Operations management of the future - a holistic view in a complex world

Well-planned process optimisation can give you a head start in terms of reaction time and speed. The digitalisation of command and administrative tasks supports this. The introduction of automated and networked applications and software for transmitting target data in real time as part of the battle of connected weapons and data-centric warfare combines a more intelligent and cost-effective use of resources with increased efficiency in operational planning. Data Centric Warfare consistently encompasses all military processes from Joint Intelligence, Surveillance and Reconnaissance (JISR) to logistics and targeting.

Standardised processes can thus improve the interoperability of armed forces in a multinational network and successfully overcome challenges such as language barriers or divergent organisational structures. With a holistic view, KPMG can support the definition and implementation of standards across organisational areas and countries. These are essential prerequisites for both processes and technology in order to survive in the context of multi-domain operations.

Based on the available data, KPMG supports the development of concepts for the automation of forecasts and planning processes using AI. The same applies to software for analysing big data from the intelligence network. The development and introduction of digital applications can provide a timely and accurate picture of the situation for a more efficient and sustainable control effect, which also includes the anticipation of situation developments and the identification of prescriptive recommendations for action. Our approaches to comprehensive and innovative digitalisation thus give armed forces an information advantage and the ability to react more quickly.

The stable and sustainable development of Germany as a defence location requires

• an efficient system for controlling and coordinating the supply of critical defence equipment and raw materials,
• the identification of domestic producers,
• securing supply chains and
• strategically forward-looking, robust supplier and raw material supply planning.

For a better defence industry base, KPMG uses industry-specific expertise and a view of the supply chain system to help identify the relevant levers and optimisation potential for forward-looking planning. The defence industry base and the areas of key technologies must be set up in such a way that they are resilient to the disruption of global supply chains. Among other things, the model of a state-guaranteed basic capacity utilisation of these industries must be examined in order to be able to scale them up if necessary.

KPMG can contribute to the design of an adjusted procurement management system that prioritises the rapid availability of systems while keeping an eye on actual operational requirements. Our procurement and project management expertise helps to achieve this goal, reduce costs and simplify procurement at the same time. Our legal expertise in procurement law also supports the legally compliant handling of projects, ensures that the armed forces have negotiating power commensurate with their importance and minimises procurement law risks.

Sustainability stands for responsible leadership. The focus here is on the necessary balance between economic development, social justice and environmental protection. The goal: a long-term and future-proof economy and society. This must go hand in hand with a strengthening of the armed forces in terms of security policy.

The acronym "ESG" (Environmental, Social, Governance) is predominantly used for this approach across all sectors. Four focus topics are emerging for the Bundeswehr:

• The armed forces as part of society
• Interaction of crises and climate change
• Socially responsible and sustainable supply chains
• Financing the production of defence equipment with regard to ESG criteria

Sustainability is a task for society as a whole, and the armed forces are not exempt from this. As one of the largest organisations in Germany, the Bundeswehr not only plays an important role in achieving the ambitious goals of national sustainability strategies, but also in promoting social responsibility.

Climatic conditions have changed drastically around the world in recent years. Extreme weather events such as heatwaves, droughts, storms, heavy rain and floods are occurring more and more frequently. A modern, operational army needs to be prepared for this.

In addition to increased disaster relief operations - both nationally and internationally - there is still a risk that military conflicts will be triggered, for example by distribution disputes or migration movements, which will make it necessary for the Bundeswehr to intervene within the framework of international organisations.

Conflicts also cause considerable environmental damage. There is a risk of biodiversity loss, contamination or crop losses, which continue to have a destructive effect even after the end of the conflict and can be a source or catalyst for crises. A focus on sustainability in foreign and security policy can make a decisive contribution to holistic global stabilisation in terms of security policy. For example, shortages of natural resources caused by climate change can lead to tensions. On the one hand, these are less severe the more the consequences of climate change are mitigated. On the other hand, distribution conflicts can be reduced in a sustainable defence and security policy if the military is included in a state distribution system.

The Russian war of aggression against Ukraine has made it clear that supply chains are being targeted by parties to the conflict as a strategic breaking point in order to weaken specific industrial segments or entire nations. The disruptions come at a time when the German economy is undergoing a transformation phase, the core aim of which is to decarbonise energy production and supply. These factors have a major impact on processes along the value chain. In addition, access to finance is becoming more difficult and is further restricting sustainable financing.

As part of an EU-wide study, KPMG AG is currently looking at sustainable financing and sustainable supply chains within the defence industry. The results of the study will be published and discussed in the near future and are available on our website.

Changes require a comprehensive and clear database from which concrete goals can be derived. Together with our customers, we have created such a database using IT-supported dashboards, among other things, and thus revealed sustainability potential that could not be recognised for a long time

Furthermore, in cooperation with the Ministry of Defence of a NATO country, we gained valuable insights into the interdependencies/interactions between climate change and the transformation of the defence sector. The findings have been summarised in a sustainability agenda.

Electrification of military propulsion systems is challenging - but it also offers considerable tactical advantages. However, due to various requirements, electrification in purely military use is hardly possible. In the civilian fleet management of the Bundeswehr, on the other hand, there is great potential for CO2 savings. In contrast to military mobility, this area offers many opportunities for a drive mix that also includes electric drives.

The circumstances under which primary products are manufactured or raw materials are extracted also have a direct impact on the living conditions of people in the respective supplier countries. These must also be taken into account when making project decisions.

As part of a study, we have shown that there is an urgent need for action by defence companies, particularly in the area of ESG reporting. As an experienced advisor to the German Armed Forces, we are ready to support you in tackling these important tasks and working together to make the armed forces fit for the future.