Finding advantage in the economic attributes of supply chain management

The tension between culmination and operational reach is inherent in all operations and at every echelon. Historical examples abound. The German push into Stalingrad in 1942, in pursuit of a moral victory, and again with their desperate offensive at the Battle of the Bulge in 1944, are two of the more notorious references. Germany started WWII with relatively minuscule industrial capacity (e.g. 4.8 % of the global motor vehicle capacity), limited access to fossil fuels and light/heavy metals, and a delusional sense of invincibility abetted by their early tactical successes by way of Blitzkrieg.^[1] All of this was complemented by a self-assured will to fight predicated on initial weapons design prowess and an ideological sense of superiority. Even still, the strategic intent was to annihilate opposition expeditiously via fast-acting maneuver in order to avoid attritional warfare. The Wehrmacht’s shortfalls across their various campaigns are more apparent in hindsight. Sustainment flaws, for one, plagued the German army. Momentum frequently stalled when German ammunition, fuel, and personnel resupply withered to a halt. At these moments, the reality of scarcity could not be ignored. The Wehrmacht’s dogged pursuit of breakthroughs versus the actuality of dwindling resources during WWII are not isolated instances. There are also modern military and non-military examples of supply chains and production systems being disrupted by material conditions that reflect classical economic postulates. Often overlooked in military logistical planning, these economic principles are valuable because they connote predictable patterns of supply chain behavior. By examining the operational approaches of German forces during WWII, product lifecycle examples of the civilian sector, and the depleting nature of the current Russo-Ukrainian war, the sustainer/logistician of the future can see how predictable supply chain challenges can give way to new paradigms for avoiding sustainment failures. When properly understood, these approaches can be resourceful across a multitude of mission sets and allow us to combine elements from multiple disciplines to better understand the operational environment. Ultimately, these economic precepts should continue to enhance doctrine as a favorable reference for friendly forces and an overwhelming problem for adversaries and enemies.

How does the US military avoid sustainment failures in future conflicts? Of course, it must work to secure its strategic/operational/tactical links (e.g. lines of communication and main supply routes); nodes (e.g. supply depots and support areas); and motor transport assets (e.g. line haul and the vehicle fleet). In doing so, it can better support efforts up to, and beyond, the forward line of its own troops. Just as importantly, the US military must employ special focus on preserving the frameworks that influence and guide the comprehensive logic and behavior of its supply chain. It must work to protect these critical vulnerabilities while also planning and preparing to exploit those pertaining to the enemy’s sustainment system (i.e. red logistics). Comparative advantage, unplanned obsolescence, and surge capacity are some of the activities that theater-strategic, operational, and tactical sustainers can leverage, in theory and in practice, for a distinctive edge during battlefield operations. They are cornerstones of basic supply chain practices and economic theory. These conceptual bedrocks require only a rudimentary understanding to grasp their principles and appreciate the significance of their utility.

Since the origin of the exchange of goods and the beginning of markets, comparative advantage has been a pervasive characteristic of global economics. British economist David Ricardo introduced the concept in the early 19^th century.^[2] Essentially, it refers to the fact that some countries and organizations have found either the desire, or a very efficient means, to produce certain goods and services more effectively than the great majority of others. They typically control these markets. The world’s disproportionate reliance on Taiwan’s microchip fabrications is a prime example. Without complete control of the inputs and other transformational activities, the chances for inopportune failures, borne from the setbacks of suppliers or the malicious intent of an enemy, increase significantly. During WWII, German tank and aircraft designs were best-in-class, but their desire to produce complicated variations (e.g. Panzer I-VI) put significant strain on their limited production capacity. Their comparative advantage was ingenuity, but they overindulged in it, resulting in standardization challenges and ultimately maintenance dilemmas. Like the German forces during WWII, the US Army sustainment warfighting function is susceptible to operational disruptions to its comparative advantage: the utmost competence and capability to sustain large scale combat operations at scale. This critique underscores the need for sustainment to protect itself against some of the compromising supply chain interdependencies created because of globalization. Over-the-horizon supply chains and complex weapon systems with niche technologies are network and materiel advantages that require far-reaching and unique commitments to support. The urgency for further assessment and evaluation to find, and control for, these liabilities is a critical task that has been outlined in former President Joe Biden’s Executive Order 14017.^[3] Steps the sustainment warfighting function can take to minimize comparative advantage risks include dual-sourcing for critical materials, strengthened intellectual property protections, capacity burden sharing with alliance partners, and a design philosophy that prioritizes standardized inputs in conjunction with process divergence when customization is necessary.

