What Sequestration Means for Supply Chain Sustainability

March 8, 2013 - PRLog -- Sequestration has arrived and with it comes problems that can significantly and negatively affect the supply chain for the defense industry. Though defense contracts are mostly multi-year arrangements, failing to address sequestration and it’s potential effects could allow long-term problems to be introduced into the supply chain.

With 9% (or $50 billion) of the Pentagon’s budget being cut due to sequestration, many facets of the industry will come under intense pressure to remain sustainable and reliable in the coming years. The good news is though, this isn’t all happening at once. According to Roman Schweizer, a Senior Defense Policy Analyst at Guggenheim Securities, “The brunt of that 9 percent cut would be spread over the course of anywhere from one to three to five years.” Though the length of time it will take to implement the 9% cuts may span up to five years, planning against sequestration now is critical for future success.

In an industry where every dollar must be budgeted with maximum effectiveness, failing to plan for long-term problems will negatively influence the supply chain, magnifying the current stresses of sequestration. Building upon a financial competitive edge is the must-have strategy taking hold in the defense industry’s new environment.

Following are three strategies to sequestration that can work to combat the influence it may have on the supply chain:

Maximize communication. One of the most vital defenses against non-authentic inventory is communication. Understanding quality standards and establishing continuous communication between approved vendors, qualified test facilities and service providers reduces the risk of critical errors, which could cause major program delay.
Work to prevent volatility in inventory management. The twin pendulums of excess inventory or deficient inventory can wreak havoc on a supply chain.
Plan for obsolescence. Addressing product and component obsolescence within the supply chain can be a risky but necessary maneuver.


Sustainability is only possible through strategies that have a long as well as short-term outlook. An unorganized inventory management strategy will have difficulty addressing new challenges at each level of the process, which leads to constraint problems and can magnify other issues such as excess inventory or a minimal product supply.

Is your supply chain adequately prepared for sequestration?

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