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The Defence Sector and Supply Chain Management

Challenges in Defence Supply Chain

The global defence spends circa $2 trillion annually. This offers significant growth opportunities for defence suppliers and high performing cross-sector organisations. However, some inherent industry challenges must be addressed to ensure future supply chain competitiveness.

Across Valuechain’s secure, collaborative portals, we support Defence supply chains to gain visibility and improve quality, cost and delivery performance whilst maintaining data integrity. 

Fragmented Defence Support Chains​

The defence sector operates many legacy aircraft and land vehicles. And despite these vehicles no longer being in production, a reliable support chain providing spare parts and MRO services is critically important to ensure these ageing platforms continue to operate.

However, this generates sporadic demand – often called “Aliens and Strangers”, which may not be commercially sustainable to source from the same suppliers that manufactured the production orders. Therefore, Defence contractors (or their tier 1 supply chain integrators) generally rely upon a long tail of smaller niche suppliers. These suppliers facilitate lower overhead costs, have the required quality accreditations, and have the capacity to provide a responsive delivery service. As a result, multi-tier defence supply chains are often fragmented, with minimal sub-tier knowledge available to downstream customers.

Furthermore, finding alternative potential suppliers with the required capabilities is also challenging. There is limited visibility of how companies are performing other high-value manufacturing sectors. And, there’s even less visibility of those harbouring ambitions to break into the Defence sector but maybe not yet have the required accreditations.

Valuechain provides a free B2B matchmaking service for subcontract SMEs aspiring to penetrate the defence sector and existing suppliers seeking new growth opportunities. Suppliers can join the Valuechain Network Portal and increase the visibility of their company profile, capabilities, approvals and share the latest news updates. Defence contractors can then identify new potential cross-sector suppliers using advanced search and B2B matchmaking algorithms.

Why Valuechain for Defence?

Here at Valuechain, we root ourselves within connectivity and transparency. We aim to get our customers, suppliers and partners closer through collaboration to overcome challenges that are faced within the industry. We do this by providing control, security and simplicity.

Lack of 2-way supply chain collaboration systems​

Defence contractors and sub-tier suppliers have historically relied on manual processes to communicate forecasted order book demand and supplier manufacturing status. And this reliance on manual processes typically results in supply chain partners sending multiple fragmented spreadsheets emailed to and fro. To address this, several large defence contractors joined forces to work on Exostar. However, Exostar is a top-down supply chain platform that lacks the sub-tier engagement critical for SMEs and therefore prohibits supply chain collaboration to improve QCD performance.

Furthermore, many smaller manufacturers’ less sophisticated planning and control systems cannot communicate effectively with customers. As a result, poor upstream and downstream communication increases delivery risk. However, companies attempt to mitigate these risks by holding excessive inventory levels and rising costs, causing further supply chain challenges.

However, the Valuechain platform uses a bottom-up supply chain engagement approach. By integrating with companies’ incumbent ERP and supply chain portals, our platform facilitates sub-tier collaboration while catering to top-down defence contractor requirements. This approach streamlines sub-tier communication while standardising best practice standard operating procedures, including supplier auditing, tendering, new product introduction, order book collaboration, non-conformance management, and automated 2-way KPI generation.

Data Security is Critical

Data Security is critical

Ensuring the designs of components and assemblies and even the identification of their suppliers is ITAR (International Traffic in Arms Regulations) compliant is critical in Defence supply chains. However, such tightly controlled security can negatively impact supply chain performance by limiting collaboration, communication and transparency. 

Valuechain offers an innovative hybrid hosting approach whereby all sensitive data can be hosted on servers that reside behind our clients’ firewalls. Our approach balances the needs for security and collaboration as you can work with chosen trusted suppliers on-demand schedules, performance data and best practice collaborative workflows. In addition, Valuechain has secured its cyber essentials approved suppliers and complies with ISO27001 standards.

How can we support your defence organisation?