Tackling Challenges in the Industrial Base
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This is CNA Talks, the flagship podcast of CNA, a Washington, D.C.-based research and analysis organization. In an era of increasing frequency and severity of natural disasters and mounting tensions between global powers, it is more important than ever that the federal government and its suppliers can respond to a sudden surge in demand.

In this episode, experts from across CNA to join the show to discuss their research bridging the gap between the United States government and the industrial base.

Welcome to CNA Talks. I'm John Stimson. Today's episode is all about how to improve collaboration between the public and private sector. And we brought together experts from all around CNA to cover this. First, Dr. Charles Cartier, who is a research scientist in CNA's gaming and integration program. He was the lead analyst and co-designer of the Camelan War Game on clothing and textiles for the Defense Logistics Agency that we'll be discussing today.

Charles, thanks for being here. Thanks, John. We also have Dawn Thomas back on the show, who is the co-director of the Center for Emergency Management and Operations and the director of the Center for Critical Incident Analysis. She is an expert in large-scale incident planning and response. Dawn, welcome back to the show. Always fun, John. Thanks for having me back. And we also have April Cho, who is a research scientist in CNA's Data Science Predictive Analytics Program.

She has worked on various projects supporting the Navy, including the Munitions Industrial Base Study for the Assistant Secretary of the Navy for Research, Development, and Acquisition. April, thanks for being here. Thanks for inviting. So, Charles, we're going to start with you. The inspiration for today's episode was the Camel Land War game, which you and your team developed. Can you tell us what question you set out to answer with this game, like how the project got started?

Sure thing. So like you said, this project was for the Defense Logistics Agency or DLA. And at a very high level macroscopic view, their question was pretty simple.

They wanted to know if they were looking at a large-scale ramp-up or mobilization of the military, so activating reserve and guard components for a large-scale contingency. They expect that demand will increase for the things that they purchase from the industry base. And they wanted to ask specifically for class two logistics or clothing and textiles, how quickly can the industry respond?

In particular, there were some sub questions related to this, related to if they can't respond quickly, what are the key bottlenecks and constraints? And what are the priorities? How do things get priorities? What are the underlying decisions associated with that? Gotcha. And so, you know, you set out to build a game to address these questions. Tell us about that development.

Sure. So I'll start by saying for anybody who's unfamiliar with a war game, at CNA as an analytic organization, we view war games as an analytic methodology. And it's particularly useful at getting institutional knowledge from participants, and it's good at exploring incentives related to decisions.

But that's one amongst many methodologies. And so the full project actually had a lot of pregame research where we went out to government and industry, had facilitated discussions with them. And we were really very fortunate at how transparent both government and industry were with us leading up to the work.

We got to go to site visits, to cut and sew shops, and we got to look at DLA's order data. We did some research on what the demand would look like. We also built out a model leveraging DLA's analytic center of excellence.

And so all of this kind of came together into the kind of star of the show, which was the war game itself, where we had industry and government both in the room at the same time talking through kind of critical issues and their perspective on what a ramp up would look like. What was really cool, I think, about this was the fact that we developed what we call the supply chain engine, a little kind of miniature version, a simplified version of a real world supply chain engine.

based on clothing and textile data that we had. And we had people in the room who actually are clothing and textile supply chain managers playing out and role-playing what they do at cut and sew shops or what they do at higher tiers of supply when they're making bolts of cloth or thread, all the way back to kind of notional sheep that we had within the game. And having...

experts in the room role-playing something close to what the real job is as close as we can within kind of this artificial environment resulted in a lot of people coming up to us throughout the game saying, you know, what you saw over there

That's exactly how it happens in real life too. And when we hear things like that in war games, that gives us a lot of confidence that we got something right. One thing I'll also mention real quick just as a shout out is it was not me alone doing this project. There were a lot of folks on the team that kind of came together to make this happen from data collectors and facilitators, other analysts working on this project. In particular, it's worth noting the co-designer Kate Lee and the project director Geno Saad were lifting small mountains to make this project happen.

