Like good comedy - effective supply chain management and delivery of sovereign capability is all about timing.
"Temporal urgency" is a measure of the minimum time at which a capability can be established from today's context. It allows us to firstly assess the need to invest in local supply chains and develop genuine sovereign industry capability; and secondly, to assess its ongoing relevance in a technological, economic and geopolitical context.
For too long, initial costs have taken precedence over the long-term benefits of local industrial capability investment by Defence and government. COVID-19 has exposed the inherent fragility of global supply chains, and made plain the need to invest in appropriate self-reliance.
The Department of Defence can shape - and break - the defence industry with respect to how it behaves. Clear industry policy objectives provide certainty and allow industry to invest in infrastructure, workforce and research and development with confidence.
There are some technologies, products and services that may not be economically viable for us to sustain locally. We can import or offshore these elements and allow our regional neighbors the opportunity to develop globally competitive industries with nations such as Australia as a reliable customer.
But the pandemic has demonstrated that nothing is reliable. As a nation, we need to consider what economic cost we are willing to bear to hedge against supply chain disruption. It's about balancing the risks with that investment.
If we are considering an industry where it would cost three times as much to design, manufacture and sustain a product (and critically the skilled workforce) in Australia, the real question to ask is: if that supply chain is compromised, how long can we continue in its absence? That is the temporal urgency test.
"Chipaggedon", with the devastating impacts on manufacturing timeframes and global component costs, proves that a well-considered investment in sovereign capability for those technologies and services that are time critical, will be repaid when global shocks are realised.
Some capabilities can take years to develop the local IP, establish plant, processes and what is typically the longest lead time - a skilled workforce - then these are the areas where the risk vs cost decisions begin to justify the need for the establishment of a sovereign capability.
SYPAQ operates on the front line of this debate, developing latest generation autonomous systems, surveillance capabilities and artificial intelligence technology. The rapid pace of technological change in these domains means that anything Australia acquires will soon be obsolete without a healthy, sovereign industrial and innovation ecosystem. Given this, it's no surprise that robotics, autonomous systems and artificial intelligence has been identified as a sovereign industrial capability priority by Defence.
The pace of change means that no sovereign capability can be considered permanent. But investing in small to medium Australian businesses - to ensure that the unique workforce and IP remains wholly Australian controlled - is the next big test of Defence industry.
People lament that we have not grown true Australian primes as if this is some failing on the part of medium sized businesses. Rather, too many of our excellent medium sized businesses are bought out by multinationals because they struggle to bridge that gap between ambition and Defence commitment. We can and must do more to level the playing field to help medium Australian companies compete and win.
To safeguard our ability to respond to global shocks, we need long-term vision when assessing where to invest and which risks are worth taking. But one thing is for certain: a skilled and adaptable workforce is a critical enabler for any sovereign capability. It will enable novel and disruptive IP controlled by genuinely sovereign businesses, which is essential to our long-term national security and prosperity.
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