Surge complexities in defense industry supply chains: evidence from multiple case studies

Managing defense supply chains in today’s tumultuous and volatile security environment is becoming increasingly complex and competitive. Complexity remains a major impediment to supply chain performance (Choi and Krause, 2006; Bode and Wagner, 2015; Aitken et al., 2016), which increases the vulnerability of such supply chains (Jüttner, 2005), compromising the benefits promised by converting its many distinct functions such as outsourcing, integration, long-term partnerships and collaboration into a single efficient process (Fawcett et al., 2008).

While such single extended processes are desirable and sometimes necessary for competitive advantage, coordination, and cost reduction (Childerhouse and Towill, 2003; Gerschberger et al., 2012), many of such strategies are applied to a limited scope along the defense industry supply chains (e.g., Turner et al., 2018). Due to the uncertainty surrounding the defense sector, and more specifically, its products, the need for quick ramp-up (crisis) and scale-down (peace) is high (Kovács and Tatham, 2009). Moreover, if extreme occurrences become extended, such cost-cutting strategies are usually replaced by more effective strategies appropriate to the situation at hand, for example, stockpiling inventory. To deliver competitive advantage returns on performance, efficiency, cost, etc (Albers et al., 2016), effective supply chain integration (SCI) between work systems is required. SCI is the degree to which a firm collaborates with its supply chain partners and collaboratively manages intraorganizational and interorganizational processes to achieve effective and efficient integration of supply chain flows across the supply chain (Flynn et al., 2010; Zhang et al., 2015). Work systems denote a system wherein people and machines undertake processes and tasks using information, technology, and other resources to produce specific output for specific customers (Alter, 2013). In this regard, complexity presents as a science that studies systems “in which large networks of parts, each behaving according to some simple rules of operation, interactively give rise to complex collective behaviour, sophisticated information processing, and adaptation via learning or evolution (Maguire et al., 2006; Mitchell, 2009).”

Given the unique characteristics of the defense industry, coupled with increasing global security risks such as the COVID-19 pandemic in 2019, the Russian invasion of Ukraine in 2022, and civil unrest, etc, events have coalesced to expose and amplify supply chain vulnerabilities across industries, regions, and continents. This requires a better understanding of the bimodal complexities embedded within defense industry supply chains (e.g., Loska et al., 2024). Even though several studies discuss supply chain complexity (e.g., Perona and Miragliotta, 2004; Serdarasan, 2013), the extant literature on complexity management in supply chains provides little insight into the identification, characterization, and management of complexity within the defense industry supply chain context.

The purpose of this article is to characterize surge complexities along the defense industry supply chains in Sweden and their implications for the support of military forces. Karabag and Berggren (2016) define the defense industry as “… public organizations and private firms involved in research, development, production, and service of military materiel, equipment and facilities”. While extant literature has demonstrated factors that drive complexity within contemporary supply chains (Serdarasan, 2013; Piya et al., 2017), there is little research on the complexity of defense industry supply chains, given the bimodal nature of defense industry customers. This is problematic because the performance of the defense industry is tied to the defense capability of the nation (Markowski et al., 2010). The ability to manage supply chain complexities enables managers to make efficient and effective decisions that are necessary for handling unexpected extremes associated with complex interactions.

Employing results from four in-depth case studies of products drawn from the industry, this article seeks to identify and characterize complexities within defense industry supply chains. To achieve this, choosing Sweden as a focus, we develop the following research question:

This study specifically examines the complexity of supply chains within the Swedish defense industry, by investigating supply chain management and logistics practices that four firms use to support their value-creation activities to identify potential complexities within these product supply chains. This study contributes to complexity literature by applying important characteristics of industries and their supply chains to the identification of complexity that can be manifest during a crisis or war to support military operations. This seeks to balance the needs of customer forces during conflict. The study adapts a classification of complexity based on the supply chain thereby supporting empirical as well as theoretical classification clusters identified in the study.

The following section establishes the industry and supply chain foundation for defining complexity clusters. Next, the methods applied in this study are discussed, followed by the presentation of findings and results. A discussion of the results ensues, and finally, a conclusion is provided.

The idea of an increasingly complex world environment is not new, however as advances in technology, economics, communication, and transportation make production ever more efficient (Friedman, 2005), the demands on supply chain structures and processes that allow for the integration of these advancements are being stretched to the limit as a result of rising customer expectations, expanding product lines as well as tailored customer experiences. As such, complexity increases within a supply chain in tandem with these changes in customer requirements, which creates an environment in which standards are constantly being juxtaposed by supply chains to gain alliances and partnership advantages (Serdarasan, 2013). Such alliances are crucial for supply chains’ abilities to adopt new technologies, develop new products, and enter new markets. Ekström et al. (2020) show that while supply chain constructs within non-defense industries may apply to the defense sector, they do not necessarily represent sufficient capabilities to satisfy requirements on availability, preparedness, and sustainability within the defense sector across these two demand conditions. To understand and further characterize complexity in the defense industry supply chains as unique with regards to its value creation function, a deeper understanding of the general features of supply chains across industries is required and undertaken via the structure, industry, product, and regulatory characteristics in the following sections.

