What we do
- Improving equipment acquisition performance. Equipment acquisition is a source of both frustration and opportunity for most Ministries of Defense (MoDs) and Departments of Defense (DoDs). Complex requirements processes and procurement systems can lead to inappropriate or unaffordable portfolios. McKinsey has deep experience in understanding these issues and helping MoDs and DoDs resolve them. We have successfully collaborated with clients to adopt a whole-life approach to substantially improve equipment acquisition performance. Our goal is to help MoDs and DoDs streamline the acquisitions processes and apply outcomes-based frameworks to managing contractor-supplier relationships.
- Transforming defense logistics. Duplicative but non-integrated processes and infrastructure result in uncontrolled inventory, poor spare parts availability, and limited visibility of repairables and consumables for MoD and DoD units. Many use multiple organizations to deliver outcomes, adding complexity to both processes and timetables for fulfillment. McKinsey can help clients transform defense logistics by addressing three distinct and related dimensions: The operating or technical model, managerial oversight, and a culture that favors complexity over simplicity. Our success across a range of platforms and consumables with one MoD demonstrates that defense logistics can be simplified and delivery expedited with redesigned incentives, aggressive targets and an outcomes-based approach to managing logistic structures such as warehouses, transport and maintenance.
- Enhancing deployed supply chain performance. Overall supply chain performance for many MoDs and DoDs is low and variable yet expensive. The result is that deployed personnel can suffer shortages of critical provisions, including food, medical supplies, and fuel, that compromise unit effectiveness. For many MoDs and DoDs, a common root cause is the lack of systems that can provide end-to-end visibility into inventory, creating a fragmented view of assets and commodities. McKinsey’s work in supply chain performance focuses on developing standardized, integrated systems and processes that improve asset tracking and logistic communication and reduce costs and duplication while improving operational effectiveness.
- Conducting defense budget audits. McKinsey takes a comprehensive approach when helping MoDs and DoDs evaluate budgets and reduce spending in an era of defense austerity. In conducting audits of defense budgets or individual programs, we assess all segments of spend, from administrative and external services to personnel, procurement, maintenance and operations. We collaborate with clients to redesign key processes such as recruiting and training so they can align personnel and assets to better support defense strategies and priorities. Our audits deliver substantial results: A recent audit for a MoD resulted in a 50% reduction in the operating costs per flying hour for an advanced aircraft system, while another MoD captured nearly $2 billion in savings as a result of a total budget review. Beyond conducting audits, we build our clients’ capability to analyze and prioritize future spend, allowing them to respond quickly to new priorities.
