Australia, and by extension the Australian Defence Force (ADF), operates its supply chain based off the guiding principle of ‘Just-In-Time’ logistics. This concept prioritises cost-reduction, waste minimisation, and the efficiency gained by the mantra of ‘the right items of supply, in the right location, at the right time’.

Over the past 80 years of wars of choice and strategic competition (as opposed to conflict), we have seen a ‘civilianisation’ of the ADF’s supply chain. Current stockholding policies, particularly those of our Army, limit the number of critical items of supply our force elements (combat brigades and below) can hold to reduce costs involved in holding stock forward, replacing stock that has expired, and eliminating opportunity-costs of stock remaining unused in forward units.

As such, we accept vulnerability in our logistics system and rely heavily on the national and international freight system to ensure stock can be moved from centralised locations to where it is needed, only when it is needed. It seems the Defence Logistics Network (DLN) recognises this vulnerability, with emerging logistics direction specifying an approach of ‘effectiveness first.’

It is the purpose of this paper to argue that applying the business principle of Just-In-Time logistics for our ADF is outdated, and no longer fit for purpose for a country that is on the precipice of falling into conflict. Robert Gibson,[i] in his outstanding article ‘Preparing Our Stockholding to be Ready in a Post COVID-19 World’, argues that we as an organisation need a strategic shift in our thinking (and policy) from the Just-in-Time concept to a Just-in-Case model.

Formations, battlegroups, and combat teams must be authorised to hold enough of the necessary tools of war (food, water, fuels, ammunition, medical supplies and repair parts) to prepare for contingency operations. With this must come an understanding and acceptance that there will be inefficiency, increased cost, and waste[ii] in stockpiling resources forward (within our combat brigades) where they can be deployed rapidly.

We must begin to view (and frame) investment in our nation’s Defence Force through the lens of an ‘insurance policy.’ Until we manage to do so, any funding injected into the Defence budget to increase readiness through forward stockholding will be perceived as dead-money, unnecessary waste, and lacking value for money when compared with the opportunity cost of a visible, tangible capability, such as procurement of new platforms. This line of reasoning is dangerous and undermines responsiveness. Just like an insurance policy, forward stockholding is indeed dead money, until the point in time when it is suddenly necessary and all prior sunk costs are vindicated.

To delve deeper into this problem, David Beaumont outlines that our strategic holdings of ammunition, fuels, and repair parts are wildly inadequate for any measure of sustained, high-intensity conflict.[iii] To provide just one example, as an International Energy Agency member since 1979, Australia is required to hold at least 90 days of net oil imports. For the past 10 years, every year we as a nation have fallen short of this target. As of June 2022, Australia held just 58 days of fuel as a result of dependence on Just-In-Time imports.[iv]

Should our shipping lanes be disrupted due to conflict in our region, Australia holds strategic fuel reserves to sustain its industry and military for a period of less than two months, notwithstanding the increased consumption expected in a wartime economy.

Detailed information on the ADF’s Strategic Materiel Reserves (SMR) of ammunition and guided weapons is problematic to discuss openly due to security classifications; however, war-games conducted by our allies provides a reasonable litmus test. In a recent simulated war-game based on Ukraine, US annual production of 155mm artillery shells would last only two weeks at Ukraine rates of expenditure.[v]

The ADF needs to consider the real possibility that our recently clarified strategy of ‘deterrence’ fails and that we as a country are regrettably and unwillingly dragged into a conventional conflict against a great power. This possibility is an inconvenient truth; however, only two years ago at the time of writing, the bipartisan Secretary of the Department of Home Affairs remarked ‘the drums of war are beating’ and that ‘we must be prepared to send off, yet again, our warriors to fight’. The recent Defence Strategic Review made it abundantly clear that we are ill-equipped for this challenge, albeit without proving much in the way of tangible solutions except for further reviews. So how is it we prepare?