Industrial organization economics claims that firms gain a competitive edge by adapting to the characteristics of the market within which they are present (Bain, 1956; Caves, 1964). According to Hay and Morris (1991) and Scherer (1980), the main structural variables of the structure-conduct-performance include the number and relative sizes of sellers and buyers, product differentiation, etc. As such, the structural characteristics of an industry are important not just because they make up an important aspect within which procurement occurs, it also provides a basis for understanding the interaction among firms and the role of competition within procurement, outsourcing within the industry regarding price, product quality, delivery schedule, and innovation (Porter, 1980; Markowski et al., 2010). This is because governments can use their power to control the size, structure, and performance of a nation’s defense industrial base (Hartley, 2007). Also, defense industry production requires defense-specific skills or assets that are not necessarily available in other industries. For example, defense procurement requires a different policy focus due to its dedicated manufacturing capability requirements (Markowski and Hall, 1998).

From a design perspective, the purpose of engaging in supply chain design processes is to reduce costs and simultaneously increase performance. Given that up to 80% of total supply chain costs are determined early on at the product design stage (Appelqvist et al., 2004), the supply chain-product design alignment presents as an important source of sustainable competitive advantage (Sharifi et al., 2006).

The structure of an industry has strong influences in defining the rules of competition among its new entrant and incumbent firms (Porter, 1980). While not a static phenomenon, industry structure tends to change over time due to, for example, changes in product characteristics, technology, consolidation, government policies, intellectual property rights, research and development (R&D), and even growth. Thus, as industry structures change, rules, and consequently the nature of the supply chain’s performance change (cf. Porter, 1980).

A process is a set of structured and related tasks that are designed to produce specific output or accomplish certain organizational outcomes, given certain inputs (Davenport, 1993).

While the defense manufacturing industry remains a specialized sector in its own right, there are process differences stemming from its structural makeup compared to other manufacturing sectors. For example, while parts and material suppliers in the defense industry are mainly specialists, and relatively few around the world, processes and procedures involved in the design of the product are more tailored to the end user involving customized detailing of material/parts, as such the customer order decoupling point, CODP (Mason-Jones and Towill, 1999; Olhager, 2010) of their supply chains are closer to the customer. The processes and procedures required in the matching of customer needs to the capability of the supply chain in terms of its manageability, scope, and impact increase complexity and consequently risk to the end product. This is true in terms of equipment specification, information transparency, and uncertainty in technology to quality issues (Sinha et al., 2004).

Two extremes to the relationship between the defense industry and the government exist (Zervos and Swann, 2009). At one extreme is government ownership and maintenance of critical defense assets, and the broad application of contractors to perform necessary defense services, such as procurement, on the other extreme. Thus, processes and procedures involved in these widely disparate strategies along the relationship continuum can be quite complex, as government entities, which make up the bulk of the defense industry customers significantly mediate this industry (Laursen and Salter, 2014).

To achieve sustainable, competitive, and market advantage, firms need to continuously develop new product lines, as today’s products do not guarantee tomorrow’s revenue advantage. However, new product success or failure is linked to how well the innovative creation process is managed (Brewer and Arnette, 2016). Generally, the type of products created by a given industry can place certain demands on the supply chain of that industry. According to Vonderembse et al. (2006), industry products could broadly be classified as standard, innovative, and hybrid where, standard products typically exhibit stable characteristics, with predictable demand, have long life cycles, and their design changes only incrementally over time. Innovative products, however, require sophisticated, breakthrough designs, and manufacturing capabilities differentiating them from standard products. However, their product life cycles generally tend to be shorter than those of standard products. Hybrid products represent a combination of standard and innovative components with long product life cycles, which can require periodic improvement.

Given these fundamental distinctions, differences can be established between industry products regarding uptime, dependability, and performance. For example, the design and procurement process can determine the average life span and quality of equipment, say an aircraft. This presents complexity challenges which generally carry on to difficulties within production quality (Brewer and Arnette, 2016), and support and maintenance (Markeset and Kumar, 2003). The nature of the defense industry is such that it offers almost complete life cycle warranties for single product lines, including maintenance. Also referred to as the embedded innovator approach to product support, Allmendinger and Lombreglia (2005) argue that this approach presents the most product-oriented solution to lifecycle maintenance among the different product support strategies available to customers, and as such takes a heavy toll on the supply chain.

