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MÅLSMAN™, Entry Into the Defense Industry and Solutions to Complex Issues by creator and designer, McCalla, Christine Ann

Abstract

The main objective of this article is to present the framework required for a new entrant into a competitive environment, defense, regulated with the expectations of preventing harm to a significant populace, the international community. This framework also presents challenges and barriers present within this competitive environment and strategic solutions regarding their resolutions. There also designs and methodologies such as cost and production management available that when utilized create expectations that expertise can be acquired within the project management process, as well as the attainability of sustainability. There are also correlationships and relationships present that when applied create strategic competitive advantage. This is in addition to the various approaches to complex problems that can be made available through knowledge management. The practical implications are awareness of the competitive requirements is a key expectation to strategic planning and management, particularly for entry to a new and dominant market with international watchdogs present. There is also the matter of cost effective conflict resolutions available through the avoidance of fines and sanctions, as well as full and complete recovery of revenues generated through appropriate knowledge of computations associated with said recovery.

Keywords: defense industry, weaponry, quality assurance, manufacturing, supply chain

Introduction

The decision to capitalize on abilities in the creation intellectual properties such as patents and copyrights of weaponry of defense, offense, and protection, is as significant as the actions taken to retain them into infinity. There are numerous strategic planning decisions to be made including, compliance processes required; regulations and related statutes; and, regulatory agencies to be cognizant of and their roles. There are also the presence of competitors, brand, and reputation management. Product homogeneity does not equal profitability simply on the basis of product differentiation. Accounting and costing methodologies matter and not just for certification processes, but also for sustainability and intellectual property preservation.

Keyword Search

Keyword searches were executed within ProQuest Central database, including searches for scholarly, peer-reviewed articles. The keywords were derived as implications from the assignment. Keyword terms searches were, features and defense industry; weaponry and defense industry; weapons manufacturing and defense industry; defense supply chain; evaluate stages and quality assurance and delivery; evaluate stages and resources and labor and costs. Additional searches were executed within the Statista database for data relevant to the defense industry, using keywords defense dossier; arms export; and defense competitors.

Fully describe the features of the product Schilde (2015) argued the entrepreneurial potential for the entry of defense as a product, in which there has been substantial growth in over the last two decades, the market for private, civilian force (private, civilian national security expertise) has become as a complementary tool to state military force. Schilde (2015) also argued the contracting of civilians for military operations has been a phenomenon institutionalized by the Defense Base Act of 1941 requiring U.S. contractors and subcontractors to report civilian (and foreign) employee casualties to the Department of Labor with acceleration in military personnel from contractor ratio of 50:1 military personnel to contractors in the 1991 Gulf War to 10:1 in Iraq in 2005. Schilde (2015) also addressed the general concern for the reliance on quasi-privatization of military contracting as, the rise in the private market can undermine constitutionalism and democracy by bypassing veto points and formal governmental involvement; and, centralizing power in the branch of government writing the contracts and delegating its foreign policy to private actors. MÅLSMAN™ can execute risk management through participation within the defense industry utilizing Interpol’s commercial infrastructure; being cognizant of the applicable regulations; regulatory bodies; and, the various impacts and consequences.

The product being manufactured is a portfolio / product mix of defense infrastructure under the name brand, MÅLSMAN™ (swedish for guardian, pronounced moolsman). The MÅLSMAN™ product line being sold were selected as complementary to each other, and multipurposed, for sale and service as government contracting services - direct sales, sales and services to other licensed government contractors private security firms, and on a lease basis to emergency search and rescue corporations. For security, compliance, and licensing reasons, these arrangement will be conducted using international law enforcement agency, Interpol.

MÅLSMAN™ defense infrastructure of aircrafts; missiles and missile systems; armored vehicles; and air defense systems, capable of individual product line use or as a comprehensive system. MÅLSMAN™ aircrafts is comprised of sophisticated aircrafts, (Ross, 1990); Villa and Viggiano’s (2012) Sukhoi Su-30MK fighter aircrafts, MI-35 combat helicopters, Mi-17-V multitasking transport, Mi-26 heavy transport helicopters, Su-35 and Su-39 combat aircraft; the An-74 cargo aircraft; the II-76 and Mi28 combat helicopters. MÅLSMAN™ missile and missile systems, manned and unmanned including ballistic missiles and silos, (Ross, 1990); Villa and Viggiano’s (2012) AIM-9M Sidewinder, AIM-120 AMRAAM, Harpoon and Sea Sparrow missile arsenals, Python and Derby missiles, and, smart bombs of various calibers.

