The Changing Land Warfare Manufacturing In Europe for Defence Management

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Supply chain management is a challenge that all of the industries need to find a balance between efficiency versus cost. Holding inventory is costly, because it requires a warehouse, purchasing components in bulk, and storage of components. Of course, such a production line should run at full and optimal capacity without any stock level excess, thus minimizing waste and granting flexibility to adapt to demand variability. The just-in-time delivery system, used by many industries, relies on accurate planning by manufacturers to anticipate production requirements, keeping only the bare minimum stocks. If stock levels fall below a predetermined threshold, replenishment orders are triggered, resulting in frequent, smaller deliveries.

Manufacturers also try to keep personnel and machinery to a minimum to drive down operational costs. Retaining needless staff, machine tooling, or storage space all increase costs and make a lean approach more appealing. It has been applied across sectors from car manufacturing to electronics to food.

That said, there are drawbacks to JIT delivery — especially with regard to unpredictable demand or supply chain disruptions. Nevertheless, the defense industry has been heavily reliant on JIT systems. But recent global events have tested this model.

The End of Just-in-Time for Defense Manufacturing​

At present the COVID-19 pandemic and the continuing war in Ukraine have revealed major vulnerabilities in JIT-based defense supply chains. Such sudden disruptions and these events are challenges for the defense manufacturers to reconsider their ways. "Just in time is dead," Tommy Gustafsson-Rask, President of BAE Systems Hägglunds, stated at Eurosatory 2024. He stressed the need for the defense industry to move to a more proactive, long-range planning model.

Source: Armored Fighting Vehicle (AFV) and other military equipment has a complicated supply chain. Most AFVs share commercial powerpacks which have economies of scale and manufacturers can manage orders accordingly. But other critical supplies, like armored steel for vehicles, are more complicated. There are only a few steel mills in Europe that make high-quality armor steel, restricting the flexibility of supply.

For decades, European armed forces have utilized relatively small percentage of vehicles and systems, which has reduced production capacity for consumables, such as tank and artillery barrels. The war in Ukraine has fundamentally changed this dynamic. A tsunami of land platform orders has hit Europe since February 2022. Hundreds of vehicles are now being manufactured as replacements for those dispatched to Ukraine, and to expand military fleets and equip new formations.

Rising Demand for Land Platforms in Europe​

How to Strengthen Defense Supply Chains​

Joint procurement programs are one way to reduce supply chain stresses. One of the prime examples is Patria’s Common Armored Vehicle System or CAVS, a 6×6 armored personnel carrier. Latvia, Finland, and Sweden have all ordered CAVS vehicles, and Germany is a new addition to the consortium. These standardizations significantly reduce the development time and save costs for these countries.

Elite-Viewer-AW12Another one is the Boxer Heavy Weapons Carrier; similar enough to Australia’s Combat Reconnaissance Vehicle. Production along these lines will see 100 units produced in Australia and shipped to Germany, simplifying the manufacturing process and cutting down on supply chain complexity. Sweden and Denmark have also standardized their CV9035 Mk IIIC orders, which has enabled BAE Systems to rationalize production processes.

Defense manufacturers need to rethink their approach, according to Gustafsson-Rask:

“If all your needs are 90% fulfilled, your vehicles will arrive on time. But if you demand 100 percent, you may not get them until 2032.”

By doing so, this statement reflects the compromise inherent in military procurement.] Such countries should settle for minimal deviation from optimal specifications, given the need for speedy delivery.

Widening the Scope of Production of Critical Components​

Still, speeding up European military fleets has left many worrying about the production of critical components — especially artillery and tank barrels. The war in Ukraine has shown how rapidly barrel life can be exhausted in sustained combat.

As of 2022, Europe had very limited barrel production capabilities with virtually all 120mm and 155mm barrels produced by Rheinmetall. This bottleneck endangers production of replacement barrels for Leopard 2 tanks, PzH2000 howitzers and other platforms.

To remedy this, Rhein Metalls has expanded its production capacity quite substantially. Between 2024 and 2029, the business plans to produce a minimum of 100 155mm barrels a year for the PzH2000. Italy has also ramped up its production lines for barrels, contributing to Europe’s overall manufacturing resilience.

The Future of Defense Manufacturing in Europe​

We are now in a rushed arms expansion in Europe. The new initiative follows an order for about 1,600 armored vehicles in 2024 and an order of 2,500 logistics vehicles to be sent to Germany and the UK These orders have to be filled in a timely manner while also navigating complex supply chains.

To do so, manufacturers are embracing new tactics, like:

• Standardize vehicle designs to simplify production complexity
• Cost-sharing joint procurement programs for efficiency
• Scaling lots for key parts of our production, from barrels to armor steel
• Avoiding the traps of JIT delivery with investments in supply chain resilience

The Defense Industrial Base is heading in a more proactive manufacturing long game. The old just-in-time model is untenable in a time of geopolitical uncertainty. Military manufacturing in Europe will be characterized not by its speed but rather by more stockpiling, better production scalability, and more diverse supply chains.