Considering the development of weapons by opportunists, existing products must be updated and improved, and new countermeasures must be developed. In the context of an ongoing conflict, these actions must be taken urgently (Stephens, 2001; Katz et al., 2015; Wells, 2017; Zhang et al., 2018; Haner and Garcia, 2019). This places demands on the defense industry, necessitating product innovation, and advanced manufacturing methods to achieve robust supply chain capabilities.

While the defense industry has traditionally maintained a privileged relationship with governments of the states within which they are located mainly due to its strategic importance (Hartley, 1974; Hayward, 1989), regulation of the defense industry by these governments remains extremely complicated (Schilde, 2023). The industry routinely deals with items and materials that are highly differentiated (Dertouzos, 1994), multidimensional, and in some cases hazardous material, weapons, and space systems, including items in the so-called United States Munitions List (USML). The exchange of these items is tightly controlled within the International Trade in Arms Regulations (ITAR) framework (Nosanov, 2009). ITAR governs the export of products and the technical data associated with those products to foreign countries and requires an export license before disclosure to a foreign national. Other types of regulations focus on the common problems facing defense systems in many countries, including increasing their access to security, and sovereignty and reducing the cost of defense, foreign direct investments, tariff, and non-tariff barriers, etc (Abbott et al., 2017).

Regulation entails that there are limits to the actions of actors in the defense sector concerning design and procurement at the very least. Thus, regulations can affect design, procurement, and maintenance in different ways. For example, government regulation can proscribe the use of certain types of material procurement from certain regions or locations for a variety of policy objective reasons, which can include socioeconomic and anti-trust issues (Awasthi et al., 2019). This can increase procurement costs and reduce product efficiency and, ultimately, the competitiveness of such products. For example, in recent decades, the United States Congress has used legislation to reserve up to 60% of all maintenance and upgrade-related work to state-owned defense firms, leaving 40% of contracts open to competition from the private industry (Gansler, 1993). Regulation can therefore make supply chains more complex by increasing the scope and variety of risks.

As rapid technological advancement is changing the face of modern warfare, military supply chains are becoming more complex and unpredictable when combined with the characteristic uncertainty typical of the military across peace and war conditions. The premise of complexity science suggests that the whole is not the sum of the parts, thus pitting it in stark contrast to the foundational idea of systems analysis, which essentially presents a methodology for reducing the complex parts into a manageable whole. That is to say, emergent characteristics of the whole may not be explained by the parts alone. However, complexity is argued to go beyond systems thinking such that it may be applied to understanding organizations and their management (Grobman, 2005).

Complexity is what happens when burgeoning system-level phenomena exhibit random as well as systematic patterns, in time and space, which are difficult to accurately describe (Maguire et al., 2006). Closely linked to the concept of systems, we view complexity essentially as a property of (certain) systems, as most definitions of complexity proposed within literature undertake this within the confines of systems. This is especially true when considering the so-called two-pronged approach to defining complexity proposed by Casti (1979). This somewhat simplistic and straightforward view of complexity argues that numerosity and interactions are the two main drivers of complexity. These characteristics also constitute two major features of systems. Hence, we conceptualize the defense industry, and the supply chains it operates, in this study, as a system.

According to Yates (1978), complex systems typically display five important attributes. These include (1) a large number of elements that make up the system, (2) a large number of interactions among these elements, (3) nonlinearity, which occurs when system input produces irrational or non-proportional output as opposed to a one-to-one input-output relation typically characteristic of simple systems. Also, (4) broken symmetry arises from the inaccessibility of parts of a system from certain other portions of the same system. Finally, (5) they exhibit nonholonomic constraints (also Bozarth et al., 2009), which happen when one or more portions of the system are left outside the general system control, allowing these portions of the system to behave in a manner different from other parts of the system.

Complexity literature has grown rapidly across a wide range of literature in recent years and can broadly be defined along different subject and disciplinary perspectives. From a management perspective, extant literature generally differentiates between structural and dynamic complexity, including its application within organizational management (Stacey, 1996; Stacey et al., 2000). Dooley (2002) defines organizational complexity as the extent of variation that exists among the different elements that make up the organization and is classically measured in terms of the number of organizational partitions (Blau and Schoenherr, 1971), and their relations. Summarily described as the number of different professional specializations that exist within an organization and remain fixed over certain periods (Prietula, 2011).

Burnes (2005) asserts that organizational complexity occurs as a result of change of some sort, resulting in a variety of consequences at different levels in an organization. Similarly, Okwir et al. (2018) describe extant management literature on complexity as stemming from the external environment rather than the result of users’ response to that environment. Thus, it is not surprising that this literature tends to emphasize structural dimensions of complexity (Perona and Miragliotta, 2004; Ashkenas, 2007).

