Managing today’s military supply chain

Story

September 08, 2023

Shan Morgan

Elma Electronic

The pace at which technology is ramping up, including in the military electronics and implements arena, is forcing the defense and aerospace industry to increase its adoption of new tech and parts. Such advances in pace and adoption does expose companies to more risk, but the military supply chain is not alone in this dilemma.

The past several years – both during and after the height of the pandemic – have taught those in industry a lot about how to be flexible in day-to-day work environments, but it has also spotlighted how global businesses operate. If you trace supply-chain disruption down to what happens on the floor of a manufacturing shop, one can easily see how a single breakdown along the line can mean trouble across the continuum, from end-to-end.

Recent disruptions to intricate global supply chains have put significant strain on almost all aspects and resources, not just in the realm of technology. At the same time, defense contractors are looking at multidomain operations and shared technology initiatives, like the Joint All-Domain Command and Control (JADC2) initiative and the modular open systems approach (MOSA) to provide better intelligence and networking capabilities as well as streamlined, cost-efficient system development paths to better enable the military warfighter.

Managing supply-chain breakdowns

For those of us in the military and defense industry, a stable supply chain is critical for both national security and economic strength. And just like a surfer trying to paddle past the break, but who keeps getting rolled back to the shore, managing the complexity of supply-chain solutions needed in today’s defense industry can feel a bit like this same frustrating push-and-pull. (Figure 1.)

[Figure 1 ǀ Overcoming the challenges across the supply chain is leading to increased resilience and stability.]

In order to adequately mitigate critical defense supply-chain risks, there needs to be enhanced resilience to breakdowns within the process. In a February 2022 report on “Securing Defense-Critical Supply Chains,” issued by the U.S. Department of Defense (DoD), four strategic enablers were identified to help strengthen the global supply chain and avoid similar interruptions in the future. This diverse set of focus areas addresses several factors of the supply chain rather than a single area:

Workforce: trade skills through doctoral-level engineering skills
Cyber posture: industrial security, counterintelligence, and cybersecurity
Manufacturing: current manufacturing practices, as well as advanced technology like additive manufacturing
Small business: the role of key members of DoD supply chains

Supply-chain resilience and modernization are top of mind for many across all sectors of the defense industry. How does this awareness translate to the actual day-to-day processes the military technology industry need to manage?

Impact of cost-down initiatives on military electronics

One common trend is cost pressures from the DoD being pushed down to the prime contractors, bringing about a new wave of technology, where more is invested in research and development. Advances in high-performance computing and initiatives, like the SOSA [Sensor Open Systems Architecture] Technical Standard, to standardize commercial off-the-shelf (COTS) equipment are all driving the pace of technology, pulling more components in from the commercial market to keep pace with the speeds designers are clamoring for.

Several consequences of this standardization push include:

Outsourcing by the primes: looking for ways to either minimize volume or technology problems within the supply chain.
Technology pulled in by system platform providers: examples include putting together chassis, backplanes, and active cards – and possibly operating systems – as well as solving IPMI issues. (IPMI [Intelligent Platform Management Interface] is a standard system-monitoring interface employed by many board-level standards.
Shift in role of traditional suppliers: companies providing “building blocks” – only a backplane, chassis, or power supply, for example – tasked with finding a place to play in the military market.
Infusion of commercial suppliers: the rapid pace of technology change means more potential entry points of commercial solutions into the marketplace.

Increased pressures with advancing technologies

The pace at which technology is ramping up is forcing the industry to keep in step, exposing companies to more risk.

In the pre-industrial age, cost versus volume was pretty much linear. To make another widget, you added another person – another widget, another person, and so on. In the industrial age, fixed costs dominated, so volume increases meant a better cost curve with the goal being to pump out a lot of widgets using the existing infrastructure.

This current “post-industrial” age is not dominated by volume, but rather by complexity, and the major focus is to manage complexity’s impact on costs. Unmanaged cost increases not only hurt an individual company, but can also harm the entire industry in how companies are perceived by their customers. (Figure 2.)

[Figure 2 ǀ Increases in supply-chain complexity can mean misaligned production costs.]

Assessing production in the current economy

Although previous production models may have focused on a company spending as little time as possible to get a widget out the door, that’s not today’s business. Success in the military technology industry requires a longer cycle, with a typical project starting about 18 months before a prototype is even developed, with production starting as much as three or four years after that. With other recent pivots in the global supply chain, such extended development and implementation times become even more impactful to delivery of the final product.

The complexity of this cycle not only relates to technology, but affects all aspects of a business, from sales, program management, and compliance to change management, customer approvals, and design reviews. No longer is it only the rate of technological change putting tremendous demands on the engineering teams; the recent spate of supply-chain hiccups also then enters the equation as a critical factor.

Some good news: Although delays and disruptions have impacted the supply chain, other factors such as open standards – which help mitigate risks since designs don’t need to start from scratch – are actually helping to form a forward-thinking environment. Many standards groups include key suppliers who commit to support solutions based on the standards themselves. Theirmembership, awareness, and participation give these companies a different perspective of supply-chain requirements. This situation is creating new opportunities to regionalize manufacturing and inventories, thereby reducing the reliance on single-source suppliers. The availability of key components based on modular open standards that can be used across multiple platforms will encourage further acceleration and adoption of new technologies.

Meeting customer expectations

As flow-down continues to occur, manufacturers need to consider a number of factors. When sourcing components, manufacturers must ensure that their vendors are in compliance with the DoD requirements as well. With the strain of constant price increases – sometimes upwards of 20% or 30% for obsoleting technology – affordable traceability is a big challenge. Supply-chain-side operations also must make room for new tooling, new equipment, more personnel, and added training to help ensure that the yield and quality coming out of the manufacturing group stays high and that customers’ delivery expectations are being met.

The key to managing this complex business environment: Companies in the military arena must stay current with the technology as well as the process and must become skilled at balancing resources to increase project risk properly. These moves need to occur across multiple departments and all partner relationships, so as to deliver quality solutions that meet customer expectations at a fair price point. The ability to balance all of these supply-chain issues affect companies’ ability to grow and the health of the industry as a whole.

Shan Morgan is the vice president of sales for Elma. He was previously the senior vice president of sales and marketing for the systems group and also served as general manager of Optima Stantron, the cabinet enclosure unit of Elma. Shan received a bachelor’s degree in aerospace, aeronautical, and astronautical engineering from the University of Arizona.

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