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• To identify supply chain risks most critical to the Army, RAND convened a workshop with AMC's Strategic Sourcing Working Group. The workshop identified the top three risks as demand fluctuation, funding uncertainty, and long lead-times. RAND found additional risks, such as lack of technical drawings, expired contracts, unpredictable demand patterns, reparability, whether the NIIN is sole-sourced, and whether the NIIN has downed a weapon system overnight.
• Based on the identified risks, RAND developed a measure of supply chain risk by NIIN for 9,300 repair parts. RAND found that only a few hundred of the 9,300 parts analyzed have much risk, mainly because of the large inventory on hand.
• RAND then used the NIIN risk measure to develop measures of supply chain risk by weapon system and supplier, by summing risk over all NIINs for each weapon system and supplier, combined with other factors associated with the weapon system and supplier.

As the United States Army winds down from over a decade of contingency operations, the Army's demand for repair parts is expected to decrease. Army Materiel Command (AMC) executives are concerned that a decrease in orders to suppliers could raise the risk that either the suppliers will shift production or fail, potentially disrupting the Army's supply chain. AMC is currently implementing a Strategic Sourcing and Supplier Relationship Management initiative to help the Army reduce supply chain costs by identifying strategic suppliers and working closely with them to improve performance. As part of that initiative, AMC asked RAND to determine the supply chain risk by supplier and the supply chain risk factors that are critical to AMC. This report documents a process and methodology that allow AMC to assess supply chain risk by repair part, supplier, and weapon system. It also presents the results of a workshop conducted with AMC's Strategic Sourcing Working Group to elicit their concerns about supplier risks facing the Army. The researchers concluded that only a few hundred of the 9,300 parts analyzed have much risk, mainly because of the large inventory still on hand. Among the factors that increase supply chain risk are lack of technical drawings, expired contracts, and unpredictable demand patterns. A key recommendation is that the Army should institute a regimen to track the risk associated with the supply of repair parts.

• Chapter One

  Introduction: Improving Supplier Relationship Management and Reducing Supply Chain Risk

• Chapter Two

  How Businesses Manage Supply Chain Risk

• Chapter Three

  What Can Disrupt the Supply Chain? Identification of Risks

• Chapter Four

  How We Measured Risk

• Chapter Five

  Analysis and Results

• Chapter Six

  Conclusions and Recommendations

• Appendix A

  Master List of Supplier Risks

• Appendix B

  Workshop to Identify Enterprise-Wide Supply Chain Risks, May 2013

• Appendix C

  Top 100 Highest-Risk NIINs