America’s supply chain is evolving and becoming increasingly complex, global and specialized. When COVID-19 disrupted the global supply network and demand for many goods simultaneously spiked, shortages quickly emerged. These highlighted significant vulnerabilities in America’s overall supply chain, leading many experts to acknowledge that modernizing the supply chain is a national security imperative.
The President has recently signed an Executive Order for a 100-day review of potential vulnerabilities in U.S. supply chains for critical items, including computer chips, medical supplies, electric-vehicle batteries and specialized minerals. There has been a myriad of suggestions — from government and industry — on the right approach to America’s supply chain challenges. What is most evident is that government and industry will need to work closely together.
That next threat may result from a vastly different situation. America must be ready for a diverse set of future threats. All sectors of the supply chain must be assessed, from health and medical, food and water, energy, vital technologies, emergency preparedness, essential mineral reserves to all the areas of our critical infrastructure.
Given that stockpiles expire, become obsolete, or may be useless in response to different disruptive events, how do we effectively address supply chain adequacy and resiliency? And is it reasonable to expect all goods critical to our health and economic wellbeing — regardless of the challenge — will be made in America?
The supply chain of the future needs to securely meet numerous scenarios and challenges, many unanticipated or far more extensive than expected. As consumers, we expect supply to meet demand, particularly in critical commodity areas like health, food and water. When there are disruptions, we expect all levels of government to work closely with businesses to resolve problems rapidly. Government/Industry partnerships should focus on four areas to modernize America’s supply chain: visibility, coordination, agility and trust.
Increased visibility of the entire supply chain enables situational awareness and rapid decision-making. Remarkably, much of the data needed for improved supply chain visibility already exists in government and private sector information systems. This existing data can be quickly and securely leveraged with appropriate safeguards to develop meaningful insights, real-time dashboards, predictive situational awareness and precise forecasts. Demand planning can be coupled with near-term demand sensing resulting in much faster supply chain pivots. Greater use of blockchain, artificial intelligence tools and advanced data analytics can improve the accuracy and speed of simulations and forecasts. Supply chain gaps can be more rapidly addressed by employing innovative technologies with optimized predictive analysis.
Improved coordination enables faster and more efficient management of supply shortages and/or demand spikes. Critical supplies can be shifted to locations where the need is greatest or re-routed while in transit to aid state and local response efforts quickly. Improving coordination would require more robust “whole of government” oversight and planning at the federal, state, tribal, territorial and local levels and significantly expanded public/private collaboration. A comprehensive supply chain risk assessment framework should be agreed upon and utilized to improve coordination and assess and mitigate supply chain risk over time. That assessment should be repeated periodically, like the Department of Defense Quadrennial Defense Review.
Enhanced agility enables American manufacturing and distribution systems to pivot more quickly to meet rapid demand fluctuations and has the added benefit of increasing American global competitiveness. Stockpiles across all sectors from health and defense to commodities should be used strategically to meet short-term gaps while the industrial base quickly pivots to meet changing demand signals. The future supply chain should include diverse manufacturing sources both within the United States and overseas to reduce the risk of domestic supply disruptions. The speed that the industry can respond to changing demand signals is enhanced when government and industry work together using data to identify and resolve barriers, develop realistic plans, test those plans, and continuously monitor progress. Enhanced agility will enable a faster response to changes in demand patterns, minimize economic impact, and possibly save lives.
Strengthened trust must be at the very foundation of America’s future supply chain. Trust and transparency enable concerns to be identified early and resolved quickly with less disruption. Increased visibility relies on strong cybersecurity and trust agreements that provide assurance to companies and institutions sharing data. From the sources of raw materials to the end consumer, everyone in the supply chain must trust the supply system’s safety, reliability and security. Investments in verification and early detection of supply chain threats such as counterfeiting and contamination strengthen trust by keeping unwanted and unsafe goods out of the system. As this administration implements its plan to improve the nation’s supply chain, it should consider integrated methodologies for building trust in the plan and the proposed outcomes — and that trust-building should include all industry sectors and all aspects of supply chain network and operations.
Prior to COVID-19, the words “supply chain” were not in the average citizen’s daily vocabulary. We all took for granted that the resources we needed for our everyday needs would all be available. Nor did we effectively contemplate the impact of supply shortages in medical supplies and critical sub-components.
As we review our COVID-19 lessons learned, now is the time to modernize our supply chain so that America is more prepared. With the new administration, the federal government has the opportunity to take a leadership role in the development and implementation of a modern American supply chain built on a foundation of visibility, coordination, agility and trust.
Lisa Veith is senior vice president of new markets at Maximus Federal.