The U.S. Army looked on with apprehension as small and cheap drone weapons proliferated within the ranks of insurgents in the Middle East. In response to drone proliferation and growing risks posed to U.S. ground forces, the U.S. Army tasked the Asymmetric Warfare Group, and later the Threat Systems Management Office, to procure similar drones to those used overseas for counter-drone training. At the time, militant groups purchased remote-controlled airplane kits and commercial drones from online marketplaces like China-based Alibaba through front companies and proxies. After purchase, the components or drones were shipped to intermediaries before being delivered into the hands of militants. The seemingly innocuous toys and parts were modified to carry explosives with a fusing device once within the conflict zone, challenging traditional concepts of air superiority. The red team needed to grow quickly and went on a massive buying spree, utilizing shell companies and contractors. But something very interesting happened afterward.
The Army’s voracious appetite for drones and associated parts upended the supply chain, changing how insurgents constructed drones. With online marketplaces sold out of common airframe components, militant groups could not procure significant quantities. A former contractor on the project revealed that weaponized drone production dropped precipitously when combined with the U.S. military’s counter-drone campaign in the theater. The U.S. Army’s effort to equip a red team for the drone threat it faced in the Middle East unwittingly interdicted militant weapon components. The U.S. Army successfully skewed the market to interdict the supply chain without firing a shot.
This unwitting victory was short-lived as insurgent groups adapted and fabricated their own drones or found substitutes for hard-to-procure parts. Still, using the open market demonstrated a unique way to disrupt ongoing insurgent operations. In 2015, the Transportation Journal published an article titled “Supply Chain Interdiction as a Competitive Weapon.” The article recognizes that “vigorous competition” downstream is inevitable if an adversary can deploy its resources at will and scale. The article suggests an entity can avoid this competition by effectively manipulating the adversary supply chain, termed “supply chain interdiction.”
The Department of Defense should view supply chain interdiction within the open marketplace as an effective weapon of war. Operational planners need to study adversarial supply chains in detail to determine where deployment opportunities exist and to hedge against a similar attack. To accomplish this task, the services should recruit supply chain professionals and place them within their ranks alongside other servicemember specialties. With real fears of critical supply chain compromise, supply chain professionals must be considered important tools in the tactical and operational levels of warfare and not just for risk mitigation in the commercial industry.
Supply Chain Interdiction
Harassing and destroying supply lines through a direct attack is as old as warfare. Hannibal had to divert resources from the intended sack of Rome to protect Carthage’s power base after a brilliant Roman ploy, delaying and eventually halting his advance. Nazi leader Adolf Hitler attempted to use submarines to sink Allied shipping during the Battle of the Atlantic to starve Britain into submission. Ukraine used rocket systems, drones, and sabotage to hit ammunition dumps, railyards, and bridges to erode Russian military power.
But what if a country could erode combat effectiveness simply by buying the entire supply of a critical component in the open market? In The Art of War, interpretations of Sun Tzu’s text place bloodless victories as the cornerstone of his warfare philosophy — to win without fighting. Supply chains are acute pressure points that can quickly paralyze a war machine, and their manipulation to subdue an adversary appears to align with Sun Tzu’s overarching tenet. Strategists have both salivated over and fretted about upstream supply chain attacks. The CHIPS Act is meant as a way for the United States and its allies to ensure access to critical semiconductors used in almost every modern gadget and weapons system during a war or in times of instability. But the CHIPS Act is also a way to shore up the integrity of the supply chain to guard against real or imagined fears of an upstream supply chain attack from suppliers in China. The fear is rooted in the belief that China could use domestically manufactured electronics to compromise critical systems or choke supply during a crisis.
Designing a Supply Chain Interdiction Campaign
The purpose of interdiction is to “prevent a rival from acquiring, moving, or converting critical resources” to gain a military advantage by preventing “a competitor from using resources at the time of their choosing.” There are four strategies for supply chain interdiction: to delay, divert, disrupt, or destroy the ability of a rival to deploy its resources.
Delay and disruption strategies share similar definitions. A delay forces a selection of an alternate that imparts a delay of tactical or operational significance. Meanwhile, a diversion strategy is to “cause the consumption of resources or capabilities that are critical to a competitor’s operations.” It is useful to explain with a hypothetical scenario. Say a country signs a lucrative deal with a major overseas oil producer and locks in priority shipments over a competitor. Unable to fully satisfy domestic consumption, the competitor begins drawing down its strategic oil reserves, eroding its self-sustainment capability in times of crisis.