From a supply chain perspective, the resulting increase in the intricacy of dependencies in the supply chain has further complicated the ability of firms to tackle the complexity inherent in their supply chains. Thus, within supply chains, the focus shifts towards studying the origins of complexity and how to effectively manage it. Complexity here is considered across three different types, including static, dynamic, and decision-making complexities (Serdarasan, 2013). Structural complexity entails the structure of the supply chain, including the variety and strength of relationships among its parts. Dynamic complexity describes the uncertainty embedded within the supply chain as a result of its structure relating to aspects of time and randomness.

According to Perona and Miragliotta (2004), complexity within logistics and manufacturing systems is characterized by strategic, contextual, and resource objectives, as well as the level of attention paid to issues of general complexity surrounding the project at hand. As such, these objectives, including establishing competitive advantage, achieving operational excellence, etc (strategic), and doing that within the military/defense industry, etc (contextual) using all human, technological, financial, etc means available to it to achieve such objectives (resource) form the basis of complexity in such systems. Because the logistics systems remain the structure upon which the supply chain works, these characteristics could be very well applied to the supply chain.

This study sought to understand the surge phenomena and how complexity factors develop along these lines. Surge is conceptualized as, conditions under which the state/military is in a state of crisis, conflict, or war, while steady-state conditions would represent the opposite of this. An inductive approach, via case studies, was applied to examine supply chain complexity under surge conditions across four defense companies in Sweden.

While case studies remain a powerful method of inquiry (Voss et al., 2002), undertaking this within an inductive framework allows for the consideration of the defense perspective and its possible contribution to theory. Cases represent products that are used as lenses through which surge conditions along their product supply chains may be further understood. Two of these cases are combat or offensive platforms, the third product is ammunition, and the last product depicts a service function required to be performed on combat platforms. The cases were selected to incorporate variation in activity, actors, raw material, relationships, and hence complexity factors across all four supply chains. Due to sensitivity issues, actual descriptions of the products and organizations are not stated and or are randomly anonymized in different ways. Thus, inquiries are focused on how the supply chains of these platforms and the service functions that support such platform products handle the bimodal operational environment required by its military customers. This entails that the unit of analysis of the cases is the product/service supply chain, which could also be described here as a work system. Figure 1 displays our conceptual framework depicting the unit of analysis as well as the important features within the case and the relationships among them. This framework is based on the traditional understanding of the interdependence between different actors and flows within supply chain management theory. Applying a multiple-case design strengthens the study’s foundation for the development of testable and more robust theory (Stake, 1995; Yin, 2003).

Information was categorized according to the type of complexity along the lines of structure, processes, products, and regulation. For easy identification of the different products, cases are designated as follows: Case 1 (Combat/offensive platform); Case 2 (Offensive platform); Case 3 (ammunition), and Case 4 (Service/maintenance product).

Data from study visits and information provided in a mapping activity of case product supply chains were carried out by the case companies and were used to support the assessment of the investigation. Interviews and follow-up questions were used to clarify issues within the mapping data source. Given the opportunity, multiple informants (from 15 to 25 for all cases) from the different case organizations were interviewed to achieve a broader perspective across the supply chains. For example, such interviews were sometimes undertaken during site visits and sometimes specifically requested, to get a broader sense of the variety of processes and procedures at different stages of the supply chain and were not applied as a source of data per se in the study. Rather, they were used more for clarification and interpretation of elements of the mapping data. Interview respondents had between 5 and 15 years of work experience. We distinguish between informants and respondents, with informants not necessarily being assigned to the project. Informants may include key organizational figures such as the CEO, factory manager, procurement manager, company lawyer, etc.

The study follows an inductive approach and is based on existing literature and thematic analysis. Case selection employed both literal and theoretical replication (Yin, 2003) beyond the first, most obvious case. With four defense organizations involved, we identified the first case and selected the others based on their ability to support either literal (similar) or theoretical (different) replication. Given our focus on organizational differences, complexity theory (Serdarasan, 2013) provided justification by differentiating supply chains based on structure and dynamism. The theoretical approach explored structural, industrial, product, and regulatory perspectives. The first step of our analysis process asked case companies to map the supply chains of the products represented in the study. This was carried out by the case companies themselves, with detailed instructions and directions from researchers on areas of importance for the mapping exercise, aimed at generating visibility of activities and processes within selected product/service supply chains. Mapping involved only processes that were actually (currently) carried out.

In the second step, informant interviews were used to corroborate data received within the mapping and compared to the sources, for quality assurance and familiarity with the data (Hsieh and Shannon, 2005). For structure, we solicited clarifications that spanned the entire supply chain, as structure deals with such issues as the number of nodes in the supply chain, the number of buyers and sellers, and the level of expertise required to complete processes and procedures along these supply chains. The results of the mapping activity were reviewed and discussed with the involved representatives during project workshops and summarized in Table 1.