MÅLSMAN™ armoured vehicles include battle tanks, armored personnel carriers, and wheeled tank destroyers, (Ross, 1990); and, Villa and Viggiano’s (2012) wheeled or tracked armored troop carriers. MÅLSMAN™ air defense systems, popular products within the armed market and defense industry according to Ross (1990). Villa and Viggiano’s (2012) ground-air Tor-M1 missile system, radars, NASAMS, and 40 8x8 armored Stryker. D'yachuk, Orkin, and Orkin’s (2011) interactive automated system including aircraft carrier multipurpose groups, tactical aviation, and air weaponry, planning, and simulation mathematical models for attacking naval groups. Relevant clearance levels and licenses are required to participate in the purchase, lease, or negotiation of any of these products. There is also strong demand for these product, and it is anticipated that MÅLSMAN™ will gain a significant market share based on the technical expertise of the owner, management team, customer responsiveness, and technological advancement of the products.

Fig 1 - U.S. arms exports 2017, by weapon category (in TIV expressed in million constant 1990 U.S. dollars) (excerpt from Defense spending and arms trade dossier, page 68, SIPRI ID 248561)

Golde and Tishler (2004) argue strong military powers deem as a must-have, state-of-the-art technological know how and economic wherewithal to secure said infrastructures as well as the development of sophisticated weapons systems. Due to constraints related to socio-economic and political systems, few regions are capable of meeting said needs limiting the competitive landscapes to Western Europe and the United States of America, (Golde and Tishler, 2004). Golde and Tishler (2004) also argued that one such constraint is a defense system, with the defense structure also playing signficant roles within the competitive landscape including by nations; economic growth; regional and national race; access to arms import and export; interrelationship and interactions between security and economic conditions; and, the various models of international arms trade. Given the limitation within the competitive landscape, the major threat remaining is espionage given the limited number of actors within the landscape and the size of the client / market share.

Fig 2 - U.S. arms exports 2017, by country (in TIV expressed in million constant 1990 U.S. dollars) / (excerpt from Defense spending and arms trade dossier, page 65, SIPRI ID 248552)

Defense spending and arms trade dossier (fig 2) presents U.S. arms exports value for 2017, showing a substantial market with buyers such as Saudi Arabia, Australia, United Kingdom, Israel, and Iraq being major actors. MÅLSMAN™ products will be sold to these nations and other willing buyers licensed to transact business in this market. Furthermore, the MÅLSMAN™ product line will assist in Bachar’s (2017) Qualitative Military Edge (QME) as defined by Naval Vessel Transfer Act (NVTA) of 2008. This is the ability to counter and defeat any credible conventional military threat through the use of superior military means including weapons, intelligence, surveillance, and reconnaissance capabilities superior to those of such other individual or possible coalition of states or non-state actors, Bachar’s (2017).

Sokolov (2005) argued one feature of MÅLSMAN™ products, making ordinary citizens feel secure and making an impression on potential adversaries through MÅLSMAN’s™ strategic vision of securing life, living, and zest through the defense of country, mankind, and holdings. Sokolov (2005) also argued that countries lagging in the production of advanced weaponry have a substantial weakness and consequently, the government may resort to extraordinary mobilisation measures in order to modernize and increase production of weapons and munitions. Another feature of MÅLSMAN™ products, is to support defense policies and government policies through its product line offering. Sokolov (2005) also presented theory on defence industry complex, categorized as armaments and classified into three groups of varying technological proximity to civilian industry; the first group, most remote from civilian production, would be allocated to specialised military factories: small arms and ammunition, gunpowder, explosives and poison gas, mortar shells, and so on. The second group was closer to civilian industry; it is comprised of field and naval guns, shipbuilding, aviation, tanks, military optics, and radio communications. The third group, comprising electrical equipment, transport and communications equipment, instruments, personal kit and ration stores, was closest to civilian goods and could be allocated to civilian producers without detriment to defence interests (Russell’s, 2011 value chain / demand chain). Given that MÅLSMAN™ product line of aircrafts; missile and missile systems, manned and unmanned; armoured vehicles; and, air defense systems fits into the Sokolov’s (2005) second and third groups, the viability and feasibility of the MÅLSMAN™ product line is assured.

