4 Tips for Mitigating Risk in Defense Programs

June 26, 2013, by Mike Crowe

Quality, Delivery and Cost (QD&C).  These are the factors most used to determine the value of a supplier.  They are also the aspects of performance that we can most easily calculate, compare and analyze.  A green supplier scorecard that shows high OTD (on-time-delivery) and low DPM (defects per million), along with competitive pricing is the dream of both Buyer and Supply Chain Manager alike.

In the high-stakes market of Military Defense products, however, this is not quite enough.  With programs taking years to develop and often requiring decades of production and support there is another critical factor in evaluating a critical supplier.  A company’s ability to minimize risk over the life of the program is of epic importance.

Whether you are a Program Manager at a Defense OEM or a Captain heading up a US Navy Program Office, mitigating risk is a daily concern.  Identifying companies who are able to help you ensure your schedule does not slip and deliver at the expected cost is critical to your success.

There are several aspects that a valued supplier can utilize in mitigating your risk.

  • Product Reliability & Dependability
    • Displaying a solid history of reliability through the performance of their products in the field is crucial.  Although new and innovative products and technologies can help move a program forward, to invest in these areas is risky unless the supplier has a strong base of product reliability.
    • Process Capability in the development and production of their products through repeatability and variation reduction.  Strong adherence to process will minimize risk associated with variation in production and test.
     
  • Proven Pedigree
    • You need a supplier that knows what it’s doing.  A solid foundation of supplying products to the Defense industry is a must.  These suppliers can help minimize risk by leveraging their vast experience and get your product fielded faster.
     
  • Strong Support
    • In today’s environment of budget cuts and declining investment in new development it is critical to find the suppliers who can provide expertise in the areas you need.  Partnering with you as an extension to your own technical team, these suppliers can reduce risk by applying valuable knowledge directly to the point of need.
     
  • Business Stability and Long Term Continuity
    • In an atmosphere of program uncertainty, you need a supplier who is invested in the Defense Market, but is strong enough to withstand the ebb and flow of governmental budgets.  A supplier who is over-leveraged in Defense could create risk by being “too big to fail” whereas one who only dabbles in the industry might exit when times get hard.
     

Business managers will continue to fight the headwinds of declining Defense budgets in the coming years and must make decisions to ensure the success of the programs for which they have responsibility.  One significant way to minimize uncertainty and maximize potential is for key OEMs to make strategic decisions regarding the suppliers they select.  In addition to Quality, Delivery and Cost factors like Reliability, Pedigree, Support and Stability will play a large part in a program’s success.

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