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An Overview of President Biden’s Supply Chain Executive Orders

On February 24th, 2021, President Joe Biden signed an executive order centering on global supply chains and ensuring USA production is strong enough to address future needs across various categories. While the executive order does not focus specifically on “Made in the USA” initiatives, it addresses the need to future proof America’s supply chain across several categories. More specifically, this executive order presents a call to action for the APNSA (Assistant to the President for National Security) and APEP (Assistant to the President for Economic Policy) to deliver detailed presentations on four key supply chain categories within the next 100 days. Furthermore, this executive order calls for a more substantial and widespread one-year analysis of six supply chain categories.

With COVID continues to make supply chain stability uncertain, this executive order seeks to future proof our country from potential events like new pandemics, cyber-attacks, and extreme weather and terrorist events. During the COVID pandemic, the USA learned just how reliant we have been on foreign nations (dominantly China) to produce everyday necessities. While one consistent strategy may hold up during “normal” operations and minor disruptions, it is essential to have multiple processes across the value chain to protect a company during unprecedented times like the COVID pandemic.

Below is a summary of Biden’s executive order, specifically highlighting the four immediate categories of interest in his 100-Day Plan as well as details on his One Year Analysis. The reviews of these supply chain categories will reveal if the US is too reliant on imports from foreign nations. They will also consider other potential vulnerabilities like extreme weather and environmental changes.

President Biden signs supply chain executive order. Photo Source: Forbes.com

100 Day Analysis & Reporting

  • Evaluation of risks in the semiconductor manufacturing and packaging segment to be completed by the Secretary of Commerce

At the beginning of COVID, as employees across all business lines needed to work from home, a global shortage of semiconductors and chips used to power computers, cellphones, and tablets emerged. For the most part, the production of semiconductors is executed overseas in Asia. As global demand for electronics hit all-time highs, the supply was not substantial enough to keep up. Other industries pivoted their focus to making these products to keep up with demand, which drove setbacks across different sectors like automotive. While the high demand for electronics products with semiconductors has returned to some sense of normality, the need to constantly communicate with these devices is essential to our country’s success.

  • Evaluation of risks in the battery manufacturing and supply segment with specific analysis of electric car batteries to be completed by the Secretary of Energy

Electric cars and electric energy will continue to grow more popular globally for years to come. With an increased focus on cleaning up the environment, there is a shift in consumer demand for products like electric cars over gas and diesel drinkers. Global production of electric vehicles will top 4M units in 2021 and is predicted to scale to 12M+ units by 2025. While American consumers are hot on stocks like TESLA, Chinese companies like NIO and Xpeng have quickly established themselves as market leaders. Like the gold rush, there is now a global rush to gather up all the lithium and cobalt available as these are critical materials to produce electric car batteries. Although some US electric car companies were manufacturing primarily abroad in Asia, there will likely be a shift to a more geographically diversified portfolio. Ultimately, with environmental responsibility as a high priority, America’s ability to source raw material lithium and cobalt will define our ability to transition electric battery production towards a domestic footprint successfully.

  • Evaluation of risks in the critical minerals, rare earth elements, and manufacturing of defense products to be completed by the Secretary of Defense

In addition to essential minerals like Cobalt, Lithium, and semiconductor components listed above, there are specifically 17 rare earth elements (REE): the 15 lanthanides on the periodic table plus scandium and yttrium. These rare earth elements are critical to producing high-tech devices like phones and TV screens, defense applications like radar/sonar systems and lasers, and magnets. In 1993, China possessed 38% of the world’s REEs, the USA had 33%, and Australia has 12%. By 2011, China surpassed 97% ownership of REEs. For the USA to produce more electronics and technology products domestically, we need to evaluate REEs and the corresponding supply chain. 

  • Evaluation of healthcare and pharmaceutical products to be completed by the Secretary of Health and Human Services

It is no secret that masks effectively slow the spread of the virus and reduce an individual’s chance of contracting the virus. For the first couple of months of the COVID crisis, masks were virtually unavailable to the consumer. Frantically, people were scrambling to source masks and PPE from any viable source. We quickly learned that almost all apparel and soft goods production occurred outside of the US. China, South-East Asia, and LATAM account for most of the world’s soft goods production, and thus they could pivot their operations to address the heightened demand for PPE. That meant that the USA was not first in line to get the necessary PPE. In addition to the PPE shortage, and perhaps more importantly, this report will be investigating the vulnerabilities in the vaccine, testing, pharma research, and healthcare materials and products. While things are starting to move in the right direction for the US, there were several vital junctures where material and production shortages impacted our ability to react to the virus. Raw materials in the Pfizer and Modern vaccines, lab testing materials, ventilators, and scientific research materials all stumbled and impacted the efficiency of the USA’s reaction to the virus. This report will investigate our vulnerabilities looking forward in this category.

One Year Reporting

Biden’s executive order goes beyond the 100-day initial evaluation and puts an annual framework in place to future proof and strengthen the USA’s footprint in the global supply chain.

1.    Public health preparedness

As an extension to the 100-day report on healthcare and pharmaceutical products, the administration is hyper-focused on ensuring a long-term competitive domestic pharma and healthcare market. As populations around the globe scale into the future, more pandemics are sure to occur. It is a top priority for the administration to ensure the USA has the required hospital/critical care, medicine, and PPE supplies to weather future pandemics.

2.    Agricultural commodities

With COVID, grocery stores saw some scary stock-out challenges. From toilet paper and paper towels to avocados and bananas, during the early days of COVID, consumers learned which imported products the USA uses heavily. Our population continues to grow, and our land is finite. For some time, the economics behind farming in the US has made less sense, so we have imported more. The US still does export some food products like soybeans, maize, and potatoes. However, we import a significant amount of the food we see in grocery stores.

3.    Energy sector

While the US has ramped up domestic production and decreased import percentages across petroleum, natural gas, and coal/coking coal, our country is weak in newer, cleaner forms of energy like electric, wind, and water energy sources. This annual report will evaluate the global supply chain for energy sources to ensure the USA can power itself domestically for a long time if needed.

4.    Transportation sector

As an extension to the 100-day report on electric car batteries, the transportation sector will analyze public and private transportation across all categories from air to train to personal vehicles. It will evaluate environmental impacts as well as the vulnerabilities in meeting consumer demand.

5.    The defense sector with a specific focus on where individual (non-government) supply chains are dependent on foreign nations

The annual report will analyze the supply chain around personal defense items such as guns and ammo. Relying on foreign nations to produce weaponry for individual or government use is not a long-term solution.

6.    IT sectors with a focus on software applications/platforms and data

Who owns what data and how our information is used are becoming more critical than ever to understand. Many US companies sell their data in bulk as a service, and foreign countries, like China, are purchasing lots of this data. This annual evaluation and report will highlight data, software applications, cryptocurrency markets, and how the US is positioned in this supply chain market. 

Conclusion

The new executive order shines a light on the need for robust supply chain strategies across several categories to support scalability and success in today’s market. While these changes cannot happen overnight, businesses across these sectors can start evaluating how they will implement tools to support supply chain stability. Supply chain management software, like the GRID, that extends across the entire value chain can be the first step for many companies to have the visibility, collaboration, and data required to strengthen domestic and global supply chains.

Learn more about the benefits of future proofing your supply chain through a digital SCM solution.

Bobby Hamill is the VP of Sales at Suuchi Inc. With over five years experience at Netsuite, Bobby leads the Suuchi team to help hundreds of businesses take the first step to a digital future for their supply chains. Learn more about Bobby.

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