Industry processes pertain to the actual types of processes and activities that are required to be carried out within the manufacturing process to produce a product or carry out a service. These could include processes like welding and joining of highly sensitive metals and materials to achieve input for a certain product. These processes are usually located at the focal organization sites as depicted in Figure 1, or at nodes located across the supply chain.

Product inquiries focused on the lead times of products and how their packaging, delivery, maintenance decommission, or disposal are managed from a supply chain and logistics perspective. Because products are usually significantly customized to the buyer in one form or the other, once these products are manufactured and delivered, maintenance and or upgrade obligations and contracts are usually attached to such deliveries. We consider product characteristics from the point manufacturing is completed and delivered until their decommissioning. Due to the different regulations, including procurement laws, that govern the production, acquisition, and trading of defense equipment (e.g., ITAR), the supply chains engaged in these activities can experience impacts from these regulations.

Results from the analysis were classified according to the predetermined characteristics outlined in section 2. Codes that did not align with any of these characteristics were subsequently utilized to formulate new ones.

To describe the characteristics of supply chains of the different cases in this study, Table 2 presents an overview of findings that emerged from the mapping exercise carried out by the case companies. In the next sections, we explain complexity drivers as they pertain to structure, processes, products, and regulation in the supply chain operations of the different cases studied, including the relationship among them.

Complexity within the four cases differed widely in terms of their supply chain characteristics. Examining characteristics across case supply chains can further illustrate differences in the complexity of the different supply chains. Complexity was assessed based on the supply chain strategy, which is determined by its underlying profile, for example, product, demand, or competitive profiles. A competitive profile would entail competition along the lines of cost or quality.

Although the supply chain strategies of the case supply chains developed here are based on the strategic analysis of the mapping results by determining how case companies seek to cope with business activities across organizational boundaries (Lo and Power, 2010), these strategies can change with changing supplier, customer, and environmental conditions. Identified supply chain strategies within the study include demand, product, and competitive supply chain strategies. In peacetime, production in these firms is entirely based on actual customer orders, making it fully customer order-driven. It is noteworthy that other logistics-based supply chain strategies, such as Quick Response (Lowson et al., 1999), are not mentioned. The demand strategy allows customers to pull the product, making it just responsive to the market. Integration sought to determine the degree to which firms can strategically collaborate with supply chain partners to manage the intra- and inter-organizational processes to achieve effective and efficient supply chain flows. It is essentially a measure of how much of the supply chain is controlled by the case company.

Sourcing relations across the different supply chains refers to the type or relationships entered into with the majority of suppliers/service providers along the case product supply chain. While supply chain relations can develop in a variety of ways, depending on the structure of the supply chain in question, relationships are assessed across three management foci, including strategic, preferred, and commercial relationships (Harrison et al., 2019). Strategic relationships are the most detailed types and are characterized by 3–5 years durations, joint improvement plans, and innovation roadmap sharing, among others. Commercial relationships represent arms-length transactions, with no relationship strings attached. These relationship categories are developed based on the most critical products and suppliers in each supply chain. Finally, internationalization describes the extent to which materials and services critical to the manufacture of a product are acquired from foreign suppliers. It expresses the interdependence between the case firm’s product and its foreign suppliers and service providers. High footprint depicts supply chains that have more than 50% of their suppliers outside of Sweden. Low footprint conversely describes supply chains with more than 50% of their suppliers in Sweden. The categorizations undertaken in Table 2 represent the most important materials and services required by the case products to successfully achieve their production goals and do not represent all items, materials, and services required as input into such goals.

Even though the cases present quite different products, the majority of cases represented some form of service, maintenance, or upgrade supply chains, as opposed to manufacturing supply chains. As such, it is not surprising that case 3, as the only case that shows a competitive profile, demonstrates a tendency towards backward integration, a strategy where a focal supply chain organization acquires control of critical upstream suppliers of raw material.

Given the profile of the supply chains and integration foci, the submitted analysis suggests strategic relationship preferences along three of the case supply chains. Relationships play a vital role in supply chain interactions and the absence of such relationships can put pressure on focal firms. Data suggests that relationship interactions are formed based on the supply chain profiles, as case three opts for flexibility by going into preferred relationships, which are shorter than strategic relations (about 2–3 years) and require less time and resource-sharing activities.

Identifying specific complexities in Case 1 is challenging due to the unpredictability of the supply of skilled production resources with unique competence, coupled with the dependency of this case supply chain on suppliers for up-to-date development and upgrades of component supply chain items. As such, continuous updating of the Bill of Materials (BOMs) is a priority to keep track of available item components in the market.

Owner-imposed restrictions on approved suppliers contribute to the complexity. Such restrictions could include, for example, limitations in the choice of component suppliers that can be used in the given products.

In addition, critical areas in the production process of new units, including project management, chassis access/type, system integration, system testing, as well as access to secure testing ranges, can come together to generate complexity (product complexity). Given that current customers, at the time of this investigation, had not stipulated any requirements for redundancy and endurance beyond what is outlined in the contracts, we assume that only the status quo levels of production are maintained.