Oprean (2012) argue that government and states protect substantial resources including the economic; financial; scientific and human resources; and describes features of weaponry, combat techniques, military equipment, new combat methods and procedure, army organisation; and the development of new strategic conceptions and military doctrine of avant-garde. Oprean (2012) presented main features exemplifing the development of all conventional; nuclear; cosmic categories of weaponry and combat technique of mass destruction; intelligent munitions; and, employment of information and cosmic technology in these environments. Given the urgency and dire need for the protection of nations and governments, Oprean’s (2012) features are also features of MÅLSMAN™ product line, summarized as strategic and intelligent defense conceptions and sophisticated weaponry.

Oprean (2012) also described necessary features of defense such as enhancement of armies’ mobility and their capability of deployment; exercising the control on relative distant forces; development of communication means and troops’ movement consisted in enhancement of top control, materialised in a continuous development of information requests towards subordinates; maintainance of heirarchy and structures; opportunity for troops’ response and the risks to which the subordinates are exposed and they assume; reduce the uncertainty of imperative requirement of commanders and staff of operational or strategic headquarters of joint forces; actualize the freedom of action within the battlespace, including the commanders’ initiative and agility of tactical headquarters; and, timely discovery of location and capabilities of all force elements, including individual and weapons. The MÅLSMAN™ product line will be capable of these responses summarized as mobility, deployment, and control features and elements.

Evans (1996) defined a leadership system focused on customers and performance excellence, with leadership practices that promote quality and high performance. Evans (1996) leadership systems attributes are (fig 3), create a strategic vision and clear quality values serving as the basis for all business decisions at all levels with vision and values including the promotion of said vision; setting high expectations; demonstrate personal commitment to quality; integrate quality and values in daily leadership and management; and, sustaining environment for quality excellence.

Fig 3 - Evans’ (1996) leadership system and attributes

Strategic vision

Securing life, living, and zest through the defense of country, mankind, and holdings

Promote vision

Electronic communications, strategic planing and management, meetings, electronic mail (email); online videos, talks, and exhibits

Setting high expectations

Utilize stretch goals - elimination of defects through zero defects management systems; obtain payback in 4.5 years; generate 47% profits after year 6

Demonstrate personal commitment to quality

Apply cross-functional teams using organization tools including calendar, performance measurement metrics, correspondence with clients; quality assurance reviews

Integrate quality and values in daily leadership and management

Achieve cohesion through the use of strategic plans; managers are expected to improve quality management processes; include employees in quality assurance and quality management process through the use of surveys; communicate and reinforce organizational quality values to the entire organization; and, promote quality standards

Sustaining environment for quality excellence

Encourage open-door policy; facilitate collaboration and teamwork; encourage problem solving through group settings

Golde and Tishler (2004) describes security as the difference between the country's stock of weapon systems and its rivals' stock of weapon systems. There is also the efficiency in the usage of weaponry driving the laws of supply and demand, (Golde and Tishler, 2004).

Fig 4 - Golde and Tishler (2004) defense industry framework

Analyze the manufacturing stages of your productIon analyzing the manufacturing stages of MÅLSMAN™ product line

Ross’ (1990) five (5) stages of manufacturing within the defense industry have been previously applied. Bengü and Kara (2010) also provided the product life cycle’s four (4) stages of manufacturing, product idea or concept stage, design and improvement stage, manufacturing stage and logistic support stage. Bengü and Kara (2010) provided four (4) stages of marketing, market introduction (product planning is made and the manufacturing is then introduced. This stage is related to the market environment, economy, style, utility and expected life of the product. Manufacturing increases and production distribution is limited with high marketing costs. Sales increase slowly and deficiencies and defects are corrected); growth (product adapted by buyers, sales increase due to buyer participation, profits increase due to relationship of incomes exceeding costs, manufacturing and product quality increases with increase in product portfolio, brand image constructed with promotional and advertising, difficult for company to choose between percentages of high market share and profitability); mature (longest and most important stage of product life cycle as sales are at its highest amounts. At the end of this stage, sales fall. Manufacturing style is mass production, probable constrictions in manufacturing along with changes in distribution channels. The result is high competition and increasing costs, and declined profitability); and, saturation and decline stages (new product entries observed with accompanying sales increased. For existing products, sales decline with resulting decrease in production. Manufacturing costs are inverted to sales price, with manufacturing costs increasing with price of product decreasing. Distribution channels are straitened, with promotional and advertising costs decreasing). A supply chain must be created through collaboration of designers, suppliers, and customers, including inputs and outputs, value-added services, managing customer needs, and a feedback cycle that connects measurement of customer satisfaction and product and service attributes, (Jambekar and Pelc, 2006).