Takes the whole team. Appreciate you calling that out. But like, it does sound like you put together a really comprehensive look at what this whole process looks like. And to have people from industry involved giving you that compliment, that's really great feedback. I think that it is really great example of how well these kind of war games can abstract these processes when you when you do the work and you bring in the right people.

Yeah, totally agree. I guess just to talk a little bit more about the war game, there were kind of two different things going on here. One was kind of the supply chain engine where we had a lot of mechanics for particularly industry members to kind of practice producing a notional set of uniforms. Right. And then what we would also do is simultaneously have facilitated production.

discussions between government and industry to get at kind of the pain points that get very tactical and very nuanced that the game mechanics couldn't fully represent. So we had a number of different types of data, things related to more how decisions were constrained by kind of real world challenges, and then things that get really into the weeds related to, you know, how difficult it can be to make souls of boots or things like that. I'll talk a little bit to the overarching

outputs. One is when we generated this demand and presented it to players as they were working through it, the industry couldn't meet the full demand that we presented to them. It was an aggressive demand that we presented. And due to delays in the industrial base ramping up, military personnel in this scenario would have lacked uniforms and the associated protections going into a kind of a conflict scenario.

And so that's kind of a unsurprising result, actually, for anybody who knows the supply chains and studies them. And it's really associated with a number of different things, right? If you present a shock to a system, a given tier of a supply chain needs to ramp up its facilities, its equipment, it needs to hire new staff, and it needs to increase its orders

from one tier up in the supply chain. So your cut and sew shop that's making a uniform needs to increase its orders of bolts of cloth that it's cutting and its needle and thread and its fasteners, its buttons, et cetera, that it uses to put the uniform together. And each of those companies making those individual things also need to ramp up. And that trickles all the way up the supply chain. There are delays with each of those steps.

And so all of that together makes things very challenging. John, one point I was hearing from Charles there that I thought was interesting, and it maybe relates to some of the work you all do on the more like domestic manufacturing and, you know, like within the United States side of things, not so much the military, is this idea of like how supply chains are sort of set up with like the current demand in mind, this idea of like a maximum efficiency model, right?

And when you present a shock to the system, it can take a while for them to adapt to that new need. So I don't know if that rings true to you or if there's any connection that we can draw there with what you do on your side of the house.

Yeah, John, it's a great point. And you do see it all the time. An easy example to give you is that kind of the technology and the transportation and all the things around our food supply chain have gotten to the point where we've kind of maximized the amount of food you could bring into grocery stores without going over and having waste, right? We've gotten it down to this real science of food and being sold, getting backfilled.

And the problem with that is exactly what you said. When there's a disruption, then there are no three to five extra days sitting around. Or if there's a disruption in the technology that supports that, then that's going to obviously lead to issues. So, yeah, it's an easy example from the civilian side to look at our food industry.

Got it. Just to wrap up our discussion of Camel Land, what happened after you completed the development of the game and it was presented to the sponsors and the people involved, Charles? So great question. After we wrapped up, we did postgame analysis, wrote up a report and presented that both to DLA leadership and

Well, we started with presenting to DLA leadership and DLA leadership was very interested in the results and took them all very seriously. One of the things that they did, which...

makes this particular war game exciting is they made it public release in order to get more visibility on some of the issues that we brought to light. And so we were actually also allowed to outbrave to industry and other government agencies. And I think we've been very fortunate because of that decision to get a lot more visibility than is typical of many of our projects, at least within the work that I do.

Yeah, that's great because the, you know, I think that this game is a really great example of like that war games. I think when people think of them, they think of like, you know, experimenting with the battlefield, right? Like the possibility of conflict. And I think that this game is a great example of the fact that this concept is a lot broader than that and can be used to capture all kinds of ideas, including logistics, supply chains. And so it's great to see that kind of visibility exists and that understanding grow within the, you know, within the defense industrial base.