The horizontal nature of the integration strategy for this supply chain suggests an adherence to the efficiency principles of no anticipatory inventory, as alluded to within the interviews.

Mitigating the impact or consequences of such constraints can be linked to added costs for the firms along the supply chain. So far, there are no indications that either the customer or the firm is willing to undertake these expenses.

The principal narrow sector in Case 2 involves the manufacture and upgrade of a platform as part of a larger platform system. Manufacturing complexity can stem from the dearth of specialized welding expertise and access to quality assurance welding rigs.

The product strategy allows for supply chain flexibility to shape the product profile across the customization and standardization strategies. In the event of a surge in volume via, for example, a conflict or armed aggression, addressing the increase in demand for assembly capacity and supplier deliveries would have to rely on offset solutions within the customer’s country. These solutions involve contracting local suppliers, contingent upon the production of the proprietary platform.

The assumption is that any surge in volume will pertain to the same configuration/model currently in production, hence strategic relationships within this supply chain and its suppliers can support the surge management along this case supply chain.

While project management was stated as a constraint to the management of surge conditions, traditional project management procedures normally break down in times of crisis or war, as projects can experience disruptions and delays in timeline, cost of labor, and inaccessibility of materials, and equipment. However, the lower supply chain footprint might be an advantage as suppliers might be fairly well concentrated in certain regions or zones.

Case 3 faces constraints related to production capacity, stemming from both internal limitations and constraints from suppliers. Case 3 represents the only full manufacturing supply chain among the chosen cases. A competitive supply chain strategy requires the capability to accurately articulate customer needs and develop strategies to achieve these needs, which might include attention to such supply chain processes as procurement, condition and mode of transportation of the finished product, etc to the satisfaction of customers. Here because the product supply chain is mostly customer-driven, the CODP tends to be closer to the customer, which means stock inventory and anticipatory procurement can be counterproductive and inefficient for such supply chain strategies. Given that the processes and procedures within such competitive supply chains are usually well-developed, tried, and tested, surge management would essentially entail the ability of suppliers to increase their supply quantity and rate to enable surge fulfillment. As such, the primary challenge for this case supply chain arises from the scarcity of suppliers for critical input material, prompting a strategic shift toward reducing dependency through the acquisition of production capacity for specific critical components.

Nevertheless, there is a reluctance to invest in the expansion of overall production capacity in the absence of long-term customer commitments. This is made even more difficult as the processes involved in qualifying and onboarding new suppliers and materials can be time-consuming and can span up to two years.

This case highlights the critical importance of having access to competent personnel and maintaining a roster of certified and skilled individuals to effectively manage the maintenance and servicing activities this case supply chain supports. Licensed personnel must possess the necessary qualifications to handle approximately 50 distinct types of products circulating in the maintenance flow. As such, the structural capabilities of this case supply chain are critical to its overall service fulfillment function, as these certifications determine who can work on the maintenance and servicing of equipment.

Challenges concerning the certification required to work on products, as well as the ability to retain these licenses over time arise. Annual performance evaluations must be undertaken and passed to retain authorization for specific products. Bottlenecks are created when the number of certified staff fluctuates over time, leading to the inability to schedule skilled personnel when servicing and maintenance tasks are required. Further, the lack of insight into the customer’s product use rate complicates staff planning, as the absence of visibility can hinder the proactive procurement of spare parts and certified personnel to undertake tasks.

This presents additional constraints stemming from extended lead times for components and staff scheduling issues, even though such issues could be quite easily managed across its strategic partners across the supply chain. Surge complexity here thus remains similar to those of case supply chains 1 and 2, which emphasize the availability and supply of personnel with required skills. Given the high footprint of these case supply chains, and confounded with staff uncertainties, cases indicate the potential for a multiplicity of independent characteristics among supply chain elements that can interactively give rise to complex collective behavior, as argued by Mitchell (2009) and Maguire et al. (2006). As such, it is not the independent behavior of system elements that generates complexity, but the constellation of these different individual elements at a given point in time, considering other environmental factors as well.

The cross-case analysis compares and identifies similar features of supply chains to organize them into predetermined clusters of supply chain characteristics. Within the context of this study, complexity was sought among the myriad of ongoing activities occurring within and working to shape the supply chain structure, processes along the supply chain, supply chain product characteristics, as well as regulations affecting these supply chains to create complexity. The presented classification is based on salient features of supply chains as developed in section 2 of the current study and applied to the cross-case analysis of the investigated supply chains.

To explain the results of the cross-case analysis among the 4 case supply chains, Table 3 presents an overview of the complexity among typical defense supply chain structures that emerged from our data analysis. It also highlights areas where structural, process, product, and regulation characteristics change apply in the different surge supply chain scenarios.

