Tag: military

OM in the News: The Rocket Fuel Supply Chain

An ammonium perchlorate plant explosion in Nevada demonstrated the vulnerability of a key part of the supply chain for many commercial and military rockets.

In Chapter 11 and Supp. 11, we discuss the importance of having multiple suppliers for critical components/parts. Yet the Pentagon long relied on one U.S. company to make the main ingredient–ammonium perchlorate fuel– that powers its most potent missiles.

Most of that fuel still comes from a specialty-chemicals company in Utah called American Pacific. It is an example of the single-source chokepoints that Pentagon logistics experts have long flagged as a national-security risk, reports The Wall Street Journal (April 28, 2024).

Despite efforts to diversify, many weapon materials have no U.S. manufacturers. Others have only one source or a dominant provider. The supply-chain snarls caused by the pandemic heightened officials’ sense of urgency by exposing other materials only made in adversarial countries such as China.

Northrop, which is best known for making stealth jets such as the B-21 Raider, also makes missile-defense systems and solid-rocket motors that need ammonium perchlorate to fire. It tried to lower the prices it paid for the chemical by investing more than $100 million to build production lines in northern Utah. But its effort has been slow to take off. Cost overruns bedeviled the program, making expense management a priority for the company.

As one of two major U.S. solid rocket makers, Northrop has long been a big buyer of ammonium perchlorate. The company’s rocket motors are used in missile systems such as Lockheed Martin’s Guided Multiple Launch Rocket System. The U.S. has sent thousands of these missiles to Ukraine. The military’s exacting requirements for its arsenal—which include at least a year of testing materials for shelf life and performance before they can be certified for specific weapons—have limited supply of the Northrop-made ammonium perchlorate. Higher prices for materials such as ammonium perchlorate can dent contractors’ profits on so-called fixed-price contracts when they are left on the hook for cost overruns.

Classroom discussion questions:

  1. Which of the risks in Table 11.3 (page 448) of your Heizer/Render/Munson text apply here?
  2. Why can’t Northrop obtain the fuel it needs?

OM in the News: Military Supply Chain Struggles

A Norwegian factory, Kongsberg, produces a missile-defense system that can shoot down drones, helicopters and other airborne threats from 25 miles away.  Capable of launching 72 missiles into the sky at once, the Nasams system is what protects the airspace over the White House. Kongsberg, which in addition to Nasams also makes ship-based missiles and parts of F-35 fighter jets, has ramped up production to 24-hour, 7-day shifts. That still may not be enough. With the West confronting a rising number of potential threats, including Russia, Iran, and China, orders are piling up for the Nasams.  It takes two years to make one Nasams, and there is already a multiyear backlog.

Israel’s Iron Dome antimissile system intercepted rockets launched recently from the Gaza Strip

Modern weapons are hugely complex, often requiring thousands of parts, reports The Wall Street Journal (Jan. 4, 2024). Kongsberg, like most Western defense firms, designs and assembles its weapons systems but doesn’t manufacture most of the components. Over 1,500 suppliers contribute to the products. The Nasams supply chain alone consists of 1,000 companies and is built across two continents. Kongsberg states: “We are supplied by companies with their own supply chains, which in turn have their own supply chains, which have their supply chains, till it gets right down to the mine that digs up the basic resources.”

In a 2023 wargame simulation of how the U.S. would respond to a Chinese invasion of Taiwan, it was estimated America would run out of all-important long-range antiship missiles within the first week. The U.S. wouldn’t be able to replenish its stock quickly: As with the Nasams, each missile takes about two years to make.

Other missile categories have similar issues.  Lockheed Martin said it will take four years to double production of Javelin and Stinger surface-to-air missiles, twice as long as expected, as supply-chain challenges continue. Pentagon officials said the problems were widespread, with everything from chips to springs and ball bearings running short. The U.S. tried to track the global supply chains for the two missiles with the goal of finding workarounds for bottlenecks, said a pentagon leader. His conclusion was sobering: “We do not have that ability.”

The Pentagon aims to map global supply chains for 100 weapons systems in production, down to part number and country of origin. The move is intended to identify pinch points early, and mitigate them by finding alternative suppliers.

Classroom discussion questions:

  1. What is causing the supply chain problems in the defense industry?
  2. How can they be addressed?