As the reliance of The Defense Department and its major contractors on vast global supply chains to provide the systems and weapons the DOD needs to perform its mission increases, so too does the risk. These potential risks come in many forms: the financial failure of a critical supplier; a supplier in violation of labor or environmental standards; or foreign infiltration into critical systems. The government is pushing contractors to provide more information about their supply chains, and this analysis will walk you through the supply chain of DOD’s (and the federal government’s) largest contractor, Lockheed Martin Corp., and uses it as an example of how Bloomberg can help you identify and report on potential risk areas.
Critical Nodes
It is possible to identify 350 of Lockheed’s suppliers by using the supply chain function SPLC on the Bloomberg Professional Service. Bloomberg’s entire supply chain database contains more than 1 million customer/supplier relationships. The same data also shows that some of these companies are highly reliant on Lockheed as a customer. Quickstep Holdings Ltd., a manufacturer of composite materials based in Australia, receives an estimated 70 percent of its revenue from Lockheed. Any change in Lockheed’s fortunes could have downstream effects on highly dependent suppliers like Quickstep.
For the Pentagon, Honeywell International Inc. is a much more critical supplier than Quickstep. Honeywell is a top 10 supplier to Lockheed as well as the other big five defense contractors: Boeing Co., General Dynamics Corp., Northrop Grumman, and Raytheon Co. Many defense programs could be disrupted, and alternative products and suppliers might be difficult to find if Honeywell’s goods and services were suddenly compromised.
Read more at Supply chain risk is a growing concern for the Pentagon
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