Structural characteristics can change between steady-state and surge periods. This is so because the number and relative sizes of sellers and buyers in the market, the expertise of organizations, the number of skilled personnel, etc, all tend to change over time within a steady-state constellation. However, these characteristics of suppliers, sub-suppliers, as well as own resources can be altered or drastically affected in times leading up to and during a conflict or armed attack on the nation. Consequently, structures will change, which can generate complexity for the supply chain as a whole within the surge state. This complexity cluster remains the only characteristic to affect changes in all case supply chains, as it could be argued that the other three complexity characteristics can essentially be derived from the structural character of the supply chain. Surge changes affecting personnel, raw material, and security were identifiable in all case supply chains studied.

While processes are expected to remain the same, especially concerning quality-tested and certified processes, it is possible that due to the inability to obtain certain raw materials or skill sets of required staff for certain types of procedures, there might be a need to change processes to achieve some sort of goal. For example, during a surge, it might be necessary to combine several related processes to carry them out at locations where they could be safely and securely undertaken, for example, the amalgamation or fitting of certain modular parts by sub-contractors before onward supply to OEMs. These types of changes within the process characteristics are deemed to be possible in all cases.

Typically, product characteristics will not change much during surge conditions. However, it is necessary for supply chains and organizations that run them to be open to the innovative use of available material during extended periods of surge, as regular material flow along the supply chain might become disrupted. Maintaining the product characteristics could also be used as a way of reducing variety, which also helps to avoid supply chain structural complexity during surge periods. It does this by helping supply chains focus on a narrower range of component materials usually by undertaking rationalization exercises across the supply chain. Such strategies could fit well in case supply chain 3, as it represents the only fully manufacturing supply chain in the study, and managers seem to have good control over its entire supply chain.

While regulation makes a small contribution here to overall defense supply chain complexity, ITAR remains critical if industry supply chains maintain the use of ITAR-certified products and materials. However, it could be advantageous for the agility and flexibility of supply chains to use non-ITAR-certified products and parts as these certifications make it impossible to change or combine such items between products and customers. As such, for supply chains that do not use ITAR-certified products, complexity can be reduced even across surge periods. Key identified indicators represent, for each supply chain, the main complexity driver within the case. While these remain the key drivers of complexity within these supply chains, other constraints also contribute to the overall complexity of the given case supply chain.

Overall, structural variability along the supply chains of defense industry products and services presents the most sources of constraints that contribute to complexity. Changes in the numbers and types of suppliers along these supply chains in light of the deregulation activities in the industry over the last 20 years or so might still be palpable. For example, changes regarding acquisitions and mergers coming under new and different ownership create opportunities for organizations to change strategy by prioritizing the international market over its local and home-nation market segments.

Also, the flagrant ambiguity and lack of knowledge surrounding the activities of the typical end customer in the defense industry make it more difficult to achieve a high level of predictability for supply chains. This variability affects the defense industry as it carries on to its supply chains, which then present as sources of complexity.

Changes in ownership also come with integration issues, which can create complexity problems for such defense supply chains. Given the continuous churn of actors in the Swedish defense industry via mergers or acquisitions, integration issues within such mergers and acquisitions can linger for many years, which can lead to complexity issues.

Finally, the fact that the industry, as a rule, abstains from holding stock, even for flexibility purposes, without agreed contracts while also promising customers a high level of service, presents a classic instance of how complexity can be easily created within the supply chain itself.

The analysis undertaken provides support for the argument that competitive manufacturing supply chains with simpler supplier networks and robust relationships are better at avoiding complexity by focusing on profile factors, such as timelines, accuracy, quality, pricing, etc. As such, study results suggest that case supply chain 3 is expected to generate less complexity in relation to the other case supply chains. This allows for the flexibility of case supply chain 3 to develop its raw materials capability without increasing its overall production capacity. The cyclical nature of the industry was expounded on as the major reason for the reluctance to invest in an increase in overall capacity, arguing that even though the market conditions might be favorable today, the market is not always going to be that way.

This study investigates the sources and characteristics of surge complexities in typical defense industry supply chains. The empirical and case-based identification of complexity and its sources developed in this study identifies complexity according to four predetermined characteristics of the defense industry, including structural, process, product, and regulation, to obtain a clearer view of complexity within the industry, thus allowing us to view defense industry complexity from a different perspective, the supply chain.