Ross (1990) defined five (5) stages of manufacturing within the defense industry, prefabricated components imported and assembled in country; actual production of licensed agreement of foreign supplier; complete foreign design weapons under license; modify, redesign, and produce foreign weapons; and, domestically designed arms are produced. Jambekar and Pelc (2006) argued that new technological initiatives should be mapped into three-dimensional space governed by a hierarchy of business units and operations with a cybernetics perspective with fundamental survival functions of transformation, information, measurement and coordination. Jambekar and Pelc (2006) also argued the cycle should begin with the marketing function and extends all the way into service functions (Bengü and Kara, 2010). To successfully execute mass customization, skilled, knowledgeable and autonomous workers, modular processes and products, management coordination and configuration of modules are needed to meet customer specification, (Jambekar and Pelc, 2006).

Bengü and Kara (2010) contributed to the discussion regarding the manufacturing stages using costing concepts methodologies such as activity based costs (ABC), just-in-time (JIT) manufacturing system, product life cycle costing, and total quality costing. Bengü and Kara (2010) also argued that product life cycle costing has been used the Department of Defense of the United States to increase efficiency in armament. It is also a costing methodology aimed at assisting both producers and consumers to forecast and manage costs of a product during its life cycle. Bengü and Kara’s (2010) product life cycle is more than a costing methodology; it is a mechanism to manage costs while also monitoring the relationships of product mix, marketing, sales, branding, profits, and production.

Assess operations concepts and the supply chain process until the product reaches the customer Jambekar and Pelc (2006) argued knowledge management and its related decision metrics managing performance such as defect reduction (fig 3), customer satisfaction, customer retention, and market share resulting in Russell’s (2011) organizational interconnectivity in terms of a supply chain. Russell (2011) assesses operations concepts and the supply chain process until the product reaches the customer as an integration of key business processes up and down the supply chain creating supply chain management, applying resources such as problem solving, innovation, collaboration (underpinning of supplier management - upstream, and customer relationship management - downstream, with information technology being the glue holding the supply chain together, fig 5 and fig 6.

Fig 5 - Russell’s (2011) assessement of MÅLSMAN’s™ operations concepts and the supply chain process until the product reaches the customer as an integration of key business processes

Fig 6 - Russell’s (2011) supply chain definition

Jambekar and Pelc’s (2006) elements of business ecosystem is used to assess operations concept and the supply chain process until the product reaches the customer, (fig 5).

Fig 7 - Jambekar and Pelc’s (2006) elements of MÅLSMAN’s™ business ecosystem being used to assess operations concept and the supply chain process

Enterprise

Large; strong R & D group; mass manufacturing; highly flexible production program, international manufacturing networks (Szwejczewski, Sweeney, and Cousens, 2016); standard and customized products and installations

Comparable competitor

Boeing Company; large size; similar products including homogeneity; similar flexibility including products and customization; location USA

Competitors

Boeing Company

BAE System

Lockheed Martin

Regulations, norms, and mores

Regulating Agencies

Arms-trade watchdog the Stockholm International Peace Research Institute (SIPRI), Reuter (1991)

Standardization Agreement (STANAG), Bojnec (2013)

American National Standards Institute (ANSI), Bojnec (2013)

Bojnec’s (2013) STANAG and ANSI are security and defence standards, and used for similar products and services in defence industry supply and marketing chains. Bojnec’s (2013) STANAG and ANSI prescribe characteristics with which products should comply, as well as ways for testing them.