Yeah, absolutely agree. It's worth hammering that the war part of war games is the less important word here. It's really about generating a synthetic environment for any system and using that environment with a bunch of experts in the room to identify key decisions and the incentives behind those decisions such that leadership organizations can better prioritize things.

April, I want to turn to you now. We're talking about this idea of helping government and private industry work effectively together because that's necessary for the way our military operates. And your work on addressing choke points in the Navy munition supply chains is also really relevant to that conversation. So can you tell me a bit about what problems you've observed in that system and tools you've developed to address those problems?

The key challenges or characteristics of the defense industrial basis, really, compared to the commercial world, the defense investor base, especially in the United States, is a much smaller vendor basis. A lot of the single source and source are suppliers. And so when all the demand and production requirements are going up across multiple programs and multiple services, really the choke points that currently exist in this interconnected supply chain.

chain becomes a checkpoint for every multiple demand signal. And so that has been the key challenge that we had to better understand how are all these vendors and suppliers are all connected, and in what cases and scenarios are they going to be a bigger problem. And so to prevent and mitigate those risks, what are all the investments and actions required in the near term and longer term to be better prepared for those coming demand signals?

Kind of, in some ways, a similar challenge that Charles confronted with the uniforms where, because of the limited amount of enters and things like that, a shock can really create challenges in the system.

Yes, that is correct. And so without currently a lot of those industrial based are managed by a single prime contractor or single program offices without not a lot of, you know, communications across them. And so when, you know, we think about the demand going up in all of these separate programs and services, they don't really know how they all connect down to stream and the lower tier and how that becomes a problem and become a bigger checkpoint. And so how do we better understand the connection

between all those different demand signals and supply base. What are all the priority items and actions that are required to make sure that all those choke points are identified earlier and reinvest earlier on so that we can be prepared for the future? I think that has been the big conversation for our study.

And what are some solutions that you found in this process? Yeah. So initially, we try to understand the near-term actions and investments that are required. So we have to actually go talk to all these industry partners, understanding what are the challenges, where they are, and what their demand signal looks like in the out years.

so that we understand what are all the lists of constraints that they're tracking, what are all the additional help and, you know, assistance that they require, either in-house by their own investments, but also from the government side, if there's anything that we can help. And so by having those conversations, looking across multiple programs and vendors, understanding, you know, what are all the priority items, those are primarily driven by the timeline that it takes to

for all these investments to realize. And so prioritizing timeline and investments that are required, that's essentially how we came up with prioritizing the investments that are actions that are required at the Navy leadership level. Now, the near terms are always important, you know, trying to fix the current problem is always necessary to move on to the next step. But at the same time, we need to think longer term, what is that longer term vision for the industrial base? And really,

The resiliency and then the robustness of the supply chain is what we need in the longer term so that in the future when we have to surge the demand

then we are better prepared to support those demand. And so for those cases, we utilize some of the data-informed analytics tool, network analysis, trying to understand what are all the connections between the sub-tiers, not just at the prime level, to better understand and uncover what are the connections between different demand signals and programs. And so those became a primary topic conversation of like where we need to better understand and prioritize our investments to stand up either a

strategic second sourcing or stand up government facility to help them help the government so that they can help the industry so that they can, you know, better focus on the new productions or current challenges that they're trying to mitigate. I think this idea of anticipating demand that you brought up here, April, is really interesting and relevant for all three of the areas that we've kind of already discussed. You know, for example, we we know that there's going to be a hurricane season every fall.