Our findings identify different specific complexity characteristics of different supply chains, as different types of supply chains are exposed to different types of constraints which, when taken in the totality of the supply chain system, can present complexities. These were observed across three drivers, including skilled personnel, raw materials, and security drivers. Results show that, in the event of a surge, structural characteristics are found to change the most and thus have the broadest impact contribution to complexity across all case supply chains studied. However, individual case supply chains exhibited different key drivers of complexity, which were mostly in line with the focus of the supply chain. Processes and procedures were also found to make significant contributions across all cases; however, these were only observed along the single driver of processes and procedures. Product characteristics complexity was observed only along case supply chains 1 and 2 with raw materials as drivers of complexity in these supply chains. A possible explanation for this finding could be the fact that these two cases represent semi-manufacturing supply chains, that is, they upgrade an additional component to a main platform, and as such do not necessarily maintain the same BOMs as that of the main product platform. While regulation characteristics were not observed as a major contributor to complexity along defense supply chains, firms are aware of this constraint and understand how this could be avoided and managed.

Although these results are not unexpected from a supply chain perspective, they are, however, novel within the defense literature, providing initial insight into different supply chains across the defense industry, their potential strategies, and the resulting constraints that lead to complexity along these supply chains. This is particularly significant as studies adopting such structural approaches to complexity within the defense industry remain scarce.

However, this study’s approach to complexity identification remains firmly in line with Choi and Krause (2006) and Gerschberger et al. (2012)’s consideration of complexity identification from a holistic, supply chain systems-level perspective. This perspective seeks to ascertain adequate methods for system representation that consider the interdependencies that might occur between core supply chain elements.

As such, results from such systemic approaches can be quite different from other studies that focus on particular aspects or viewpoints of supply chains (e.g., Bozarth et al., 2009), which seek to determine how complexity manifests itself within and in between particular business units of the supply chain and as well as its external partners. While the focus of Piya et al. (2017) remains narrow and bilateral, similar drivers revolving around products, processes, supplier location, etc were identified in both studies. However, given the detailed focus of the Piya et al. (2017) study, it was possible to delve into softer relationships and more detailed aspects of the complexity issues identified, which the current study is not able to address, given the broader focus of its systemic approach to complexity identification. In this respect, the current study advances beyond prior research that draws on dyadic analyses for the identification of complexity along supply chains such as Turner et al. (2018), which investigates how managers in supply chains respond to complexities.

Based on the findings and previous discussions, complexity along defense supply chains can be categorized into three main classifications: High, Moderate, and Low, along complexity type and intensity dimensions (Figure 2). Structural characteristics continue to be the most impactful sources of complexity, while product-related and regulatory characteristics, though still important, remain sources of low intensity.

While there is no clear-cut relationship between the complexity clusters and the empirical results provided in this study and that undertaken by Piya et al. (2017), it is however possible to compare results from both studies, with their proposed three complexity clusters – internal, external and interfacial, identified from dyadic interactions within the supply chain. In their article, the principal focus is the level of severity of the identified drivers and their interaction effects, whereas the current study focuses on the supply chain as a system, that is, network elements behaving according to given rules of operation and giving rise to complex collective behavior (Maguire et al., 2006; Mitchell, 2009). As such, this study contributes to the complexity literature in two main ways. First, it is one of the first studies to undertake complexity studies within the defense industry by analyzing multiple cases, via supply chains, to gain a better understanding of the nature of characteristics of the defense industry, especially as it has to do with the surge phenomenon. Second, the study undertakes this research from a systemic standpoint. Because the industry runs and maintains hundreds of networks and supply chains, strategies, focus, relationships, and integration structures all work together to contribute to the performance and capability of the supply chain. This systemic approach focuses on identifying complexity across the supply chain, and one that is as yet to be undertaken within the military and defense literature.

While a functional supply chain is crucial for strategic and tactical decision-making in supporting the armed forces during both peacetime and wartime, this study shows that the structural characteristics of defense supply chains are the most sensitive to change and serve as primary drivers of complexity. Analyzing supply chain complexity through the dimensions of structure, process, product, and regulation provides practical insights that can help decision-makers better understand strategic drivers, optimize supplier selection, and enhance workforce planning and training. Organizations and policymakers can apply these findings to effectively manage skilled and certified workers, address key challenges, and develop strategic responses to improve supply chain robustness.

A key limitation of this study arises from its use of case studies, which, while appropriate for theory building, require careful selection to comprehensively represent the phenomenon under investigation. The cases examined within this study include foci on parts supply chains supporting servicing, upgrades, and customization. However, incorporating end-to-end supply chains—such as manufacturing supply chains—would have provided a more comprehensive perspective on systemic complexities within defense supply chains. Manufacturing supply chains differ from spare parts supply chains in terms of their structure, interactions, and optimization approaches. Unlike supply chains designed for servicing and maintenance, manufacturing supply chains operate with different constraints and objectives, highlighting the inherent complexity of systems where complementary parts pursue independent optimization.

Hence, this study calls for further research to investigate end-to-end manufacturing supply chains within the defense industry to further elucidate how systemic factors along manufacturing supply chains can affect complexity.

This research was funded by the Knowledge Foundation (KK-Stiftelsen).