants, who may be interested in participating in the process going forward and to understand from interested industry participants their views on opportunities envisaged and issues and concerns if army base workshops were to be run under the GOCO model.
- Directorate EME should share a list of challenges & issues that prospective bidders may face. Contracting model, Scope of Work, Obligations etc. must be clearly outlined in a detailed project report.
- To be able to operate ABWs efficiently, the industry must develop expertise, manpower, process, procedures in a phased manner.
- Familiarisation of work philosophy of workshops, well publicised visits for 3-4 days at a common date by industry representatives should be planned.
- Clarity on limits / restriction on a number of workshops private players can bid for must be specified.
- Assured orders - 10 year assured target plan should be given to the operator of each workshop.
The uncertain requirements and demands of future conflicts, militaries all over the world are being forced to adapt adaptable supply chains and the life cycle management of their assets. Militaries depend on cost effective support from the manufacturers and suppliers of their equipment and from 3rd Party providers of logistics support.