Building Supply Chain Immunity

If you’re a betting person, put money on supply chains becoming vastly more closely scrutinized and attended to after the COVID-19 pandemic. It has been an object lesson in how important it is to temper the desire for cheap, lean production no matter where or at what larger cost.

Contracting professionals, whether in government or industry, can expect to called on for far greater understanding of the supply bases of their prime contractors, deeper knowledge of national and international markets for goods and services, and more granular comprehension of the health and capability of companies bidding for their agencies’ or companies’ work.

Even as the pandemic had only just begun claiming victims here, it wasn’t hard to find discourses on the brittleness or fragility of U.S. supply chains. Very soon, the U.S. military discovered the truth of those characterizations as suppliers deep in defense contractors’ networks slowed or ceased production due to sick employees, local stay-at-home orders and even school closures.

Mapping Effects
As we noted in the Innovations column in our June issue of Contract Management magazine (reprinted here on the Acquisition Innovation web page). Mapping the effects of the virus on contractors, subcontractors and further levels of suppliers became an increasingly important capability. Our July issue features a story about the Naval Supply Systems Command (NAVSUP) supply chain war room. It mapped the 900 companies in the spare and repair parts supply chain, seeking to identify stressed companies in need of support.

The mapping project was buttressed by the recent creation of a supply chain manager function in Navy programs. These managers monitor Navy systems from cradle to grave, interacting regularly with NAVSUP, an could be the precursors for similar positions elsewhere in government.

In March, government staff and academics began an effort to work with the many national supply chain task forces responding to the pandemic. “We were quickly met with the overwhelming realization that our country was not prepared to respond to needs being imposed on our healthcare supply chains, wrote Robert Handfield a participant in the group and leading supply chain theorist at North Carolina State University. “Not only were we not prepared, but our previous strategies had left us crippled by overseas supply chain dependencies, often accrued through the pursuit of low-cost procurement.”

Persistent Surveillance

Handfield and U.S. Air Force Major Daniel Finkenstadt, another participant, are drafting a framework for a new way to govern national supply chain contingencies. An overwhelming theme of the pandemic experience, they say, has been “lack of central governance to orchestrate the disparate relief efforts towards a common goal of optimized sourcing and distribution for rapid recovery and long-term resilience.” Solving that will take governance authorized and funded for the long term and equipped with proactive awareness and fast supply chain response and recovery.

To cure what they call a “dire lack of market intelligence and market research,” the authors call for a persistent surveillance system that continuously observes the global supply chain from different vantage points, able to zoom in and out for niche and overall views of risks, constraints and solutions.

They call their recommended approach to curing these failures “supply chain immunity.” Like the human immune system, such a supply chain system could detect an invasive force with a suite of intelligence sensors managed by a strong central governance cell. The intelligence gathered would enable relief efforts to be prioritized so response would be agile, coordinated, and properly targeted.

Handfield and Finkenstadt’s report is a work in progress, so look for more. And don’t forget that NCMA is looking for your stories of contracting ingenuity during the COVID-19 crisis. Please send them to me at [email protected]

Outside the Box Blog

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