The military infrastructure and logistics market consists of three categories: Force Management, Installations Support, and Central Logistics. The value of the market is expected to increase at a CAGR of 5.69% during the forecast period (reference see graph).
The supply based system is gradually being replaced by distribution based logistics. Under the supply based system multiple independent organizations are responsible for the distribution process, and there is therefore a lack of centralized command and management. Logistics units are either combined to form support groups or are separated to form functional or branch specific units. Conversely, a distribution based system results in reorganizing these units into seamless distribution commands and would help the armed forces to deploy rapidly in order to counter asymmetric threats.
Recent years have witnessed a growth in the development of COTS products and technologies by various defense companies engaged in the field of military infrastructure and logistics. Governments are now buying bundled products as opposed to systems, which are then configured to be made into integrated systems. This process has many benefits including research and development cost savings and a reduction in production time. The asymmetric wars in Iraq and Afghanistan and rapid advancements in technology have resulted in changes in the way the military around the world is handling resupply and production.
The military logistics sector is currently witnessing a phase of moderate M&A activity in keeping with the trend of sector consolidation when military demand falls. As defense spending has leveled off in recent years, companies operating in all areas of defense are looking to diversify their offerings in order to compete for the various contracts on offer and add more revenue streams to their existing lines of business.Many countries across the world are currently engaged in the process of overhauling their logistics capabilities. The primary element that drives an effective logistics system is the software used to view logistics transactional data. Major defense spenders such as the US and some countries in Europe are shifting from their respective legacy systems to more advanced platforms in an effort to increase the efficiency of the armed forces.
Source: ASDReports - Market Research
Date: May 30, 2012