Naval Vessel Transfer Act (NVTA) of 2008, Bachar (2017)

Arms Export Control Act (AECA), Bachar (2017)

Defense Base Act of 1941

United Nations

The Hague - The Criminal Court

U.S. Department of Defense

Defense threat / conflict groups

Hezbollah, HAMAS, Jihad, al-Aqsa, Martyrs' Brigade, and e Popular Front for the Liberation of Palestine-General Command

Suppliers

Pressure sensors manfacturer/supplier, Jambekar and Pelc (2006)

Temperature sensors manufacturer/supplier, Jambekar and Pelc (2006)

Customized electronic circuit supplier, Jambekar and Pelc (2006)

Precision mechanics supplier, Jambekar and Pelc (2006)

Electronics infrastructure supplier, Jambekar and Pelc (2006)

Computing systems supplier, Jambekar and Pelc (2006)

Engineering products service provider, Jambekar and Pelc (2006)

Electrical accessories supplier, Jambekar and Pelc (2006)

Instrument casing supplier, Jambekar and Pelc (2006)

Complementors

Metal producer

Laboratories and simulation manufacturers and providers

Distribution channels

International representatives

Direct delivery systems

Customers

Nations including Saudi Arabia, Australia, United Kingdom, Israel, and Iraq

United States Department of Defense

Other licensed international agencies

Another methodology to assessing operations concepts and the supply chain process until the product reaches the customer, is Chapman, Bernon, and Haggett’s (2011) selection of appropriate quality management techniques. Chapman, et al’s (2011) techniques are, (1) develop strategies (focus on delivery time variability through appropriate supply chain process designing through the use of process chart/flow chart, histogram, and cause and effect analysis); (2) identify key processes (the order to delivery cycle in defense is similar to commercial / industrial processes, with the focus being the supply chain performance of customer places order, order entry, order processing, transportation, and order received); (3) analyse existing processes (including performance measurements and modification); (4) redesign processes (to achieve appropriate responses and outcomes); and (5) implement new processes (through evaluation of existing processes and address disparaties including the development of acceptable norms in performance).

The operations concepts and supply chain process intersects and interact through the use of Chapman, et al’s (2011), providing simple mechanisms toward easy understanding of current works, methods, and practices; encourage communication and discussion; and, the provision of visual means to inputs from those not initially involved in the documentation process. As an integrated framework, both components provide navigation and clarity for project management, necessary for flexible, mass, and project management manufacturing including customizations particularly in a massive operation such as defense manufacturing.

The function of operations concept and supply chain is to enhance operations through the numerous relationships created and their interdependence including suppliers, customers, and regulators. VanVactor (2011) argues collaboration refers to the cooperative supply chain relationships forged, both formally and informally, directly and indirectly among organizations, supply chain partners, and customers to enhance business operations. VanVactor (2011) also argued that the collaboration of supply chain management and practices are mediators to operations conflicts including effective and profitable business practices.

Another methodology in the assessment of operations concepts and the supply chain process until the product reaches the customer, is VanVactor’s (2011) application of the use of accuracy within the supply chain with the right product delivered to the right customer timely, effectively, and efficiently. There is also the matter of stakeholder involvement where all parties involved within the supply chain operates in a manner creating sustainable operations, including that of collaboration and execution. While the supply chain management focuses on satisfying customer demands, formulating and implementing strategy based on maximizing end-customer business, and managing lines of supply (VanVactor, 2011), it is the operations management that facilitates the routine activities ensuring performance targets are met. One such aptitute would be the balanced scorecard (Balanced Scorecard Institute), where the perspectives of customer, financial, learning and growth / organizational capacity, and internal processes drive organizational continuity (sustainability) enabling coping mechanisms for all levels of the competitive landscape. Ponis, Gayialis, Tatsiopoulos, Panayiotou, Stamatiou, and, Ntalla (2015) aruge supply chains if poorly managed, often leads to increased cost structures which severely deteriorate performance. Operations concept is the navigation that prevents cost-deficient structures and outcomes.

Amanipour, Jamshidvand, and Tabatabaei (2015) argue that the current competitive landscape extends beyond operations in terms of business versus business, to now supply chain versus supply chain. The more efficient the supply chain, the greater the competitive advantage of the organization, in terms of production costs, operations, supply chain management, performance management, branding and brand management, and strategic planning and management. To retain competitive advantage into sustainability, Amanipour, et al, (2015) presents that the supply chain members must learn to seamlessly integrate, grow, and develop business functions beyond traditional quality management practices into supply chain quality management. Supply chain quality management is a systems-based approach to performance improvement that integrates supply chain partners and leverages opportunities created by upstream and downstream linkages with a focus on creating value and achieving satisfaction of intermediate and final customers, (Amanipour, et al, 2015).

