Rising global conflict has resulted in a healthy defense budget. The trend toward putting more of that budget into technology has not slowed down, giving defense manufacturers and contractors big opportunities to increase production and continue to innovate.
The U.S.-based defense industry has also been helped by a growing preference for goods manufactured in the United States. Trade conflicts, however, along with rising oil prices are affecting costs for certain raw materials and goods. These rising costs have led defense contractors to find other ways to cut costs without sacrificing quality.
One main area of focus is the supply chain, driven by government demands to use small businesses and make the manufacturing process more efficient to save money, while helping contractors get products to market faster.
Lowering costs
There is always pressure to reduce the cost of deploying and implementing new technologies. Competition for contracts is intense, and cost is a primary factor in winning bids. While working with suppliers to decrease costs can provide marginal help, rethinking the entire supply chain and reducing layers of cost can potentially generate substantial savings.
During rack integration, for example, the end user typically specifies the hardware vendor and then selects an integrator to integrate the hardware and customer-specified systems into a rack with specific structured cabling, slides, and cable management.
Services include the integration of computers, LCD display, storage, keyboard, network switches, routers and power management devices in a server rack.
CP Technologies recognized that this added a layer of cost, so we created a new model where the hardware vendor is also the integrator, providing an estimated 20% cost savings for the Department of Defense (DoD) end users and prime contractors, while decreasing lead times and improving overall compatibility. A 20% cost savings is hugely impactful to top-line growth and profitability and saves considerable cost to the DoD.
Decreasing lead times
In addition to decreasing costs, rethinking the supply chain can also help develop products faster. With the increasing complexity of weapons platforms, many contractors have turned to commercial-off-the-shelf (COTS) offerings to speed up the development process.
Even within COTS offerings, there are additional opportunities to remove unnecessary steps from the supply chain process, allowing defense contractors to decrease lead times and eliminate configuration issues. Components no longer need to be shipped back and forth between the hardware vendor and integrator, essentially saving time by cutting down on the number of middlemen needed during the manufacturing and assembly process.
Additionally, compatibility between different components in each rack can be guaranteed to a certain extent since all components are built and assembled by a single hardware vendor, cutting down on time spent troubleshooting compatibility issues. By choosing a hardware vendor that also integrates complete rack solutions, primes can shave weeks off of their development calendar.
Increasing quality & consistency
Another advantage of having a hardware vendor integrate the complete rack is consistency and quality management. Components and subcomponents are managed under a single part number and each system includes obsolescence management and revision control to ensure long-term support for the life of the program. Integrated systems reduce the complexity of ongoing service and support of systems.
By maintaining stable revision control, primes can greatly reduce the cost of maintaining systems. End-users greatly benefit from the consolidation of integrator and component manufacturer by having a single point of contact. By managing each system and corresponding sub-system under a single part number it ensures an expedited means of reordering components and addressing any necessary troubleshooting. The process of supporting and upgrading systems in the long-term is simplified thanks to a reduced likelihood of compatibility issues between components because each component is produced by the same manufacturer.
With the priorities moving from sustaining operational readiness for deployed forces to defense modernization, the need for reducing costs and lead times and increasing efficiency will be essential for maximizing defense budgets in the near future.