Assistant Deputy Minister (Materiel)

One contract with McKinsey & Company

Advisory and Consulting Services in Support of the Defence Supply Chain

Objective: To obtain third-party high-level recommendations to address Defence Supply Chain gaps and challenges in order to improve performance.
- The Defence Supply Chain comprises over 600 million items, spanning roughly 1.2 million NATO Stock Numbers, globally dispersed across more than 300 supply warehouses, as well as private sector supplies.
- Sound management of the entire Defence Supply Chain is required to deliver against CAF operational needs.
Total Value of Contract: $5,749 (including tax)
Timeframe: 2022-09-23 to 2022-11-10
Results: McKinsey made seven (7) key recommendations. These – as well as those provided by other companies who participated in this process – are informing the Defence Team’s supply chain modernization and improvement plans.
- McKinsey’s recommendations related to decision making, people and professionalization, processes, technology, and analytics. These recommendations were supported by McKinsey’s subject-matter research and its insights on other supply chain transformation efforts.
Outsourcing Rationale: National Defence specifically solicited multiple external independent experts to build a robust set of recommendations on supply chain leading practices. The outsourced work is part of a thorough analysis of the Defence Supply Chain to inform the Defence Team’s initiatives for modernizing and improving its supply chain performance.
Contracting mechanism: Against a Supply Arrangement.

The Defence Supply Chain (DSC) is a strategic capability, integral to supporting Defence operations in Canada and abroad. For this reason, National Defence continues to look for opportunities to improve its practices in this area.
Its complex business processes comprise a broad range of activities from materiel planning, acquisition, support, warehousing, distribution, and divestment.

Through an open and transparent Request for Supply Arrangement process in early 2021, National Defence pre-qualified a number of suppliers, including McKinsey & Company, to provide consultancy services in support of DSC modernization.
Through a competitive process under the Supply Arrangement, National Defence subsequently awarded a contract to four qualified companies – McKinsey & Company, IBM, Deloitte, and Accenture – to provide a holistic review and report on the current state of the DSC.
This contract was awarded to McKinsey under a firm fixed price model with single payment upon acceptance of a final report. McKinsey’s contract rate was in line with comparable services, and they met the deliverables outlined in the contract.
McKinsey was required to sign a non-disclosure agreement, as per the terms of the contract.

McKinsey’s recommendations, along with those from the other companies, are part of a data set which are being used to inform the department’s Defence Supply Chain modernization efforts.
McKinsey’s recommendations included:
1. Improve organizational operating model and decision making to support readiness
2. Double down on capability building at all levels
3. Ensure accurate and precise data flows through the supply chain
4. Implement a balanced scorecard upon which to base a refinement of the DSC design
5. Invest in leading-edge capital asset acquisition tools and apply world class procurement practices
6. Improve supply chain operations for materiel, supported by digital tools, including digital twins and a control tower
7. Improve maintenance management, and enhance equipment availability with a robust maintenance excellence program