Ai Group-backed report: Australia’s Defence supply chain at risk

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A high-profile report headed by the The Australian Industry Group (AI Group) has investigated strategies for increasing the resilience of Australia’s defence supply chains. 

Supported by the Department of Defence’s Strategic Policy Grants Program, the Australian Industry Group and Perth USAsia Centre evaluated current supply chain frameworks and practices in light of traditional, emerging and strategic risks.

Insights into the nature of contemporary supply chain vulnerabilities and risk management practices all feature in the report generated by more than 60 interviews with defence and defence industry experts. 

“There is now a globally-recognised need to invest in improving the resilience of defence supply chains,” the report, ‘Securing Australia’s Defence Supply Chains’ says. 

Action needed to protect supply chains

Six key recommendations have emerged in the report: 

  • A comprehensive strategy and action plan for the strategic protection of defence supply chains.
  • Robust and scalable mechanisms for generating information on defence supply chain risks.
  • The establishment of governance structures that allow regular and organised engagement with industry.
  • To develop a clear methodology to identify, select and resource supply chain interventions to identified risks.
  • To increase the priority accorded to supply chain issues during Defence procurement processes calibrated by risk.
  • Collaboration with international partners to enable trusted capability supply chain options.

“As strategic risks to supply chains increase, stronger governance structures and policy frameworks are also required,” says Kate Louis, Ai Group’s Head of Defence and National Security. 

“These should set core concepts and definitions for supply chain security, provide risk assessment frameworks, and identify options for interventions to address identified vulnerabilities. This additional protection is particularly important in the context of our large Defence spend.”

Defence’s local military equipment has grown by 35% to around $3.5 billion, the report says. 

Drain on fuel supplies

Fuel supplies have long been a topic of debate due to the low number of reserve days. 

Defence Minister Richard Marles, as reported in the Guardian, was considering increasing Australia’s onshore fuel storage. The nation has just 58 days’ of emergency fuel in storage – the international standard is 90 days.

The Strategist reported fuel limitations have cut short the RAAF’s most significant international engagement, “Pitch Black”, in the Northern Territory in recent years. 

The three-week exercise draws Canada, France, Germany, India, Indonesia, Japan, the Netherlands, Malaysia, New Zealand, the Philippines, Singapore, South Korea, Thailand, the United Arab Emirates, the United Kingdom and the United States. 

“While Defence and defence industry are still focussed on ‘traditional’ risks, such as logistics and commercial availability, awareness of strategic risks is rising. An example of this growing awareness relates to fuel and fuel reserves,” Securing Australia’s Defence Supply Chains reported. 

Read a summary here or download the full report. 

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