From a logistics perspective, it poses two immediate questions:

1. How do we logistically support an ADF that is required to rapidly scale in size?
2. How do we work with our industry and government partners to redirect parts of our economy to support a war effort?

For the former, fortunately we need only look to Ukraine for a timely example of a middle power being compelled into a conventional war with a great power. In 2016, prior to the invasion by Russia, the Ukrainian Ground Forces numbered 169,000 personnel. By June of 2022, three months after the invasion, they numbered 700,000.[vi] Just-in-Time logistics as a guiding concept isn’t suitable for this level of unexpected growth and by extension, the demand it places on our supply chain.

Making arrangements now to rapidly scale the ADF is a necessity[vii]. This involves procuring, stockpiling, and warehousing significant quantities of uniforms, weapons, ammunition, protective equipment, communications gear, and fuels that will remain unused – perhaps for extended periods – and becoming comfortable with the associated expenses. The ADF should continue to explore emerging developments in disposal theory, which involves obsolete equipment or expired stock being retained in deep storage with deferred maintenance (mothballing) instead of being destroyed.

As both participants in the Russo-Ukrainian war have recently learned, it is far easier to re-purpose and retrofit old equipment than to produce new equipment with urgency. In a world that is currently at ‘90 seconds to midnight’[viii] attempting to cost save by waiting for the worst-case scenario to source this equipment is one of the largest risks to our commitment to defend Australia’s national interests. In this instance, Just-in-Time is far too late.

For the latter question, a whole of government (WoG) approach is necessary, although not the complete solution. Legislative progress is also necessary to support the mobilisation not just of people, but of our national industry. Stephen Kuper’s article ‘Time for an Australian Version of the Defence Production Act’[ix] argues that, as the title suggests, Australia must legislate emergency powers similar to the US Defence Production Act[x], to enable a rapid reorientation of our economy in the interests of national defence. In the American system, this act consists of several sections:

1. The first authorises the President, through executive order, to direct businesses to accept and prioritise contracts for materials deemed necessary for national defence, regardless of a loss incurred on business.
2. The second section authorises the President to establish mechanisms (such as regulations, orders or agencies) to allocate materials, services and facilities to promote national defence and to prevent the hoarding of supplies in wartime.
3. The third section authorises the President to control the civilian economy so that scarce and critical materials necessary to the national defence effort are available. This includes offering loans or loan guarantees to companies, installing military equipment in government or private factories, and authorising companies to coordinate with each other – which might otherwise violate anti-trust laws.

With the introduction of an Australian version of the Defence Production Act, it is not so difficult to imagine a future, even this decade, with some of our most recognisable Australian companies producing body armour and uniforms, and providing further explosive ordnance resilience to our vulnerable supply chain. I acknowledge (and expect criticism) that the political environment and public sentiment for open discussions around the use of executive power and military mobilisation in Australia are vastly different to those within the United States. We are clearly far less tolerant for such acts of unilateral control.

Vietnam-era conscription still casts a long shadow in our nation’s memory, and public criticism to former Prime Minister Scott Morrison’s self-appointment to various ministerial positions during the pandemic is a recent reminder that Australians instinctively reject concentrated power. We do, however, have a collective responsibility to identify and draw attention to our strategic vulnerabilities, and identify possible methods to improve the status quo. With the recent release of the Defence Strategic Review, and the imminent release of a National Defence Strategy, there is no time like the present to try.

We have an obligation as the custodians of Australia’s national interests to prepare for war in a meaningful way. Perhaps it is an alarmist view; however, readiness goes beyond procurement of new platforms and annual exercises with pre-determined outcomes. It is an uncomfortable reality that modern wars from the past century are rarely decided by technology, training, or even tactics. They are decided primarily by preparation, political will, and the level of industrial power a nation can bring to bear upon on their enemies. As a result, our logistics system, stockholding policy and legislation require modernisation to keep pace with a transformational ADF and emerging threats in a dangerous world.

End Notes