A leading expert on supply chains is available to discuss President Joe Biden’s executive order to create more resilient and secure supply chains for critical and essential goods in the United States.
“The private sector’s ability to rapidly adapt supply chains on the fly ‘right of bang’ during a crisis is a key to the system’s resilience and must not be compromised by government regulation. That would be a serious mistake,” data scientist Benjamin Ruddell said. “The private sector in the U.S. did an amazing job in 2020 adapting to the COVID-19 crisis.
“Where we badly need government regulation of supply chains is to ensure that the ‘left of bang’ supply chain structure is prepared with the right structure to successfully adapt during a crisis. You need to build a diverse and self-sufficient supply chain before the crisis, not during the crisis. The government’s role is to set policy standards and enforce action, but I believe that the private sector is better equipped than the government to determine how to achieve the policy goals in practice.”
Ruddell is the director of the $4 million national FEWSION project funded by the National Science Foundation and located at Northern Arizona University. FEWSION has built the first complete quantitative and qualitative description with correlating maps of the U.S. food, energy and water system supply chain (the FEW Nexus), so every citizen and policymaker can see from where their food, water, fuel and a total of 46 different commodities come. Ruddell is a professor and director of the School of Informatics, Computing, and Cyber Systems at NAU and has led research projects funded by NASA, USDA, USGS, the Department of Defense, private foundations and several U.S. cities. NAU is known for its top scientific research programs.
Expert: Benjamin Ruddell
- COVID-19 and the Texas power outage remind us that risks are not worth taking in our critical supply chains. It’s not worth it; a small, short-term cost saving is quickly forgotten when Americans start dying. Critical supply chains include basic telecommunications, medical, energy, food, water and defense goods and services. However, most supply chains are not critical and should not be regulated as such. For example, I don’t believe Facebook, T-shirts, restaurants or the entertainment industry are critical. These things are important, but not urgently required to sustain life during a crisis.
- We need to ensure that our critical supply chains are both self-sufficiently sourced from friendly suppliers within the United States and its close allies, and sufficiently resilient, meaning there are adequate stockpiles, inventory and a diversity of suppliers.
- Domestic and close-ally suppliers can be relied upon to prioritize U.S. needs during a crisis. It is important, however, that those suppliers themselves source from friendly suppliers, all the way up the chain—not just at the first level. Supply chain engineering must inform the details on policy, because the details matter. But, as a rule of thumb, it is essential that at least 50 percent of suppliers for each critical item, and ideally more than 80 percent, are sourced domestically and from friendly nations. More is better; 100 percent is the right goal.
- To achieve resilient supply chains, the goal is to create options during a crisis. Stockpiles and inventory are a great backup option and have become underused during the just-in-time era. For example, the U.S. stockpile of personal protective medical equipment was badly neglected before the COVID-19 crisis. Another important resilience principle is to maintain a diversity of suppliers and to locate those suppliers in multiple regions and nations. It might be cost-efficient to have just one or two large suppliers, but this is a disaster waiting to happen when one of them becomes unwilling or unable to fulfill their contracts during a crisis. For critical supply chains, we cannot afford to concentrate risk. Supply chains sourced 100 percent from the U.S. are less resilient than those sourced from both U.S. and friendly nation suppliers.
- The federal government should establish a comprehensive policy on critical supply chain resilience.
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