§ Mr. Jenkin
To ask the Secretary of State for Defence if he will make a statement on the outcome of the McKinsey report into the operations of the Defence Logistics Organisation; and what plans he has to reduce staff numbers at the Defence Logistics Organisation. 
§ Mr. Ingram
The McKinsey report confirmed that the rationale for a fully integrated Defence Logistics Organisation (DLO) remains as persuasive now as it was at the time of the strategic defence review in 1998. The DLO has made real, demonstrable progress towards its strategic objectives, while continuing to provide a high level of support to operations and exercises. The McKinsey report identifies the key principles that will underpin the long-term strategy for322W logistics support, and proposes improvements in the three core logistics processes (procurement, engineering and asset management, and materiel flow), many of which build on existing good practice within the DLO. The key principles and performance targets are embedded in the new DLO strategic plan, and work to deliver against these objectives is being taken forward in the DLO change programme. McKinsey also identified a need for wider end-to-end review of the logistics processes in the land and air environments, and this is now the subject of a separate follow up study that will report in the summer.
Staff numbers in the DLO are reducing as a result of a number of initiatives and rationalisation measures already implemented, such as the warship support modernisation initiative. The McKinsey report suggested that more significant reductions in DLO staff numbers could be achieved. More study and testing will be required before any firm conclusions can be drawn. Any reduction in staff numbers will be as a consequence of changes to modernise logistic processes and any decisions to change how the DLO's current provider functions should be undertaken in the future.