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The recent executive order by President Biden, calling for a review of U.S. supply chains is the right first step to address the risks and vulnerabilities affecting global supply chains. If done right, it will also serve as a roadmap to better understand the supply chain landscape and who the players are, down to the supplier, site, and part level. And that visibility is the key to being able to make informed decisions and fix problems; problems like the current chip shortage or last year’s PPE shortages.
Let’s expand on the chip shortage – which our CEO, Bindiya Vakil, recently called “a ticking time bomb” on Bloomberg TV. The issue, building since last year, has created an extremely constrained environment. There were two debilitating factory fires (one in July and one in October) at major Japanese semiconductor plants. Labor strikes and geopolitical factors also played a big role: the Trump administration began tightly regulating sales of semiconductors to Huawei Technologies, ZTE, and other Chinese firms; at the same time American firms were cut off from chips made by China’s Semiconductor Manufacturing International Corporation after the federal government blacklisted the firm. Combine that with delays due to COVID, shortages of shipping containers, and reduction in global air cargo capacity, and it was a perfect storm of disruption. This disruption is going to cost carmakers $61 billion.
Given all the market shifting and unrelated disruptions, no one could have totally planned for this. That said, some companies did invest the time and effort to manage potential risk proactively. They knew who their suppliers were, monitored the situation closely, paid attention to early alerts (Resilinc sent its first alert regarding potential disruption to the semiconductor industry back in October 2020), and had backup plans in place with their suppliers. Overall, they fared much better despite these challenging times. For example, one major high tech company who has been at the forefront of managing risk recently spoke about how they did not miss a single customer shipment despite these upheavals.
In her recent interview with Supply Chain Dive, Bindiya explained what the government will likely find as the committee begins its review: “The executive branch’s review of these industries will start with an understanding of what the supply chains look like and the location of the suppliers. After the location of suppliers is well understood, then companies and the government will have to work to understand what the risks are to that particular region whether it’s political or natural disasters. Most companies buy from distributors or they buy from the supplier’s broker or something — they don’t know where the actual manufacturing is happening.”
Having visibility into your supply chains is not optional; it’s not even a matter of compliance. Visibility protects the supply chain and protecting the supply chain is a matter of National Security. Resilinc welcomes the new executive order from The White House. We are proud to be a long time thought leader in this space and at the forefront of supply chain resilience, assisting thousands of companies to quickly turnaround their SCRM programs and gain visibility
