Challenges and barriers that limit the productivity and competitiveness of UK defence supply chains

by Julia Muravska, Anna Knack, Rebecca Lucas, Ben Williams

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Like companies in other sectors, some parts of UK defence supply chains suffer from productivity shortfalls that may constrain their performance and competitiveness. This is an issue of widespread concern throughout the defence industry. RAND Europe was commissioned by the Ministry of Defence (MOD) to explore a set of policy options for supporting defence supply chains in the UK, and to build the evidence base for a supply chain development pilot programme. As part of the resulting year-long study, the research team identified the main challenges and barriers faced by companies across the tiers of UK defence supply chains, mainly through discussions with a wide range of industry and government stakeholders. Specifically, we found that:

  • SMEs and mid-tier suppliers report difficulties accessing and engaging with both top tier suppliers and the MOD
  • UK defence supply chains find it difficult to attract non-traditional defence suppliers which can limit opportunities for innovation.
  • Defence contracting terms and processes present barriers to supply chain development.
  • UK defence supply chains are constrained by shortages in critical defence industrial skills.
  • Defence appears to be slower than other sectors at taking up innovative processes and advanced manufacturing technologies.
  • UK defence supply chains encounter difficulties in enforcing and monitoring cyber accreditations across all tiers.

These underlying challenges contribute to the productivity shortfalls within defence supply chains that our research has uncovered, and the RAND team developed two pilot concepts that can help address them. The pilots would support other government initiatives and derive synergy through mutual reinforcement.

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This Perspective is derived from a year-long study funded by the UK Ministry of Defence. The study was conducted by RAND Europe.

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