University of Moratuwa

MBA in Management of Technology

Department of Management of Technology
Cover Sheet for Assignment
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.
Subject Code:
5215

Group

Subject:

Supply Chain Management

Lecturer:

DR. Raj Prasanna

Individual

Students Statement:
I certify that I have not plagiarized the work of others or participated in unauthorized
collusion when preparing this assignment.
Office
use only:
Signature:..
Deadline Met

Date:.
Extension Given

Signature:.
Marks Given:

Late Submission

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.

Contents

Executive Summary................................................................................................. i
Table of Content

..ii
LIST OF FIGURES.................................................................................................... iii
1.

2.

3.

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

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

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

5.

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

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

2

6.

Conclusion...................................................................................................... 19

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 ..4
Figure 5.1 Integrating warfighter-facing and supplier-facing organizations ..17
Figure 5.2 ability to rapidly respond to environmental changes and integrate intelligence from
multiple sources into a single enterprise plan ..17

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

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 nations
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.
(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.
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.
2

 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.

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 Porters
Value chain analysis. The Porters 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;

Figure 2.1 Porters 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
4

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 Navy

Considering 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;
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:
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
6

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.
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
7

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
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;

Operational, public affairs, government relations

Technical, IT and quality assurance
Logistics, general management and finance
Accounting,
Legal
HR
9

and planning

 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;

3.2

Improving service
Reducing cost to serve.

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
10

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);

3.3

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.

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.
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.

11

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.

3.4.2

Ships/craft Acquisition
Spare parts
Fuel and Lubricant
Uniform materials
Victualing items

Operations

Mission selection and operation planning

Sailing Scheduling
Machinery maintenance activities
Transportation

3.4.3

Patrolling Seas
Fisheries protection
International defence activities (Joint Exercises, Seminars, Workshops)
Providing land security

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

12

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
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

13

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.
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
14

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
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.

15

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.

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.

16

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 Lloyds 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
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

17

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
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
18

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-defensesupply-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)

APPENDIX I

- Sri Lanka Navy Value Chain

APPENDIX II

- Sri Lanka Navy Supply Chain

19