Are More Competitive Supply Chains More Resilient? Evidence from Defense Industrial Base (DiB) Supply Chains

• In Event: Environmental Resilience and Sustainability in the Face of Threat and Risk

Abstract

This paper explores the resilience of supply chains within the Defense Industrial Base (DIB), a critical infrastructure sector designated under Presidential Policy Directive 21 (PPD-21). As part of the Resilient Supply-and-Demand Network (RSDN) program at the Defense Advanced Research Projects Agency (DARPA), we surveyed domestic and international firms involved in the supply chains of critical materials such as small arms munitions and eight DIB-critical metals, several of which are classified as strategic or rare. We collected data on resilience tactics (e.g., input substitution, resource isolation) employed by firms in response to disruptions and assessed the economic avoided losses that would have occurred in the absence of these tactics using a unique survey methodology. Through firm and tactic-level analyses, we evaluate the cost-effectiveness of resilience tactics and compare the severity of supply chain disruptions. Building on the supply chain resilience literature, this paper takes a novel approach to explore how firm size influences resilience and traces the pathways through which input substitutability affects firm resilience. We use Structural Equation Models (SEM) to estimate both the direct and indirect effects of having a larger pool of input suppliers on the magnitude of losses a firm can avoid by leveraging resilience tactics. Specifically, we trace the pathway from the size of the supplier pool through the expected duration of the disruption, and ultimately to the firm’s resilience outcome. The findings show that access to a larger pool of potential suppliers is associated with longer disruption durations, which in turn allows firms to avoid greater losses, particularly when operating under fixed-price supply contracts. This study informs inclusive and adaptive policy strategies that promote collaboration and equity in the supply chains of defense-critical materials.

 

Authors

• Yiseon Choi, The Ohio State University
  Presenting Author

• Noah Dormady, The Ohio State University
  Non-Presenting Co-Author