The nation’s inability to quickly surge medical supplies during the initial phases of the COVID-19 pandemic—the result of largely offshore manufacturing and inadequate preparedness—is a lesson on why data-rooted supply chain knowledge, advance planning, and end-to-end supply chain visibility are crucial. In peacetime, even with the Defense Production Act, it took five months before the government and commercial industry could produce an adequate supply of domestically manufactured masks for healthcare workers. Simply put, you cannot surge what you do not have.
To be able to compete and win in conflict with major powers, the Department of the Navy (DoN) should embrace next-generation supply chain visibility and logistics capabilities and study what the pandemic taught about supply chain gaps.
First, the rapid onset of COVID-19 illuminated that, as a nation, the United States must develop greater geographic diversity in its supply chain. In early 2020, it became apparent the nation was almost entirely dependent on foreign sources for life-saving infectious disease control items. There was near-zero domestic production of some personal protective equipment, testing supplies, pharmaceuticals, and other vital equipment such as needles and syringes. In addition, the supply chain was vulnerable by being oriented to one geographic area: Asia. The United States had not managed a public health industrial base as it does the defense industrial base.
Second, existing supplies were inadequate in the face of a widespread public health crisis. The Strategic National Stockpile did not have the range and depth required to be the backstop for 50 states and six territories. And there were no surge contracts in place to allow for rapid resupply. The nation essentially went into the COVID-19 fight with one round in the chamber and nothing in the magazine. After the Strategic National Stockpile was depleted, there was nothing on contract and almost no federal understanding of what it took to make a mask, a nasopharyngeal swab, a ventilator, or a test kit.
Third, the pandemic highlighted the differences between efficient and effective supply chains. Pre–COVID-19, the medical supply chain was enhanced for cost at every level. As an example, the system enhanced the delivery of a disposable mask just in time, at the lowest price. It was sized and modeled for normal, peacetime demand, with no capacity or capability to surge for a wartime or pandemic response.
Finally, a lack of visibility across supply chains complicated response efforts. The federal government lacked an end-to-end visibility system to see national demand and national supply for a public health emergency. There was no data structure or command-and-control apparatus in place for hospitals, nursing homes, or states to rapidly communicate requirements and have them filled by either public or private stocks. While
the Federal Emergency Management Agency communicated with states, the federal government did not have a common operational picture of requirements or of supplies held at all echelons,
public or private.
With these lessons integrated, DoN can transform its supply chains to create the visibility and agility necessary to deal with the next disruption, whether economic, cyber, or kinetic. The department can partner with industry and should focus on four key areas to prepare for the next conflict.
• Expand supply chain risk management and resilience: DoN needs a best-in-class supply chain risk-management program that understands the lowest levels of the supply chain to help ensure geographic diversity and understand ownership, influence, and sole-source risk. Now is the time to “de-risk” the supply chain, grow alternate sources
of supply, and work to ensure the department is resilient by not being dependent on one geographic region for essential materials.
• Ensure end-to-end visibility: You cannot manage a supply chain unless you can see it. End-to-end visibility would allow DoN to see past tier 1 and tier 2 suppliers to the lowest manufactured item to understand surge capacity (supply) and assess requirements from operational units and depots (demand). This data-rooted supply chain management—including use of a “control tower” or central dashboard for data visibility—can provide commanders the ability to rapidly adjust operations, manage material requirements, prioritize resources, surge supplies, and sustain the force.
• Harness quality data: Collecting clean data at all levels of the supply chain is critical to modeling scenarios. This allows for best practices and use of advanced algorithms and artificial intelligence–enabled analytics. These tools can significantly improve forecasting, support better scenario planning, and, if needed, create a system that can push items to satisfy requirements ahead of need. DoN needs a supply chain/logistics information technology architecture that allows its forces to harness and leverage clean data.
• Focus on effectiveness: For years, DoN focused on removing spares from ships to reduce costs. Peacetime supply chains with robust transportation have allowed naval sustainment to maintain forward-deployed readiness. However, these practices may not sustain forces during conflict. Instead, the department should invest in better forecasting methods rooted in data and technologies that provide predictive analytics. The use of digital-twin models to simulate and wargame supply chain scenarios and understand readiness drivers can transform how it calculates supply endurance levels while taking into consideration cost and efficiency.
As the Department of the Navy transforms for the next conflict with a hybrid force of both manned and unmanned systems, transforming its supply chains and logistics capabilities to keep pace with the speed of conflict is critical. The pandemic has shown the nation that it needs a naval logistics strategy to go along with its naval warfighting strategy. Supply chains matter.
