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Pages 55-75

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From page 55...
... • The critical raw materials for information technology applications include silicon, gallium (99 percent imported from China, Japan, Ukraine, and Russia) , indium (100 percent imported from China, Canada, Japan, and Russia)
From page 56...
... CONCLUSIONS The global security environment, the U.S. national defense strategy, the structure and operation of the U.S.
From page 57...
... defense strategy and any associated updating of NDS analysis and in a disconnect between the transformation of DoD force planning to a capability-based process on the one hand and the obsolete analytical methods used to specify materials requirements for the NDS on the other. The different views on the advisability of global sourcing by legislators and DoD policymakers, exacerbates these disconnects.
From page 58...
... 2001. Defense Planning in a Decade of Change: Lessons from the Base Force, Bottom-Up Review, and Quadrennial Defense Review.
From page 59...
... While the military's own internal arsenals were originally charged with both designing and manufacturing weapons for the military, since the 19th century the U.S. defense industrial base has consisted of a mix of public and private enterprise.
From page 60...
... The purely private enterprises that make up most of the defense industrial base today can, nonetheless, find their actions greatly influenced by a variety of policy measures available to the DoD. These defense industrial policy tools can shape the supply chain for defense systems in significant ways.
From page 61...
... This meant having the capability to surge the production of weapons systems should they be needed with the outbreak of war, and the capability to continue to produce these systems in sufficient quantity to replace losses and attrition in a sustained conflict. Evolution of Industrial Policy The job of defense industrial policy was to identify vulnerabilities and deficiencies in the supply chain that was needed to ramp up production of these systems in a wartime scenario, and make sure the country had the capacity to maintain the continuing flow of these systems off the production lines to sustain 5-3
From page 62...
... That meant ensuring that inputs needed to field and use these systems, whether the technologically sublime -- like advanced electronic components -- or the vital but mundane -- like natural rubber and oil -- were available in needed quantities. To fix potential vulnerabilities in the supply chain, problems had to first be identified.
From page 63...
... By nature, they are not very flexible tools for managing supply chain risks, although discretion for waiver almost always exists if officials are willing to invest significant political capital in exercising this discretion. Import restrictions, if exercised, may also create undesired obstacles to U.S.
From page 64...
... From a strategic perspective, this kind of action could also impede attempts to secure U.S. supply chains by investing overseas in foreign sources of supply.
From page 65...
... defense industrial policy in securing the defense supply chain. Relationships and Diplomacy Finally, the formation of political alliances and blocs -- for example, NATO, the Waasenaar Group, the International Energy Agency, and other groupings -- can influence other government's actions with respect to imports, exports, and other forms of cooperation in areas relevant to supply chains for items necessary for national security.
From page 66...
... This suggests the possibility that the post-9/11 risk of disruptions in global supply chains may actually have affected business behavior. The Committee is unaware of any Defense-wide estimate of the value of inventories of goods held by DoD and its contractors which could be compared to procurement, in order to produce a Defense figure comparable to the above data.
From page 67...
... Use of Inventories In contrast to the concept behind the NDS, a major strategy today for improving the efficiency and effectiveness of supply chains is to avoid the stockpiling or holding a reserve at any point in the supply chain by replacing inventory with information. A lean production system means smaller industry inventories -- trading off the robustness of supply chains against the cost of holding reserves.
From page 68...
... In contrast to primary resources, secondary resources become available mainly in developed countries that consumed large amounts of products over the past decades. The United States, while dependent on imports of various materials, is a major exporter of scrap.
From page 69...
... Recovery for many of these materials is difficult and recycling even more so, making substitution the only attractive route. Risk Analysis and Mitigation Strategies Understanding the nature of today's critical material supply vulnerabilities -- see the box 5-2 Risks for Supply Chain Disruptions -- is critical to knowing what tool is appropriate for a particular supply chain and when and where is should be applied.
From page 70...
... Management Threats • Human error, preparedness, and training • Inadequate management of a critical material supply chain • Lack of flexibility and robustness greatest vulnerability and risk were in the offshore operations (mining, transport, and ocean delivery)
From page 71...
... An example of how a single source can cause a major disruption of a supply chain occurred in July, 1993, when a fire in a single Sumitomo epoxy resin plant took out 60 percent of global supply of high grade resins used to package integrated circuits. Prices for memory chips doubled within a short period of weeks.
From page 72...
... Redment in production increases Kazakhstan (25 are already sold percent) Specific examples of disruptions in some materials supply chains are illustrated in the Table 5-2.
From page 73...
... First established in 1999, the Strategic National Stockpile (SNS) program has large quantities of medicine and medical supplies to protect the U.S.
From page 74...
... Military procurement contracts could be structured to reward contractors who maintain larger inventories of critical materials and/or components. Language could be included within procurement contracts that established supply-availability targets (for example, 30 days)
From page 75...
... This problem is more complex and requires a much more sophisticated analysis capability than the present approach to modeling materials requirements. As shown above there is a range of policy tools that can affect industrial supply chains.


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