To assess operations concepts and the supply chain process until the product reaches the customer, Amanipour, et al’s (2015) Supply Chain Quality Management (SCQM) is used, and defined as a systematically approach by means of elevating supply chain’s quality performance which is achieved by integration of different layers of the chain. The SCQM Activity Clustering (fig 6) is used to illustrate the order in which activities occur until the products reach the customer, (1) quality approaches / business results; (2) supplier relations; (3) customer relations; (4) leadership / human resources; and, (5) management / safety (Amanipour, et al, 2015). The SCQM exceeds the traditional supply chain through the utilization of the application of Amanipour, et al’s (2015) management / safety component completed towards the latter end of the activities, facilitating freedom from deficiencies; quality meaning fitness for use; and the achievement of conformance to requirements.

Fig 8 - Amanipour, et al’s (2015) SCQM Activity Clustering

Bojnec (2013) assesses the operations concepts and the supply chain process until the product reaches the customer in the defense indusry as challenging, based on the issues of, (1) greater cooperation of defence enterprises as part of the defence supply chain to ensure effective defence production at a socially acceptable cost; (2) defence standards make for easier cooperation between defence-civilian enterprises and provide quality control of products (Bojnec’s 2013 ANSI and STANAG; Bachar’s 2017 AECA); (3) defence-civilian cooperation activities in the defence supply chains, public defence procurements, and defence supply networking with foreign industry enterprises must comply with specific norms for security and defence standards for products and services, (Bojnec’s 2013 ANSI and STANAG; Bachar’s 2017 AECA); (4) a specific system of defence standards can enhance security and gate-keeping of the relevant technologies, but can have an adverse effect on the available variety of new such products; (5) defence standards are important to assure quality that can be used for intermediate consumption, production, and sale in arms and ammunition international trade, (Bojnec’s 2013 ANSI and STANAG; Bachar’s 2017 AECA); (6) defence standards simplify product monitoring and servicing as well as preventing illegal production, providing security, compatibility, and access, (Bojnec’s 2013 ANSI and STANAG; Bachar’s 2017 AECA); (7) buyers demand and expect that products and services shall comply with the set defence standards, (Bojnec’s 2013 ANSI and STANAG; Bachar’s 2017 AECA); and, (8) producers expect that defence standards are respected by their sub-suppliers in the defence chains, (Bojnec’s 2013 ANSI and STANAG; Bachar’s 2017 AECA). This assessment results in Yong, et al’s, (2015) competition restriction, as well as barriers of entry to the defense industry.

In assessing operations concepts and the supply chain process until the product reaches the customer, several evaluations occur, (1) the supply chain itself (Fig 6); (2) assessing the operations concepts and supply chain process until the product reaches the customer as an integration of key business processes (Fig 5); (3) evaluation of the elements of how business ecosystem can be used to assess operations concept and the supply chain process (Fig 7); and, inclusion of supply chain quality management (SCQM) Activity Clustering (FIg 8). Present in these visual frameworks listed, integrated and separately, are the processes for operations including enterprising, competitive landscapes, regulations and regulative matters, customer management and elements, risk management, logistics and distribution groups, and the elements of the supply chain as needed.

Finally, the assessment of operations concepts and the supply chain process until the

product reaches the customer is Moon’s (2004) supply chain structure which is the mediated variable between product strategy and supply chain inventory, where the relationship among strategy, structure and performance is highly defined.

Evaluate the various stages in an effort to fine tune them to assure quality product and delivery, including resources, labor and their costs

In evaluating the various stages in an effort to fine tune them to assure quality product and delivery, including resources, labor and their costs, Moon’s (2004) presented three (3) strategies, supply chain structure (SCS) of product with cost leadership strategy (maintaining competitive advantage through lower pricing); SCS of product with differentiation strategy (strategy is based on innovative technologies including design, prestige pricing, and market segmentation); and, interdependence of the supply chain members (in this event, efficiency is driven by monitoring, relationship, and risk of the relationship). One of MÅLSMAN™ competitive advantage will be Moon’s (2004) SCS of product with differentiation strategy (strategy is based on innovative technologies.

Yong, Ahn, Jung, and Park (2015) defense articles are decided not by the market price but rather by the manufacturing costs, with defense production requiring complex production processes and a high level of technology as well as risk. Given that the suppliers and consumers of defense articles are limited, competition is significantly lower than other industries and perfect competition cannot exist, Yong, et al, (2015). However production costs management should not invite risks, as the risk of failure from deficiencies or defects result in national security threats and events, (Templin, 1994). As a result, quality assurance is required.