Right. So is there is there ways that the private industry, that relief agencies can anticipate that we may need to be prepared to surge to those areas? Can systems be put in place that allow for surges to happen without fundamentally shifting the mentality of maximum efficiency, but just reducing?

being ready for more flexibility. I'll take a first stab at this one just because CNA has done a number of different war games related to emergency response and disaster relief. And one of the key aspects to understand related to this problem set is hurricanes are kind of like a quasi black swan event. You don't necessarily know where the next hurricane is going to be, but you do know that hurricanes happen regularly, right? And so it's in this category of kind of

unpredictable but high impact issues and one of the things that war games allows is for for them to be used as training and education events and so in this case if we could predict where the next hurricane would be it would be great to pre-position everything right where it needs to be to relieve the next hurricane but often that's not possible and so what we do instead with war games is we

work with leadership such that they've done some rehearsals of how they would respond if such something occurs. And that education and using War Games for Education allows leadership to have done a few dry runs of the key levers that they're going to have to pull no matter where the hurricane actually does hit. And they've thought through it rather than have to think on the fly and in a situation where time can really matter. Yeah, that's great. It's funny. I

You know the hurricane is going to happen. You don't know where and you don't know the specific attributes of that hurricane. But the where it hits also matters when you're talking about supply chain and supply and demand, right? So there's a group on the IPR side of CNA that when there is a hurricane coming and the five-day forecast is looking like, okay, we have a general idea of where it's going, they look at the area itself.

And they look at the kind of major supply chains in that area to figure out what is here that's maybe not other places in the US, right? So if you have a major factory for something that supplies to the rest of the United States in that area, or you're a major oil producing area, or there's things that impact the supply chain across the country because that specific area is getting hurt,

And then also it's so specific in that,

The different supply chains are run by different private sector who support different critical infrastructure, and they're all different. The choke point, the break point, it all gets very detailed in a hurry. And I think I've heard both April and Charles talking about it, right? That you get to the detail level very quickly. And that's very true on the civilian side, understanding that specific supply chain, where it might break, and then

whether it's federal government or state government can support to help it keep going. You can't do it one and done because it's different with every storm, with every threat.

and with every industry in every area. So it's more the getting the leaders, like Charles was saying, getting the leaders understanding the processes they're going to need to go through to understand where the breakages might occur and then how to prioritize the scarce resources while it's happening. And then how do you get the supply chain back running again? And then you rinse and repeat for the next thing that goes wrong.

Don, I'm going to stick with you and ask you to expand on some of that because, so far, we've talked about shock systems. You've gotten into some of how we can respond to supply chains during those. But your team has also worked on more long-duration critical infrastructure outages and how you can maintain supply chains in those circumstances. I was wondering if you could talk about that a little bit and maybe make some connections to what Charles and April have talked about as well.

Yeah, sure. So I already talked about the supply chain analysis network, doing that work kind of every time there's something going on. But we also have a longer term project where we're looking at a long duration outage of a critical lifeline. So think like your financial systems go down, your electricity is gone.

your water is not running, your communications is down, or transportation systems are down. When those things happen, as you can imagine, it's going to have really serious impacts on the supply chain. So for the state of Virginia, the Virginia Department of Emergency Management, using a grant from FEMA, they are looking at if there is a cybersecurity incident from a nation-state threat,

that takes down one of these systems for four to six months, how do you keep supply chains running? It's a very, very complex question, but we're addressing it from the, well, you're not going to solve it for every individual supply chain, but you can put the mechanisms in place

that will be able to come kind of alive if it happens, right? What is that prioritization group, right? Who's a part of it? How do they function? How do they make decisions? How do they communicate decisions? We can do that ahead of time, right? How do you decrease demand, right? So we talked about the supply chain, which is getting goods in or services in, but how do you decrease demand for those goods and services during times of extreme disruption, right?

