As America continues to face the effects of inflation, natural disasters and geopolitical unrest, the need for supply chain resilience remains in sharp focus. The president’s executive order on America’s supply chains and the CHIPS and Science Act underscore an urgent need to enlist emerging technology and hybrid models to enable resilient, competitive and sustainable supply chains.
The stakes are exceptionally high for the Department of Defense, where disruption could cause devastating national security consequences. Properly training and equipping U.S. military service members relies on raw materials and products that, without robust supply chain management, could be frequently delayed or unavailable.
Specifically, the DoD relies heavily on “just in time,” or JIT, supply chain methods in the name of efficiency and cost savings; however, current realities and continuous disruption suggest the importance of enhanced “just in case,” or JIC, practices.
Below are three reasons why the DoD should consider shifting its mindset from tactical to strategic by embracing a hybrid JIT/JIC model.
Sourcing: We no longer live in a disruption-free world. To deliver materials and services on time, on budget and to the highest standard, the DoD needs an agile supply chain prepared to address America’s overreliance on foreign sourcing. With chip shortages and other vital components’ availability in constant flux, having sufficient reserves and avoiding counterfeit parts are more important than ever. As such, the DoD must allow for increased inventory and diversified sourcing while simultaneously employing advanced technologies, like artificial intelligence and blockchain to forecast shortages and maintain quality.
Under JIC, predictive analytics balances the need for reserves with the desire to maintain cost efficiency. There is less need for precise demand projections because inventory levels are sufficient to meet demand while simultaneously hedging against current or potential disruptions to resource flow. And companies can take advantage of bulk discounts when prices are lowest to decrease direct procurement costs.
Risk management: Enabling compliance and security alongside agility is a must in today’s high-stakes, operational environment. Supply chain risk management helps provide economies of scale as well as secure technology and the right mix of trusted partners for a truly integrated ecosystem.
JIC supply chain risk management navigates probability by mapping end-to-end processes to keep costs down and avoid single points of failure.
This hybrid JIT/JIC approach focuses on preserving the security, integrity, resilience and quality of all goods while using scenario-based demand forecasting to keep costs down.
Resilience: While DoD supply chains must remain cost-efficient, they can only succeed with resiliency and by solving for unknowns. This can be accomplished with consolidated service-level agreements while planning for the best- and worst-case scenarios, including surges, seasonality, obsolescence and diminishing manufacturing sources.
Under JIC, if a supplier suddenly can’t fulfill an order, if lead times unexpectedly increase, if customer demand spikes or manufacturers encounter any other distributions, the supply chain manager can make real-time adjustments without scrambling to acquire additional stock.
Furthermore, JIC provides access to critical material for longer periods, extending the warfighter’s ability to engage on multiple fronts. This means improved readiness, system availability and operational tempo while reducing risk.
The DoD’s supply chain is under immense pressure, and defense leaders have an opportunity to incorporate, wherever possible, the benefits of the JIC methodology. This does not mean saying goodbye to JIT efficiency and cost savings; it means leveraging the best of both models to strengthen national defense and meet the demands of an increasingly unpredictable world.
Chris Frye is the senior vice president of logistics and supply chain management at SAIC.