Yong, et al, (2015) discussed the defense sector as operating significantly different from the commercial sector in numerous ways, (1) supply is driven by the government’s demand for orders for research and development or production of defense articles; (2) as the defense industry is heavily regulated and concerns national security (Templin, 1994), MÅLSMAN™ must address the risk the product presents at all stages including production; (3) government restricts competition as overseas exports are the primary consumers for defense articles; (4) government restricts competition through the assignment of products as defense articles and defense companies; (5) government regulates the defense industry through policies and procedures including investments, capital, and cost recoveries including production in addition to reasonable profits, (Templin, 1994); (6) contract methods are predetermined including fixed price contracts and cost plus contracts. See Yong, et al’s (2015) tables 1, 2, 3, and, 4.

Table 1 - Yong, et al, (2015) Contract amount by type

Russell (2011) presented thesis in assuring quality product and delivery, including resources, labor and their costs through methodologies including, classical logistics (acqusition, storage, and distribution of materials to get the right product to the right customer, at the right time, in the right condition, in the right quantity, at the right cost); lean logistics and lean manufacturing emphasizes flows in which the following are avoid, excessive production runs, poor demand forecasting, faulty inventory data, and erroneous decisions; just-in-time approach eliminates systematic process problems through real-time demand as point of sale data, and more accurate forecasts, and visibility on inventory location.

Table 2 - Yong, et al, (2015) Cost calculation of defense articles

Table 3 - Yong, et al, (2015) Ratios calculation of defense articles

Table 4 - Yong, et al, (2015) Profit calculation of defense articles

Baurina, Nazarova, and Savchenko (2017) argue the relationship between product quality, manufacturing and production costs, and delivery / profitability, with the intersection being accounting methodologies. Baurina, et al (2017) argue that objectives and target performance indicators for developing quality managemetn systems are linked to different outcomes including, achieving acceptable rates of returns and profits while obtaining and returning compliance certification required for export markets; performance and key performance indication measures are required to keep the organization and division operative; accurate financial and accounting records (costing mechanisms) needed to identify the labor input and costs associated with manufacturing and production, as well as the retention of compliance certification; Yong, et al’s (2015) revenue generation and computations (tables 1 - 4) are necessary to provide adequate working capital, including financing, competitive arrangements, contacting and subcontracting with customers, suppliers, and alliances as a matter of proof of sustainability as well as no going concerns; and, strategic planning tools and devices including Balanced Scorecard Institute’s balanced scorecard including the alignment between vision, key performance indicators, and performance measurment systems including the standard perspectives, customer, internal processes, financial, and organizational capacity / learning and growth. Baurina, et al’s (2017) relationship between product quality, manufacturing and production costs, and delivery / profitability, with the intersection being accounting methodologies, is also needed to provide quality assurance in the defense and weapons industries, to ensure that MÅLSMAN™ products is of a high quality with zero defects to meet not only compliance, but quality standards in technical, litigative and liabilities, and organizational reasons so there are no contingencies.

Bengü and Kara (2010) provided several accounting methodologies (costing mechanisms) as, activity based costing (ABC); just-in-time (JIT) manufacturing system; and product life cycle costing. All are capable of managing manufacturing costs, delivering key performance indicators, and revenue generation calculations. However product life cycle costing is most applicable as a defense industry accounting methodology and costing mechanism given its association with the United States Department of Defense and its require to increase armament efficient, Bengü and Kara (2010). Product life cycle costing is capable of analyzing and presenting direct (labor, materials, and overhead), and indirect costs (administrative, design, marketing and selling costs), including performance metrics. It is also capable to monitoring and making adjustments of profitabilities and its performance based on production volumes, and their relationship with marketing and sales expenses, as well as the manufacturing life cycle of the product, product idea or concept stage, design and development stage, manufacturing stage, and after-sales logistic support stage, Bengü and Kara (2010). Bengü and Kara’s (2010) product life cycle accounting methodology and costing mechanism, also capable of generating a marketing product life, market introduction stage; growth stage; mature stage; and, decline stage.

The formation and length of the product life cycle is dependent on speed of technological advances; product acceptance in the market; social and cultural changes and developments; effects of market entry barriers including use of regulations to restrict competition; and, the presence of new consumers, Bengü and Kara (2010). The objective of product life cycle is to determine, analyze, forecast, report and manage all kinds of costs in all life cycle stages of a product, with costs classified into three (3) groups, premanufacturing costs, manufacturing costs (including design and engineering, planning, buying, sales, logistics, and transportation), and post-manufacturing costs, Bengü and Kara (2010).