Disruption strategies remove predictability from a process and force a reaction. They prevent the deployment of resources in the manner the adversary desires it, other than time — for example, the deployment of smaller quantities of equipment or in a location that is other than preferred. Destruction strategies seek to destroy a portion of the supply chain to “completely prevent a competitor’s ability to supply itself with critical inputs.” Destroying an enemy’s ability to deploy its resources using supply chain interdiction is possible, but it depends on the timeframe. It is only a matter of time before a counter is discovered and implemented on the adversary’s side.
A sudden increase in demand outside normal variation is a demand shock in which a supplier cannot react quickly enough to satisfy all demand. When a supplier analyzes the new demand signal and adjusts production to meet it, the destruction of an adversary’s supply chain is realized. However, the adversary supply chain is restored as alternative sources are located, and supplier surge production replenishes stocks. In the case of insurgents in Syria and Iraq and the U.S. Army’s red team, the inability to resource critical components “destroyed” insurgent drone manufacturing for a short period. However, as time passed and substitutes or workarounds were discovered, the impacts shifted from the destruction of insurgent drone manufacturing to delays and disruption.
Identifying Deployment Vectors
For supply chain interdiction to disrupt an adversary’s operations, the component or material requires a narrow supplier base controlled by independent third parties. In other words, a supplier will not withhold an order from one party to benefit another because they operate in the free market. In many cases, the United States has used sanctions to try and shape this market by imposing penalties for certain kinds of trade. The goal is to disincentivize free market behavior. Sanctions also require broad acceptance to be effective. Curtailing markets have negative repercussions on suppliers. For example, the U.S. satellite industry lost significant market share to European competitors after International Trafficking in Arms Regulations restricted the sale of U.S.-made satellite components. In contrast, supply chain interdiction works within the bounds of a free market. This makes supply chain interdiction quicker to deploy, less disruptive to suppliers, and therefore less likely to raise objections from industry and governments outside the targeted entity.
Ideally, components or materials targeted for supply chain interdiction are highly manufactured. Highly manufactured components or materials likely require proprietary knowledge or advanced manufacturing processes. Such traits present high barriers to entry for substitute manufacturers as they must acquire the requisite knowledge and expensive infrastructure. Due to their complexity and resource requirements, such components cannot be easily replaced or swapped out with an alternative supplier, which slows market response to demand shocks. A good example of this is the maritime industry. In the abstract, suppose company “A” makes a specialized marine engine used in warships where customer orders average about five monthly. Another company, “B,” produces three engines monthly. To account for demand variation, company “A” manufactures six engines monthly and represents the factory’s maximum output without substantial and time-consuming investment. The unsold engines are placed in inventory.
The maritime industry produces nine marine engines monthly and will sell engines to any customer that can pay for new or inventoried production. Now, suppose two countries are experiencing rising hostilities over the sovereignty of an island, and one utilizes the specialized marine engines from both fictional companies for naval warship propulsion. Both countries recognize that naval power will be paramount to resolving the issue. One country already possesses a sizeable navy, but the other is conducting a naval buildup. To prevent its rival from matching its naval force, the country with the larger navy purchases the entire supply of engines, locking up the supply of engines for months. The goal is to delay the growing power’s ability to deploy forces in the numbers and timeframe desired to combat the other. In the timeframes of a crisis, such delays could prove decisive.
The above vignette focused on the maritime industry, which contains highly manufactured specialty parts like marine engines, propellers, and propeller shafts. Despite China possessing one of the largest shipbuilding capacities in the world, it is still heavily reliant on imports of marine engines and propellers. Many of these components come from Europe. Data from 2021 showed that Germany was the largest exporter of marine engines. By comparison, China was the world’s largest importer of marine engines. Some of China’s Luyang III guided missile destroyers were even found to contain German engines.
The U.S. Navy possesses its own foundry for making specialty submarine propellers. However, American shipyards mostly import propellers, like competitor shipyards in China. Coincidentally, Germany was also the top exporter of marine propellers. Such dependencies show a potential attack vector and vulnerability for China and the United States. Germany represents a concentrated supplier base with a sizeable market share of a highly manufactured critical component.
The drone industry presents other opportunities for interdiction. Many commercial and hobbyist drone components, consisting of controllers, optics, motors, and airframes, are manufactured in China. These components can be found on online marketplaces like Alibaba, which is similar to Amazon. When the U.S. Army made massive purchases of drone components to start its counter-drone programs, it spiked demand beyond normal variation and depleted stocks faster than they could be replaced. Ukraine pulled off a similar disruption against Russia years later.
