Six Lessons Learned from Fixing the Nation’s Industrial Base Supply Chain

“Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.” Sun Tzu

On July 22, 2021, the Defense Critical Supply Chain Task force released its final report on redressing the nation’s supply chain vulnerabilities.

The task force is a bipartisan group chartered to review the industrial base supply chain to identify and analyze threats and vulnerabilities. The government stood up this task force because of weaknesses revealed by Covid-19 and exploitation by China.

To prevent future supply chain vulnerability, this task force studied the industrial bases’ performance during the pandemic. The task force has now concluded its report, findings, and recommendations.

The final report identified six key areas for improvement. This post will examine what each recommendation means to the government and to private industry.

With that, let’s proceed with the six recommendations identified in the report.

#1 DOD must treat supply chain security as a defense strategic priority.

This highlights the importance of supply chain strategy as a critical priority. It clarifies that strategy is the foundation on which supply chains are built. Hence, the task force recommends codifying this principle into law.

For private industry, Supply Chain Masters have also recognized this tenet. It represents the starting point for any business that intends to compete. It does that by building an agile, resilient, and responsive supply chain.

#2 DOD must have visibility of the defense supply chain to understand its vulnerabilities and develop risk mitigation strategies.

Here, the task force addressed what private industry already understands. In government, it’s more complicated to achieve end-to-end-visibility given the government’s size. But the task force recognizes the value of visibility, as it is a primary source of data and information.

In private industry, a movement is already underway to gain end-to-end visibility. That’s because it supports data-based decision making. That would remedy an immediate vulnerability. Also, the technology is ready for use today.

#3 DOD (and the United States more broadly) needs to reduce reliance on adversaries for resources and manufacturing.

This points to overreliance on China as a sole-source provider for many materials needed by the Defense Industrial Supply Chain. This recommendation also includes “… industry, allies, and partner nations.” The recommendation recognizes the importance of diversification of sources and the need for partnerships.

Private industry can also profit from this recommendation. In fact, many businesses are already diversifying their sourcing strategies. Companies are moving to Mexico, Vietnam, and Brazil to diversify their sourcing. Companies are also striking long-term partnerships and alliances as a matter of survival. We’ve seen that in the ocean shipping and trucking industries. As complexity and chaos loom, partnerships between shippers and 3PLs will grow.

# 4 DOD must use its influence to facilitate workforce improvement by creating a productive partnership between the Department, industry, education partners, labor, and other federal and local entities.

The task force also considered future human resource and training needs. Recognizing the supply chain’s move to more automated capabilities, it is clear DOD needs a new, up-skilled and trained workforce. Here, too, the task force plans to leverage partnerships with private industry and educational institutions at local, state, and national levels.

Similarly, private industry has begun the realignment of its workforce with emerging technologies. Just as DoD grasps the importance of talent, industry, too, must re-look its workforce. That said, industry cannot rely on new hires alone. Industry must also resort to re-skilling and up-skilling. Now is the time to consider future talent needs.

#5 DOD should strengthen the ability to leverage close ally and partner capabilities through the National Technology and Industrial Base (NTIB).

With resilience in mind, the task force examined how to leverage existing capabilities. This recommendation calls for partnering with the National Technology Industrial Base (NTIB). In doing so, the industrial base marries research and development with technology acquisition. And the NTIB does so within the DOD and among allies. Again, this recommendation underscores the value of partnerships.

Private industry, likewise, can profit from this recommendation. Besides maximizing internal resources, private industry can expand its capabilities by extending technology initiatives to its stakeholders. That would be especially helpful in achieving end-to-end visibility. And it would foster agility and resilience. As you can see, reliance on partnerships isn’t only beneficial, it’s necessary.

 #6 DOD should deploy the full range of American innovation to secure the supply chains involving rare earth elements.

In its final recommendation, the task force addressed diversification of rare earth sourcing through purposeful innovation. It calls for focusing on developing technologies related to, “… extraction, processing, and recycling of rare earth materials.” To achieve this, the task force wants to legislate closer collaboration among the Department of Energy, the Department of Interior, and the DOD.

In the same vein, private industry should leverage its partnerships to optimize the results it can achieve. No one company has a monopoly on innovation. And with the shortage of silicon chips, lumber, etc., following DOD’s lead would be beneficial.

 

The Rise of Strategic Supply Chain Management

It should be clear from this report that the government views supply chain as a strategic asset. It may be that supply chain management was always a strategic asset. But now, in these challenging times, that tenet becomes clear.

Treating supply chain as a strategic asset points to the need to create a holistic DOD supply chain. Today’s environment demands nothing less. Challenged on the world stage, U.S. leadership is at risk. The DoD cannot afford waste with increased budget deficits.

Likewise, private industry should view supply chains as a strategic asset. Focusing on tactics, as Sun Tzu stated, leads to defeat. So, businesses must plan strategically before diving into the tactics. It calls for addressing the Big Picture first.

At American Global Logistics, we always look at the Big Picture. Then we dive into the details. That’s how to create an agile, resilient, and responsive supply chain.

Contact us today to learn about how we can help you apply these lessons learned. Applying these six lessons will go a long way in separating you from the competition.