Resilient Supply Chains: Key Elements of National Security and Economic Prosperity

President Biden has renewed the focus on strengthening the resiliency of U.S. supply chains and in doing so has redrawn the priority list for many business leaders across the nation.

Announced on February 24^th, President Biden’s 100-day review of U.S. supply chains will be focused on reducing the country’s dependence on nations like China and others around the globe who to date have provided most strategic commodities – semiconductors, pharmaceuticals and strategic minerals including rare earth metals - essential to drive a modern and secure U.S. economy.

This is no small undertaking. Beyond the complexities of mapping global supply sources and analyzing optimal trade lanes, there are also pressing practical implications: semiconductor shortages have idled automotive manufacturers across the country, placing additional immediate-term burdens on an already battered U.S. economy. “Building resilient supply chains will protect the United States from facing shortages of critical products,” according to the White House. “It will also facilitate needed investments to maintain America’s competitive edge and strengthen U.S. national security.”

In addition to the key commodities prioritized in the 100-day timeframe, the President’s order will also initiate industry-specific reviews in the defense, life sciences, technology, transportation, and energy sectors, with those studies to be completed within one year. Potential outcomes of these reviews could include changes to tariffs and duty rates, quotas, trade agreements, or incentives to ‘on-shore’ manufacturing capacity in the U.S. 

In short, it has never been more critical to design, build, operate, and maintain resilient and responsive global supply chains. But beyond supporting these government initiatives, what can organizations of all types do today to mitigate risk and strengthen security in the context of global commodity flows? Below we explore 3 key steps that can help in this journey.

Identify – Know the global supplier market to make more strategic and resilient sourcing decisions

Businesses know their own supply chains well but may not know the full range of supply sources that exist globally. There may be qualified suppliers operating outside of a preferred country or common trade lanes. Research and decision-support tools, like Descartes’ Global Trade Intelligence platform, capture worldwide import and export flows and present a broader pool of potential global trading partners. With this information, business can quickly find alternative suppliers that are already trading in their preferred region or elsewhere across the world.

Analyze – Choose the right supply chain path to maximize profit

Understanding the potential landed cost of alternative suppliers is critical to managing costs and enhancing bottom line performance. Today’s volatile tariff and regulatory landscape makes this exercise more difficult than ever. To get to the best options, sourcing professionals need to model the costs, including the variables of duty and tax rates, as well as the implications of trade agreements or quotas on particular goods. Descartes’ Global Trade Intelligence platform delivers the compliance analytics necessary to support this landed cost modelling, helping businesses keep pace with regulatory and geo-political changes, especially during times of supply chain disruption.

Vet – Review trading partners to avoid fines and manage ongoing compliance

With penalties that can range into the millions, reviewing potential trading partners against government sanctions and denied party lists is a core element of the supplier vetting process. This due diligence can be a daunting task since there are many continuously changing lists, and risk assessments must also include country-level, organization specific, and individual sanctions listings. Trade restrictions can also extend to businesses majority-owned by sanctioned parties. With all this data to consider, sourcing and compliance professionals can leverage the unified and consolidated risk-management content contained in Descartes’ Global Trade Intelligence platform to accelerate the vetting process, reducing risk, and accelerating the integration of new suppliers and customers into the global supply chain.

Whether catalyzed by another global health crisis, or ongoing geopolitical volatility in the form of trade wars, country sanctions, or more restricted companies and individuals, future disruptions to the flow of goods are inevitable. Successful organizations must act now to address this volatility and do everything possible to mitigate its negative impact on their business, not only for the sake of economic prosperity, but National Security as well.

How Descartes Can Help

Descartes can help businesses reduce supply chain disruptions by tracking import and export patterns, keeping pace with changing trade policy changes, managing trade compliance requirements, and more.

Organizations across all industries benefit from our solutions that help to initiate growth strategies, explore new markets, simplify trade data research, better classify goods, reduce duty spend, and minimize the risk of transacting business with denied parties.

Supply chain disruptions will occur, but with Descartes’ solutions in place, businesses will be able to build more resilient supply chains and be better prepared to minimize the impact of future disruptions.