According to Chris Frye, ASRC Federal Supply Chain Management & Logistics operating group president, attracting more small businesses into the defense supply chain would help improve supply chain resilience, efficiency and cost savings, while supporting the Department of Defense’s new “just-in-case stock management” philosophy.
In a recent article first published by Federal News Network, Frye notes, “Government and industry can and must work together to meet the strategy set forth by the [Defense Logistics Agency] director. This is possible by creating a path for small business entrants, increasing transparency in forecasting requirements, establishing more efficient acquisition processes and embracing industry mentorship. Together, these actions will facilitate a healthier supplier base for defense missions and serve the ultimate goal of enhancing warfighter readiness and protecting our nation.”
To learn more, read below or click here for the Federal News Network article.
How to Attract Small Business Manufacturing Back to the DoD Supply Base
By Chris Frye | December 30, 2024
General Dwight Eisenhower said, “You will not find it difficult to prove that battles, campaigns and even wars have been won or lost primarily because of logistics.” The consequences of inadequate planning, provisioning and distribution have been well known throughout the history of conflict. Even the largest, most sophisticated organizations must stay committed to ensuring a robust and thriving logistical support network to properly equip warfighters. With a focus on mission success, Lt. Gen. Mark Simerly, director of the Defense Logistics Agency recently challenged his team to “think, act and operate differently” to meet the logistics needs of DLA’s customers. Private industry has a critical role in this effort as well.
Just in time vs. just in case
A revelation of the COVID-19 pandemic was the critical need for supply chain resilience. Shortages of goods drove commercial businesses to seek solutions that leverage new technologies for automating the end-to-end supply chain process. Now DoD is realizing that just-in-case stock management, where surplus inventory is kept on hand, is the way to protect against the risks of the just-in-time model, where inventory is acquired exactly when it is needed.
The outcome of just-in-case supply is more advanced solutions that can be applied to maximize DoD efficiency and cost savings, applicable beyond DLA to other government supply chain operators. However, the suppliers of those solutions remain limited; and while new AI-based tools may help accelerate production to manage inventory lead times, they do not expand the supply base. The new philosophy of the DoD can be leveraged to re-introduce these small businesses to the market.
Tapping the small business resource
One solution is to attract more small businesses into the defense supply chain. Given the barriers to entry and their own pandemic supply challenges, many small businesses have tended to avoid entering or re-entering the DoD market. Incentivizing them to join the defense supply chain requires a few focused but critical adjustments.
Most important is to increase transparency in requirements forecasting and timelines. Given the production lead times involved in creating many specialized items that the military sources, smaller businesses in particular need clear insights into forecasted requirements far earlier than has been the norm. Just-in-time is not an option for a small business with limited capacity. Just-in-case acquisition will enable them to better prepare for their own throughput, raw materials sourcing, budgeting and subcontracting needs. Advanced, more accurate forecasting insights will enable these manufacturers to avoid lumpy demand signals or production runs limited to an occasional small quantity of items. Such uncertainty is simply not sustainable for a small business.
Another key adjustment is to create an easier path for small manufacturers and suppliers to participate in the DoD supply chain. There are instances where the DoD has only qualified one manufacturer to supply a certain item on a just-in-time basis. That not only effectively eliminates competitive pricing, but this situation also has the potential to create supply bottlenecks or even breakdowns, as we saw during the pandemic.
Despite that recent experience, navigating the complexities of becoming a qualified supplier is still a protracted process that is formidable for a small company to manage. Current prime contractors should take an active role in helping their supply chain members to advance and mentor these potential small business manufacturers to get back into the market. This will help supply chain resilience by creating options and potentially address rising costs from currently sole source items with the new competition.
An achievable roadmap
Government and industry can and must work together to meet the strategy set forth by the DLA director. This is possible by creating a path for small business entrants, increasing transparency in forecasting requirements, establishing more efficient acquisition processes and embracing industry mentorship. Together, these actions will facilitate a healthier supplier base for defense missions and serve the ultimate goal of enhancing warfighter readiness and protecting our nation.