So we're starting to talk about that. What are the ways? What are the ways of getting supply that are not traditional? Can you grow something? Can somebody make something they don't normally make? We saw glimpses of this in COVID, right? A place that produces alcoholic beverages started to produce hand sanitizer instead, right? So what are those switches that can be made with the same equipment or more or less the same processes more or less?

that might be able to give those surges to the supply if it's not coming in in its normal paths. So there is so much of what Charles and April are talking about that we are thinking about in the civilian world too. It's just in the civilian world, instead of necessarily a war causing it, right? Or a conflict causing it. We're thinking about kind of the full range of things that can happen, you know, whether accidental or on purpose, right?

and how we're going to respond to them as a state, and then as a local that needs to do it, and then also looking up and how is federal level going to support the states that need this kind of help. And if you're interested in hearing more, learning more about our cooperation with VDAM and their work on the cybersecurity challenges, there are some Blue Book TV events coming up that they'll be holding on, I believe, LinkedIn, Don, is that correct?

Yep. So we have Blue Book TV, which is us once a month talking about these really interesting issues that are getting raised. We also have a website that I will put in the podcast notes where we put our white papers and other kind of interesting reading. So yeah, anyone who is interested can look at the Blue Book project through VDEM's website and we'll hang everything we have there. Yep. And we'll also have a link to register for the next Blue Book as well in the show notes.

Awesome. Yeah, we're really looking at kind of these big questions of when we're in a national security emergency, how the civilian side responds, both like at the local, state and federal levels. And we're looking at military installations as well. So it's kind of an all-inclusive audience would be interested. Mm-hmm.

I want to kind of bring April and Charles back into this conversation here because while I think there is a lot of similarities between the military and civilian side of responding to these supply chain shocks, the military does have some challenges that the private sector doesn't have quite as dramatically, which is like the military needs to draw entirely from domestic manufacturing, I believe. So therefore, there is just a smaller market to cooperate with.

Charles, can you maybe talk a little bit about that challenge and how that came up in your work?

Sure. And so I think there's a little bit of clarification here. Whether the military is drawing exclusively from domestic industrial base really is very kind of supply dependent. In the case of clothing and textiles, though, that all falls under a category of legislation called the Barry Amendment, which does require everything to be made in the U.S. from the cut and sew shops, jokingly, all the way up to the sheep. But the sheep can eat

imported grass if you want. There are exemptions for that, but by and large, that's what the requirements are at this point. So this is kind of a protected sector and a protected industry in some ways, and that makes the supply chains really unique. So I think there are two things that April and Don both brought up that I think would apply here. One on kind of April's side is understanding

challenges and prioritization issues as you move higher upstream in your supply chain. So my kind of anecdotal impression is that vendors working directly with the government

have pretty good communication and touch points with the government. But that visibility decreases as you look at their suppliers and the suppliers of those suppliers in turn working upstream. And where you can get into trouble is if you go far enough upstream where one vendor is actually supplying a couple of different things with the same product. And if everything ramps up simultaneously, they have to make choices, hard choices potentially about what they're actually going to prioritize first.

On something that Don said, I think that one thing that we don't fully understand but might alleviate some of these challenges is the opportunities for industries that aren't currently supporting the defense industrial base, but maybe U.S. manufacturers to pivot and convert some of their current capacity to meet government demands. And that's really important.

We know it happens. We have all sorts of anecdotal examples for it happening. But how do you actually measure industrial capacity for something that's not currently producing what you need? And how quickly does that pivot happen? I think there are a lot of open questions there that at least I don't fully understand. April, anything you want to add?

I think there are some areas that military or the government organizations can adapt, even in this uniqueness and the smaller supply base characteristics of the munition industrial base. I'd like to just add, in addition to the smaller supply base, for the munition production, we're really talking about the long lead as another characteristic. Multiple years to produce and get materials. A lot of times, since we're talking smaller vendor base, every program and every crime is looking for that specific equipment.

or specific raw material that's going to take 30, 40 months to get. And so knowing that things will take a lot longer than what we are seeing in the commercial world and knowing that there are only a few suppliers who are available to provide those, how do we work with that and how do we better prepare for the future? What government can do is probably more of a longer-term solution, but

satisfying exactly what the demand is going to be like from the government longer term so that the industry can prepare and know what's going to happen. Now, that's not going to be like a month solution primarily for the munitions, but knowing what's going to happen two, three years from now will better help them prepare and improve their production and capacity. And that way, government and industry can benefit each other longer term. I think that's probably the right way to adapt in this munition industrial phase.

