It’s no secret our nation’s security needs continue to rise at an incredible pace. The Department of Defense’s (DoD) capacity to meet those needs at a comparable speed, however, remains a bit murky. After more than a decade of resource-depleting operations in Iraq and Afghanistan and years of defense-spending cuts, the overall size and strength of the U.S. military has been reduced to near-historic lows. The menaces facing our nation, both physical and digital, continue to escalate, as does the need to accelerate the development of advanced defense systems while simultaneously reducing cost—two mandates that seem as compatible as oil and water.
While efforts are being made to streamline acquisition processes (enabling the DoD to get more bang for its proverbial buck), progress has been slow—incremental changes against a backdrop of decades-long conflicting priorities and bureaucratic red tape. Nonetheless, 2017 could be the start of a major turnaround for our defense programs.
Adapt or Die
To speed the effort of getting state-of-the-art technology into the hands of our warfighters at home and abroad, the defense sector must acknowledge that the current supply chain structure is neither efficient nor effective enough to support the fighting force of the future. Simply put: if the defense supply chain doesn’t adapt posthaste, our troops are going to be dramatically under-equipped, leaving both them and the nation vulnerable.
The task at hand is formidable, no question, but, it is also eminently doable. The key to reimagining the end-to-end defense supply chain lies in the sector’s willingness and ability to leverage, not just technological developments of the commercial sector through COTS, but also the operational best practices of the commercial sector’s leading organizations.
For example, total cost of ownership (TCO) is a guiding principle within the supply chain community. This holistic, best-in-class approach recognizes that the “cost” of a product or system is comprised of more than just the sum of its direct, piece-part price tags. Indirect factors such as the costs of acquisition, operations and maintenance, and even the disposal must be taken into account. This concept, however, remains elusive within the defense appropriations process.
Nowhere is this more evident than in defense service operations. When gear is returned from the field, far too often repairs are made using technology on the trailing edge of its lifecycle. Granted, these might be the least expensive per-piece parts on the market, but the TCO model would take into account the full cost to carry legacy technologies, maintain systems, and assess potential budget overruns. Ultimately paying a little more per piece for an advanced technology could therefore be the better option.
From SOP to S&OP
It’s also time for the sector to replace antiquated standard operating procedures (SOP), which allowed for 10 year acquisition cycles, with a sales and operations planning (S&OP) model where inventory is managed as an asset—not a liability. With this approach, the job of a defense sector supply chain leader is very different from the traditional role. Supply chain professionals must have a much greater understanding of where the market is going and where technologies are in their lifecycle. This technical awareness comes from greater collaboration with industry partners. By aligning with key suppliers, they can learn what the next generation of technology looks like. At the same time, members of the defense sector need to more proactive about sharing their own product roadmaps with device manufacturers to provide them with better visibility into what the design capability matrix for military/aero/defense solutions might be over the next 10 to15 years.
Clearly, there will always be aspects of defense systems development that will preclude full disclosure with supply chain partners, but there are still tremendous opportunities to accelerate innovation to the warfighter through more open, cooperative interactions between the producers of military and defense equipment and members of the extended technology supply chain.
A Brave New World
Over the past several years, former Defense Secretary Ash Carter made tremendous strides in bridging what he termed “the chasm” between the DoD and Silicon Valley. In addition to numerous face-to-face meetings with top technology company leaders, Carter spearheaded the creation of the Defense Innovation Board and established Defense Innovation Unit Experimental (DIUx) offices in technology hotbeds Silicon Valley and Boston.
Carter’s efforts to better assimilate high-tech innovations and operational best practices into the defense sector have yielded some impressive initiatives like the new Commercial Solutions Opening (CSO) contracting mechanism. CSO replaces the traditional “waterfall” approach to acquisitions and contracting, which entails strictly defined RFP (requests for proposal) with a much more flexible communal process. In it, potential vendors are presented with a “capability gap” or technology the DoD is interested in adopting and asked to propose a solution.
According to the DoD’s CSO “How-To” guide, this collaborative approach allows DIUx to leverage the expertise of commercial sources that would not typically bid on a government contract faster and more cost-effectively. CSO not only enables the DoD to “move at the speed of business,” but it actually puts the government on the leading edge of acquisition innovation.
In addition, programs designed to increase the affordability of defense procurement and improve defense industry productivity, such as Better Buying Power 3.0, have enabled the DoD to reduce the five-year moving average for cost growth on its largest and highest-risk programs to a 30-year low, according to the 2016 Performance of the Defense Acquisition System Report.
The commercial sector, not the government, is now responsible for the majority of today’s most groundbreaking technological developments, which can bring great value to our national defense efforts. Giving trusted suppliers greater transparency into the technology roadmap and streamlining acquisition and contracting processes would position the DoD to become a fast adopter—which, as they say, is close enough for government work.
Filed Under: Aerospace + defense