Supply Chain Interdiction During Large-Scale Combat Operations
During the early days of Russia’s invasion of Ukraine, the exploits of anti-tank missiles like the Javelin were well known. As the war progressed, images of drone strikes came to the forefront, first from Turkey’s TB2 drones, then from civilian drones like the DJI Mavic. With Ukraine’s airspace contested and proving deadly for Ukrainian and Russian air forces, both sides leaned heavily on small drones. Portions of these drone fleets are comprised of first-person-view drones. Originally developed for racing, these drones are cheap and can be built from kits or plans online. Ukraine mated these drones to munitions like rocket-propelled grenades and used the first-person view to manually fly the drones into targets as suicide munitions.
In preparation for its upcoming offensive, Ukraine went on a buying spree, scooping up first-person-view drone components from global suppliers. Some estimates place the total Ukrainian buy between 50,000 and 100,000 units. Russian Telegram channels indicate extreme worry about an impending swarm attack and a race to procure a similar capability to deploy against Ukraine. Russia has used first-person-view drones to attack Ukrainian positions in the past. Chief among Russia’s concerns is the apparent ineffectiveness of its current air defense systems against small drones, especially when launched in large numbers and outside the range of jamming systems.
The predominance of first-person-view drone components comes from China. Considering that some Russian assessments assert that nearly the entire world supply of first-person-view drone components was recently purchased by Ukraine, Russia cannot deploy a similar capability in the near term. Thus, Ukraine may be the first country to successfully pull off a supply chain interdiction of an adversary engaged in large-scale combat operations. The effect leaves Russia mostly with defensive options and without potent counterattack weaponry.
Ukraine’s interdiction represents the ideal scenario where the procured materials can be redeployed directly against an adversary; however, materials do not necessarily need to be redeployed. The simple act of denying the material from being deployed with an enemy force achieves the desired outcome. In this example, Ukraine succeeded in destroying and delaying Russia’s near-term ability to deploy a similar capability, diverting precious resources from its war effort to counter-drone defenses, and disrupting its war plans.
The sensitivity of military programs and government regulations require defense companies to maintain visibility at least six to seven layers deep. This includes the manufacturer of a component, the manufacturers of each subcomponent that makes up the larger component, subcomponent suppliers, and their suppliers. Sometimes that is not enough, as evidenced by a magnet containing an alloy manufactured by a Chinese company being found in the F-35’s engine supply chain. While assessed as not a threat to the F-35, the episode demonstrated the difficulty in finding domestic or approved suppliers of critical defense raw materials. Such sobering realizations are the impetus for America’s attempt to revive domestic rare earth production. Even if a country can fulfill its appetite for highly manufactured components domestically, there is still a risk of supply chain interdiction with raw materials.
Supply chain risk identification and mitigation create an insatiable demand for supply chain management graduates in the private sector. Based on the realized and potential implications for national security, the U.S. government also needs to be on hiring binges for these specialties. The disruption in drone supply chains mentioned in earlier examples makes it clear: Supply chains are a tactical front far from the actual geographic locations of war, and supply chain experts are the sentries acting as the first line of defense.
A diversified and global economy presents unique attack vectors of relatively low risk and exposes vulnerabilities of offshore supply chains. Nation-states possess resources and budgets capable of affecting entire industries that can inflict severe consequences on their adversaries. Supply chain interdiction in the open market can achieve desired outcomes without kinetic action or politically fraught sanctions. Using shell companies and proxies obfuscates intent and makes assigning attribution dubious. These actions in the gray zone will make them appealing, and their lower risk likely reduces the threshold for deployment. Considering that at least two successful examples of supply interdiction have already occurred in war zones, U.S. military planners would be wise to take notice and look for opportunities for deployment. At the same time, care must be taken to ensure our defense industries are not equally vulnerable to such an attack. To do so, planners and the government should recruit personnel versed in supply chain management and harness the growing number of graduates in this increasingly important field.
Trevor Phillips-Levine is a naval aviator and close air support instructor at the Naval Aviation Warfighting Development Center. He holds a master of business administration degree in aerospace and defense from the University of Tennessee. He also serves as an advisor for weaponized small drone development in a cooperative research and development agreement.
The author would like to thank Dr. John E. Bell and Dr. Ben Skipper at the University of Tennessee’s Haslam College of Business Supply Chain Department for their assistance in writing this article. Additionally, Taylor Abington, CEO of Abington Aviation Consulting, provided insight into insurgent drone activity.
Source : https://warontherocks.com/2023/05/the-art-of-supply-chain-interdiction-to-win-without-fighting/