Building Supply Chains for the 21st Century.

• Author: Sax, Chris
• Position: NDIA Perspective

* As we ring in a new year, the impacts of America's supply chain issues are becoming increasingly visible. The defense industrial base is no different.

In many cases, supply chain shortcomings were not caused by COVID, but resulted from longstanding issues unearthed by the pandemic. These must be addressed for the United States to compete in a world fraught with new and evolving defense challenges.

Due to its unique position as the core industrial backbone for America's national security, the defense industrial base faces intensified supply chain challenges that could leave U.S. armed forces vulnerable. First, the industry's supply of critical raw materials is often sourced from geopolitical adversaries, or from U.S. allies that could be cut off during international conflict. The same is true for America's manufacturing capacity. Many crucial components, such as semiconductors, are paramount to the success of the 21st century warfighter yet could be denied by adversaries.

Second, some defense goods are procured from a sole source or fragile market, which limits beneficial supply chain redundancy, impacting overall resilience. Lastly, the defense industrial base faces an ecosystem challenge due to fewer new market entrants, a smaller quantity and spread of small- and mid-sized businesses, and a burgeoning skilled workforce crisis.

Despite these challenges, through a whole-of-nation approach, we can address and reverse these challenges, enabling the defense industrial base to face the challenges of the 21 st century.

One of the leading dangers to defense supply chains is the precarious sourcing of the materials and manufacturing capacity critical to supplying U.S. defense needs. As highlighted in the National Defense Industrial Association's Vital Signs 2022 report, the United States remains highly dependent on certain nations for the import of finished rare earth minerals, often from a sole source provider. China is one such source, supplying 80 percent of U.S. refined rare earth material imports.

A lack of manufacturing capacity and redundancy poses a similar challenge to the industrial base. In a Vital Signs 2022 survey, 31 percent of industry respondents self-identified as a sole eligible supplier, representing a single point of failure for U.S. defense supply chains. Industry also relies on international sources for its manufacturing capacity. Over reliance on these sources can increase supply chain fragility when strength is required...