Unplanned obsolescence is another critical vulnerability the sustainment warfighter needs to understand and continuously evaluate. It occurs when the utility of/demand for an item diminishes or disappears and suppliers stop producing it.^[4] In many instances, even the tooling is discarded, sold, or repurposed. Like comparative advantage, “an ounce of prevention” is recommended. Managing unplanned obsolescence can be both a defensive and an offensive endeavor for sustainment. Historically, within the business operations processes surrounding durable products, such as high-quality incandescent light bulbs, there have been conscious attempts to institute tactics like adulteration.^[5] It is a form of obsolescence that involves intentionally selecting a component, of a larger assembly, that degrades rapidly and ultimately reduces the life cycle of the manufactured good. For the Germans during WWII, ersatz oil, a synthetic oil replacement derived from coal, was blended with motor oil distilled from crude oil, which was increasingly in short supply during the war.^[6] The subsequent product was an inferior option with poor lubricating properties and resulted in more frequent vehicle maintenance and engine overhauls. Sanctions and embargos were the source of the shortage. Russia is currently experiencing a similar issue with nitrocellulose, an artillery propellant raw material. And like the Germans, the Russians are exploring alternatives (e.g. polyvinyl nitrate (PVN)) at the expense of quality, safety, and performance.^[7] For both militaries, commodity limitations compelled them to use sub-par substitutes, thus impacting their combat effectiveness. For the US, this can be adopted as an offensive mechanism, particularly useful if markets within the US sphere of control and influence feed into manufacturing provisions for enemy supply chains. Defensively speaking, this framework has an inherent risk of creating a deleterious effect on productivity if an adversary can use the same premise. This can be most effective in situations where lower-level components that feed into the larger, more critical modules of high value assets, are involved. There are a couple of ways to combat this idea, both of which also serve as methodologies that can be applied in an offensive manner. Obtaining market control is one way to mitigate this risk. Another is to achieve the compliance of suppliers, codified in contractual terms, for the most durable, raw materials. To some extent, this practice is already in motion within military supply chains, but the considerations and scope should be constantly reassessed by sustainers for opportunities to expand the list of products.

Surge capacity is the coordination of supplies and services in response to unforeseen ebbs and flows in demand.^[8] Planning and preparation can address some of these types of fluctuations, but adequate responses hinge on sound execution. During Operation Barbarossa, German logistics were frequently overextended. Rapid advances were characteristic of German operational tempo, and the controls instituted to provide timely service and support were often insufficient. German logisticians sustained and maintained units primarily through a push system. While this aided the Wehrmacht when they planned for decisive operations, it restricted the flexibility of forces directly impacted by random Russian resistance (e.g. partisans, Russian counterattacks) and severely cold weather. Having the capacity to manage such challenges is just as much a matter of producibility as it is throughput of supplies to the frontlines. In particular, and because it is far upstream within every supply chain, tool wear is usually overlooked as a potential obstacle, especially at the beginning of high-velocity fighting. In future fights, it will require the allocation of capacity, usually at the expense of new-make items. For example, if the Russian military is shooting 20,000 artillery rounds per day in the Ukraine conflict, they are likely changing out the cannon tubes for maintenance after reaching an original equipment manufacturer (OEM) approved round limit.^[9] Assuming a standard barrel life of 6,000 rounds and that 80% of the total artillery systems being used daily are of the tube variety, the Russian army would be required to change out roughly three artillery tubes/barrels per day. This removal process could potentially require an entire day to complete, depending on the crew’s experience level, and it detracts manpower from the battlefield as well as capacity from new tube production lines.  Add in another three weeks for the depot level maintenance/overhaul of the tubes, along with a 10% scrap volume, and during any given 21-day period, the Russian army could be without 60 artillery guns because of scheduled maintenance with six possibly never being reintroduced back into the fight. Additionally, some consumables (e.g. lubricants) and steel products used for the tube refurbishment may be under sanction and may be difficult to procure. The strategic planners for the sustainment supply chains must include these types of considerations during their extensive discussions with military industrial base suppliers. Beyond cornering certain consumable markets to create friction points for opposing forces and validating that suppliers can manage demand peaks and friendly force maintenance requirements, some additional verifications include: demonstrated cycle times, first-time yields, bandwidth/throughput, and repair turnaround time. Proactivity can help develop effective preplanned measures to address these challenges, to include tool wear, before they surface. Preemptive planning for sustainment surges must continue to be a critical requirement for sustainers. The purview must begin with tool wear and extend the length of the supply chain to materiel transported to the battlefield.  

German forces were competent, but not able to overcome their sustainment issues, especially once the Allied Forces’ attritional strategy emerged. For future sustainers, the cumulative effect of actions implemented to manage some of the key supply chain and economic activities will reduce risks and improve subsequent outcomes on the battlefield. The aforementioned concepts can be leveraged offensively and defensively within the broad dominion of sustainment. There are opportunities to impose warfighting “will” and protect provisioning interests for receptive sustainers. Regardless of what tactics and procedures are employed, the sustainer/logistician of the future will need to broaden their aperture of supply chain management and economics practices both during and in-between conflicts in order to achieve and maintain advantage. With this wisdom, decision-making can move commands closer towards dominance at the strategic, operational, and tactical levels.