Alert –

6 Takeaways from the Department of Commerce’s Supply Chain Summit

Client Alert
Bob Kolasky
Bob Kolasky
Senior Vice President, Critical Infrastructure

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Exiger participated in the 2024 Supply Chain Summit at the Council of Foreign Relations, convened by the Department of Commerce on Sept. 10. The discussion focused on the criticality of supply chain resilience to U.S. economic security and competitiveness. 

Exiger was invited to help drive the national conversation on supply chain resilience and ensure that it included the perspective of the private sector — which serves as the source of much innovation and investment to build back a trustworthy supply base for critical industries across the United States. 

A Leadership Imperative for Supply Chain Visibility

To promote the importance of the conversation, President Biden welcomed the participants with a letter emphasizing the importance of the U.S. remaining “the global leader in critical industries like manufacturing and emerging technologies.” As much of the discussion throughout the day demonstrated, however, that is not going to happen without increased visibility into supply chain vulnerabilities and resilience gaps and concerted effort to address those.

Commerce Secretary Gina Raimondo highlighted her department’s efforts to push supply chain visibility to be more proactive, strategic, and comprehensive but also acknowledged that most of the effort lies with the private sector. She lamented that critical industries were not yet where they need to be with supply chain visibility saying, “I am constantly surprised when dealing with companies that don’t know the vulnerability in their supply chains.” 

Exiger has supported parts of the Department of Commerce in better understanding supply chain risk, and our perspective matches the Secretary’s — there is more work to do be done to achieve product-level visibility across critical supply chains.  Our 1Exiger platform is a critical tool to do that. 

Analysis: Supply Chain De-Risking Efforts Will Continue

We are highlighting the Department of Commerce Summit to our clients because of what it says about how the Biden Administration is approaching the issue, as well as because of the institutionalization of approaches that Cabinet agencies and the White House are undertaking to prioritize supply chains, no matter who wins the election in November. 

Supply chain security and resilience is one of the most bipartisan issues in Washington; and, although there will undoubtedly be policy and regulatory shifts based on who the next president is, it is Exiger’s read that much of the U.S. government’s efforts will continue. Most prominently, the supply chain “de-risking” imperative for critical industries will continue.  Among those industries that are most in the spotlight are advanced manufacturing, energy, healthcare, and information and communications technology (ICT) — including companies in those sectors that support national security and defense missions. 

What is driving so much of the imperative is the challenge that the U.S. government sees with adversarial nations such as China and Russia using supply chains as a new sphere of influence. Secretary Raimondo highlighted particularly the reality that many emerging technologies are dual use, which necessitates being more aggressive in deploying export controls as well as pushing harder at authorities to limit adversarial controlled and influenced technology in critical supply chains. But geopolitical conflict is not the only driver of the push for supply chain resilience.  Environmental impacts of inefficient supply chains and chemicals and raw materials are also motivating government activity — as well as potential human rights violations in agriculture and manufacturing supply chains. Finally, there is concern about lack of availability of critical minerals and materials, as well as choke points in global supply chain causing operational impacts.

One of the themes of the summit was that while the term supply chain might be a relatively new one to the national policy stage, the reasons that supply chain resilience is so important are not.  Supply chains have become synonymous with the advancement toward automation and digitalization and the need for secure hardware and software; resilient supply chains are seen as one of the principal drivers toward economic competitiveness and combatting inflation; they are part of the modern-day clash of nations.  All that means that political leaders in Congress and the Executive Branch have recognized this is an issue that their constituents care about and that is core to America’s national interest.   

Key Takeaways from the Supply Chain Summit

In terms of what that means from the standpoint of supply chain, acquisitions, and compliance practitioners, the summit pointed to several policy themes to watch:

  • Industrial policy is no longer a forbidden phrase in Washington. Long-term industrial planning has long been associated with planned and managed economies, but there is an acknowledgement among political leaders that even a strong market economy needs an industrial strategy and related policies that will help shape the future of critical industries.
  • The tools of government are going to continue be used to both incentivize new and expanded supply sources and restrict existing elements of supply chains. Industrial policy leads to government “carrots and sticks” in terms of financing instruments, other incentives, and regulatory restrictions on business, technology, and research relationships. This has been true both in the Biden and Trump administrations and will continue.   
  • Supply chain resilience and cybersecurity are interconnected issues. The availability of critical supplies is dependent on functioning digital technology; and the protection of sensitive information requires strong cybersecurity across the supply chain. Policy and regulatory frameworks are increasingly being developed to account for those connections.
  • Information sharing is necessary for greater visibility. One of the major aims of the Commerce Department is to better understand the status of critical industry supply chains in near real-time and share that information more broadly. That can’t happen without industry input, and the macro analysis that the U.S. government is conducting needs to be pair with enterprise-level supply chain visibility to be maximally effective. This is an area that Exiger is accelerating through our product development roadmap.   
  • International alliances will increasingly be utilized for building trusted supply chains. One noteworthy announcement that was frequently discussed at the summit was the recent agreement on ICE Pact where the governments of the U.S., Canada, and Finland committed to a collaborative effort to build best-in-class Arctic and polar icebreakers and other Arctic and polar capabilities by sharing expertise, information, and capabilities.  Expect to see more of these arrangements for countries to collaborate on filling key supply chain gaps.
  • And, finally, the private sector must have a seat at the table. This should be self-explanatory; but as the source for innovation and the key driver of creating economic opportunity, the private sector needs to have access to help set priorities and co-solution with the government.

 

Exiger will remain engaged across the U.S. government and in the policy community on these increasingly important issues. We will help shape the future of supply chain and resilience by bringing data to bear to increase transparency on supply chain risks and help identify gaps that will strengthen security and resilience of critical enterprises and their supply bases.  The work that our clients do is making trusted supply chains possible, and our tools will continue to develop to enable that goal. 

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