Biden Administration ‘Doubling Down’ on Supply Chains

President Joe Biden, shown signing an executive order in 2021 calling for risk assessments of U.S. supply chains, followed up this week by announcing 30 initiatives designed to strengthen them. (Photo credit: Getty Images)

Supply chains took center stage Monday, as President Joe Biden announced 30 initiatives designed to strengthen them, as well as, he said, “lower costs for families and help Americans get the goods they need.”

Risk management is a theme of the initiatives, which include launching a new Council on Supply Chain Resilience to ensure that supply chains remain secure, diversified and resilient, and invoking the Defense Production Act to boost essential medicine production in America. Additionally, there are plans to increase joint efforts with other nations to improve resilience in global supply chains.

“Today, our supply chains are stronger than ever, with backlogs, bottlenecks and shipping rates at a 25-year low,” Biden said Monday while addressing the new initiatives. “We’ve created 14 million new jobs, including 800,000 manufacturing jobs. And the unemployment rate has stayed below 4 percent — below 4 percent for the longest period — the longest stretch in over 50 years. …  But we know the prices are still too high for too many things, that times are still too tough for too many families. We’ve made progress, but we have more work to do.”

Among the other actions Biden has implemented during his tenure are an executive order to bring supply chains back to the U.S., the bipartisan Infrastructure and Investment Jobs Act and the CHIPS and Science Act. Several weeks ago, he signed a supply chain agreement with 13 countries in the Indo-Pacific: “This agreement is going to help us identify supply chain bottlenecks before they become the kind of full-scale disruptions we saw during the pandemic,” Biden said.

Inside Supply Management^® Weekly asked Joseph Sarkis, Ph.D., MBA, professor of management in The Business School at Worcester Polytechnic Institute in Worcester, Massachusetts, for his analysis regarding the initiatives:

Question: Are these measures coming at the right time to make a difference?

Answer: This is a very good question. I don’t think there is a bad time. It seems that the Biden administration is doubling down by making this public statement. I see a number of initiatives … are plans and seem to be a listing of various on-going initiatives and projects. 

To me, it just seems like, “We are still making progress; we have not forgotten about the supply chain.” This is good in that it keeps the supply chain with a number of agencies involved in these efforts. It is not clear how much is truly to be invested, the largest amount is an economic package of (US)$750 million, but I think it is more of an economic development package with some elements of supply chain. 

But, when there are this many agencies involved, it is expected that some additional financial flows will arise. I think the timing won’t make a difference as much as the actual investments in our supply chains. They are going about it in the right way of making this a multiple-agency effort and not just (the Department of) Commerce or one group.

Q: Are the initiatives likely to result in lower costs for families?

A: I think the lowering of costs and prices will come from other sources than the government. Government is about building resilience and continuity of supply chains through risk management. Risk management and building resilience costs money and resources. This likely goes against lower prices, but does allow for greater availability.

Q: Risk management seems to have emerged as the No. 1 or a high priority for supply chains since the coronavirus pandemic — and risk management seems to be the No. 1 theme of Biden’s actions. Your thoughts?

A: My thoughts are that this is a knee-jerk reaction to what I view as relatively short-term and focused shortages. Inflation occurred for a number of reasons (such as the infusion of public funds to get the economy kick-started). Initial supply chain disruptions did cause some of it. I strongly believe that organizations and society will be more concerned with costs in the long run.

Right now, the idea of increasing capacity to reduce costs will mean a “fat” supply chain, but if companies have to foot the bill, you will see efficiency return more quickly. 

Yes, the pandemic is still fresh on our minds and there are some scarcities, maybe due to pent up demand, but eventually normal equilibrium will bring back some of the traditional thoughts related to efficiencies. Some of the less traditional thought has to do with visibility and data analytics (and maybe artificial intelligence).

Q: How do these measures compare to what other governments have implemented to improve supply chains and consumers’ access to goods?

A: Many of these initiatives do not have a specific budget attached to them. Some of them do, but they are more defense related or government related. There is a question on whether consumer access is the goal with Defense Production Act efforts. The joint efforts with Western nations to improve resilience in global supply chains is an effort that will require careful attention. The global supply chain initiatives really provide equal opportunity and footing. 

What is missing — and something that is very important — is the linkage to China and how it is not mentioned. The implicit belief is that China is a problem to U.S. supply chain resilience, but the consumer supply chain is heavily dependent on China. 

I believe that Europeans and the rest of the world are more open politically to having China as part of their consumer supply chains. China has the Belt and Road Initiative, which has allowed it to expand globally in its supply chain resources and distribution across about 125 countries. Europe and China’s relationships are also relatively strong. … China’s Council for the Promotion of International Trade is in its second year of planning, and when the Chinese government wishes to invest, it invests heavily.

Will this be better for consumers globally? Yes, if they do business with China.