Got it. Thank you, April. Well, we're just about out of time for today, but I do want to give you all a chance to give any final thoughts from what we've been talking about today. And Dawn, we can go to you first here. Yeah, thanks, John. There's been a concerted effort in the last several years for those that do consequence management to have closer communication and connections with the private sector.

But I think nothing is bringing it to light more than kind of the last, you know, five years, right, with COVID, with the colonial pipeline, with the threat of cybersecurity attacks that can really bring whole systems down. I think that as a nation, and this really does fall on states and locals to enact, but that just understanding how...

reliant we are on our private sector and how we need a much better understanding of how their supply and demand systems work so that when there is a disruption, we can support. And so I've been really fortunate to be part of that work, and I think it will keep going for a while. Thanks, Dawn. Charles, how about you?

Just to kind of talk back to some of the big final things that we talk about within Cameland that I think help mitigate some of these problems. One of the main issues is that supply chains are very lean. And to some extent, that's by nature of what their demand looks like. So whatever the government is purchasing will generate the demand and the infrastructure that the industry base has. And so to the extent that we think that what we have isn't enough,

the government can consider investing further in more access within the defense industrial base. And that's kind of a tricky risk calculus to make because if you want zero risk, you're going to spend infinite dollars, right? And so you want to mitigate some risks related to some things, and you want to maybe have a diverse portfolio of what you're mitigating risk on. But where those specific thresholds and criteria are

all kind of require more analysis or at least kind of more active analysis and more active thinking in order to make sure we're balancing everything correctly. And so that's kind of where we leave off with Cameland is we're agnostic to where the right kind of critical limit is for this strategic excess. But to the extent that you think we're not where we need to be now, that's one of the next steps that you can take going forward. Thank you, Charles. April, any last thoughts?

You know, there's a lot of recent world events that are happening. So clearly this, you know, demand signal for increased production and quantity for not just the munitions, but a lot of the defense related materials are only going to go up. And so better understanding, you know, the industrial base, the complexity of the supply chain, understanding what industry can do and at the same time what government can do so that it becomes a win-win situation. I think that'll be really beneficial in the longer term.

Absolutely. And just kind of to piggyback on that, I think one thing that this podcast has demonstrated is that, you know, a lot of these challenges that our country is facing between like the civilian and the military sector, there is a lot of overlap and there are different problems that need that can be kind of worked on collectively. And so I think that what one thing this conversation has shown is the value of having an organization like CNA that has a diverse array of expertise and the people that

able to use each other within that organization as a resource and solve problems together looking at the massive catalog of work we've done here. So I appreciate you all participating in this because I think this is a great example of the diverse skill sets and how they benefit each other at a company like this.

Thanks, John. Couldn't agree more. And, you know, we love talking about our projects. So thanks for giving us the opportunity to do so. Totally agree. Thanks for having us, John. For our listeners, there's going to be a lot of links in the show notes today. We'll have the links to the Camelan report, as well as the VDEM and Blue Book TV links that Don mentioned, and links to all three of our participants' research programs where you can find a

a wide variety of the work they've done on all kinds of topics. So if any of this interests you, check out the show notes and see what you can find out. But I want to thank you all so much for listening, and we'll see you next time on CNA Talks. The views expressed are those of the commentators and do not necessarily reflect those of CNA or any of its sponsors. CNA Talks is produced, edited, and mixed by John Stimson. Our theme music is by Edward Granga. If you enjoy our show...

We'd love it if you could give us a five-star review on Apple Podcasts and tell your friends about us. Thanks again for listening, and we'll see you in two weeks.