Defense supply chains are under mounting challenges, whether it’s geopolitical conflicts exposing vulnerabilities, soaring material costs and shortages, or lack of available labor, the pressure is on. The digital tools are there and are ready today. Defense manufacturers need to leverage these capabilities, from utilizing Industrial AI and bringing critical production closer to home, to enhancing supply chain cryptography with blockchains and distributed ledgers.
Recent conflicts have exposed the fragility of defense supply chains. The Ukraine-Russia conflict is a real-world example of how conflict stretches existing supply chains to the limit, even though forces such as the U.K. military have committed £13 billion in military support, and the U.S. Department of War (DoW) is investing $5.5 billion to expand domestic production capacity of munitions and subcomponents. Current defense supply chain operations have failed to meet demand, and without change, will continue to fall short.
Defense supply chains are hierarchical in a tiered system to encourage efficiency, but this comes at the cost of resilience. To meet increased demand and volatility on this system, defense manufacturers must leverage digital tools, including Industrial AI to enable end-to-end visibility, dynamic resourcing, and forecasting. Advanced capabilities such as industrial artificial intelligence, demand driven material requirements planning, and even blockchain are already reshaping the industry.
Taking supply chains back to their homeland
Defense supply chains typically include thousands of individual vendors across the world. The U.S. defense industrial base, for example, is made up of over 100,000 domestic and foreign subcontractors. The U.S. DoW specifically highlighted nearshoring the defense industrial base as a key component of its National Defense Industrial Strategy (NDIS). It enacts a comprehensive plan to strengthen the nation’s defense industrial base, ensuring it can effectively produce and sustain the capabilities needed for national security. One of the plan’s key initiatives is dedicated to production and supply chains with a focus on “onshoring defense-critical production capabilities, moving away from adversarial sources of capital, and a deeper analysis of supply chain vulnerabilities.”
By shifting their supplier base closer to home and utilizing real-time data monitoring, defense organizations now have the tools to ensure they select the right supplier to mitigate the risk of disruption. In this nearshoring move, exceptional supply chain management is key, and technology needs to help deliver the agility and fast Time to Insight (TTI) to forecast demand and provide detail across supply chains.
Time for digital tools to upgrade Just-in-time strategies to ensure forces are fully stocked
For defense supply chains to improve, much of the responsibility falls on the shoulders of manufacturers and suppliers to increase their flexibility and production. In the past, to deal with rising pressures, defense manufacturers looked to switch up their inventory strategy from lean to just-in-time (JIT) practices. But with growing supply chain challenges across the globe, production and financial risks demand a shift in strategy.
In its latest Aerospace & Defense Industry Outlook, Deloitte expects “to see industry leaders evolve their digital applications for supply chain visibility to resolve issues ranging from parts and labor shortages to concerns with the quality and reliability of parts.”
More sophisticated digital approaches, such as demand-driven material requirements planning (DDMRP), are needed to help reduce the risks for defense manufacturers. By utilizing actual usage data, DDMRP determines if stock levels can cover demand, increasing the flexibility of manufacturers and reducing downtime.
Industrial AI is here to spot costly bottlenecks
Here, AI tools can help manufacturers and suppliers optimize the defense supply chain by reducing production and financial risks. Investment is increasing from defense forces, in their 2026 budget, the US DoW is allocating $13.4 billion of their total budget to artificial intelligence capabilities.
Combining AI pattern recognition with real-time data can help DDMRP improve the accuracy and speed of anomaly detection throughout the organization, which helps manufacturers and suppliers to identify potential bottlenecks before they cause costly holdups.
Blockchain comes into its own
Looking forward, manufacturers’ blockchain is one of the new technologies that is now recognized as an essential tool in all this to help maintain cryptographic integrity as manufacturing companies step up the digitalization of their supply chain. It has already been recognized by the U.S. Senate Armed Services Committee FY 2025 NDAA as a technology that will “enhance the cryptographic integrity of defense supply chains, improve data integrity, and reduce risks of data manipulation by adversaries.”
Based on distributed databases shared between peers, blockchain stores data and amendments in a chronological, secure, and immutable format. The potential for these blockchain technologies to boost supply chain visibility is highlighted in a recent EY report: “Blockchain technology is solving the complexities of A&D supply chains by ensuring immutable traceability of parts, fortifying against counterfeiting and facilitating seamless data sharing across the ecosystem.”
The integrated supply chain management system
Defense manufacturers must have end-to-end visibility to get the real-time data they need to manage and maintain the flexibility of these complex and changing supply chains. Defense organizations should move to a single, integrated system incorporating all aspects of the supply chain, to ensure the right data ends up with the right people.
There are three key must-have capabilities defense organizations need to look for when selecting and implementing an integrated supply chain system:
- AI and predictive analytics – by combining advanced anomaly detection and pattern recognition with real-time data correlations, defense supply chains will become more resilient to disruptions and accelerate problem detection.
- Simulation modeling – digital twins and cutting-edge simulation modeling technologies can identify defense organization weaknesses and address the problems impacting operations.
- Connecting supply with demand – real-time monitoring technologies increase visibility, allowing organizations to know when they need new parts and what suppliers can deliver on time.
Tools for the future of defense logistics
Global tensions are not going away. Defense manufacturers are quite aware that they must be mission-ready, just like the customers they serve. That begins by building a resilient military supply chain. While nearshoring will undoubtedly help mitigate risk, it’s not the complete picture. By integrating new digital technologies, Industrial AI, and blockchain security in one supply chain management system, defense manufacturers will not only increase resilience to future disruptions but also ensure operational readiness for the defense forces they supply, now and into the future.
SOURCE: Christopher Morton (2025 November 17) Take Control of Defense Logistics with the Right Digital Solutions.IFS Blog. https://blog.ifs.com/take-control-of-defense-logistics-with-the-right-digital-solutions