Bengü and Kara (2010) distinguishes the difference between traditional cost accounting systems and product life cycle as, the traditional cost accounting systems only considers costs related with manufacturing in accordance with the Generally Accepted Accounting Principles (GAAP), whereas product life cycle costing methodology considers costs related with all stages of the product life cycle such as market introduction, growth, mature and decline stages.

Fig 9 - Bengü and Kara (2010) differences between traditional and product life cycle costing methodologies

Compare and contrast your product and plans with a similar product manufactured by a Fortune 500 company

The product for comparison is competitor The Boeing Company, a publicly traded company on NYSE - Nasdaq, who competes in the industry aerospace and defense. The Boeing Company’s product line are similar to MÅLSMAN’s™, defense replacement parts; aircrafts; weapons / missiles and missile systems; armored vehicles; and air defense systems. While The Boeing Company is publicly traded (ticker BA), MÅLSMAN™ has a small number of substantial investors along with substantial revenues garnered from government contracts and owners equity.

Fig 10 -Compare and contrast MÅLSMAN’s™ with competitor The Boeing Company

MÅLSMAN’s™

The Boeing Company

Industry

Defense

industry aerospace and defense

Product line

Aircrafts; missiles and missile systems; armored vehicles; and air defense systems.

Defense replacement parts; aircrafts; weapons; armored vehicles; and air defense systems.

Overall portfolio Commercial Airplanes (BCA); Defense, Space & Security (BDS); Global Services (BGS); Boeing Capital (BCC)

Financing

Privately held; investors

Publicly traded, ticker (BA)

Accounting methodology

Product life cycle reporting; GAAP (new company with funding requirements)

GAAP

# of employees

98,640

140,800

Regulatory agencies

Arms-trade watchdog the Stockholm International Peace Research Institute (SIPRI), Reuter (1991)

United Nations

The Hague - The Criminal Court

U.S. Department of Defense

NASA

Federal Aviation Administration (FAA)

Department of Homeland Security

Regulations

Standardization Agreement (STANAG), Bojnec (2013)

American National Standards Institute (ANSI), Bojnec (2013)

Naval Vessel Transfer Act (NVTA) of 2008, Bachar (2017)

Arms Export Control Act (AECA), Bachar (2017)

Standardization Agreement (STANAG), Bojnec (2013)

American National Standards Institute (ANSI), Bojnec (2013)

Naval Vessel Transfer Act (NVTA) of 2008, Bachar (2017)

Arms Export Control Act (AECA), Bachar (2017)

Competitors

Boeing Company

BAE System

Lockheed Martin

Raytheon

General Dynamics

NEW - MÅLSMAN’s™

Airbus

Embraer

Bombardier, and

Other entrants from Russia, China and Japan

Lockheed Martin Corporation Northrop Grumman Corporation Raytheon Company, General Dynamics Corporation

SpaceX

Non-U.S. companies such as BAE Systems

Sustainability

New company; 7 year contract fundings including profit streams; owners’ equity

No going concerns

Customers

Government contracts

Suppliers

International suppliers

Distribution channels

International representatives

Direct delivery systems

Unknown; multiproduct line creates additional channels

Although a new privately held, MÅLSMAN’s™ financial position is strong with numerous customers including several years government contracts along with substantial owners’ equity. MÅLSMAN™ is expected to demonstrate substantial sustainability although a new company with dominant competitors (Fig 11).

Fig 11 - McCarthy, (2017) The World's Biggest Arms Companies

Conclusion

Entrance into a new industry such as defense presents substantial barriers, financing; regulations; regulatory agencies; technology; and expertise. There is also the matter of sustainability, customer acquistion, supply chain, and other performance management systems. The disciplines of operations management and supply chain management and their numerous structure, supply chain structure, demand management, product life cycle, and understandings, computations, and presentations of the various revenue sources including contracts and its elements does not only make a difference. This is a competitive advantage that can increase working capital, profitability, and the related collaboration required to be considered an allied competitor. An understanding of operations management, supply chain management, supply chain structure, and their relevant frameworks create the edge needed to remain within the competitive landscape, sustainability.

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