With the launch of the White House Council on Supply Chain Resilience on Nov. 27, President Biden has announced more than 30 new actions — and over $500 million in investments — to strengthen the country’s supply chains, lower costs, and secure key sectors. Resilient supply chains are fundamental to a thriving economy. This was painfully evident during the COVID-19 pandemic when supply chain disruptions wreaked havoc on companies worldwide for years.
Given the complexity of doing business in today’s global landscape, this development presents opportunities and risks for companies doing business in the United States.
Decoding What President Biden’s Supply Chain Resilience Council Means
Join us on Thursday, November 30 at 2 p.m. EST for a live webinar exploring the impact of the White House Council on Supply Chain Resilience spearheading more than 30 new actions and millions of dollars in investments to mitigate drug shortages, share supply chain data, and support access to reliable energy and critical technology.
Understanding the Risks and Opportunities
The newly established Council, co-chaired by the National Security Advisor and National Economic Advisor, includes representatives from various U.S. government agencies and is spearheading the actions. It aims to integrate government-wide efforts to ensure long-term supply chain resilience.
Highlighted among these initiatives is the expansion of the Department of Health and Human Services’ (HHS) authority via the Defense Production Act. This move, backed by an initial $35 million investment, aims to increase domestic production of essential medicines, mitigate drug shortages, and improve health security.
The energy and food sectors are bound to benefit too. The Department of Energy announced $275 million in grants to revitalize communities affected by coal mine or coal power plant closures via investment in clean energy supply chains. Similarly, the Department of Agriculture is investing $196 million to strengthen domestic food supply chains.
“Capturing the benefits from the new support packages will depend on the agility and flexibility of organizations to adapt their supply chains to comply with the new requirements,” says Cvete Koneska, head of advisory at Dragonfly, a FiscalNote company. “In the short term, it is likely to lead to more costs and operational disruptions, as long-term benefits and national security are balanced against the short-term gains from existing market positions abroad.”
Additionally, cross-governmental collaborations aim to improve supply chain monitoring. The Department of Commerce, Department of Transportation (DOT), and other agencies will work together to develop tools for assessing supply chain vulnerabilities and devising targeted interventions.
Another area of enhancement highlighted in the action plan is monitoring existing and emerging risks. The launch of the DOT Multimodal Freight Office as part of the Infrastructure Investment and Jobs Act and the Department of Homeland Security’s Supply Chain Resilience Center are steps aimed at ensuring the security of supply chains vital for the delivery of essential services.
“It’s not always within your power to control these risks. Though you may have a contractual relationship with third-party suppliers that gives you some leverage, their suppliers expose your brand to risk that you have very little control over,” says Koneska.
Going Beyond US Borders
The White House Council on Supply Chain Resilience’s initiatives are not only domestic. In an increasingly interconnected world, the strength and resilience of American supply chains are largely reliant on international cooperation.
One notable measure is the establishment of early warning systems for supply chain disruptions. This has been done in conjunction with several key trade partners: the European Union, Japan, South Korea, Mexico, and Canada. These systems aim to help the U.S. and its partners identify potential issues before they escalate into significant problems that could disrupt commerce, allowing for pre-emptive action and mitigation.
In addition, new supply chain agreements have been concluded under the Indo-Pacific Economic Framework, and other multilateral partnerships aiming to diversify global supply chains reducing reliance on high-risk foreign suppliers, and enhancing domestic production of critical goods.
These White House initiatives are indicative of a wider global trend of governments taking measures to secure national supply chains for critical industries. “Other governments are likely to follow the U.S. lead — or to retaliate — with similar acts, which will increase the regulatory burden and obstacles for multinational companies,” says Koneska. “As a result, companies will need to navigate an increasingly complex global landscape of regulations, protectionist measures, and trade restrictions, leading to additional costs, delays, and business disruptions.”
Ultimately, more complex supply chains will have more costs, which will likely be passed on to customers. According to the Changing Global Supply Chains: MNC Survey Results & Implications report from global market intelligence and advisory firm FrontierView, a FiscalNote company, this is a key concern for 68 percent of the companies surveyed. “Despite some of the incentives offered by various governments (U.S. and others), ultimately having less efficient, less centralized sourcing and complying with localization requirements is going to add to cost of goods sold (COGS) pressures for businesses. We expect this to be a long-term driver of higher inflation,” says FrontierView’s Chief Research Officer Martina Bozadzhieva.
The Quadrennial Supply Chain Review
The Council is tasked with completing its first quadrennial supply chain review by December 31, 2024. This review's main purpose is to reassess the "criticality" of various industries, sectors, and products through a national and economic security lens. Essentially, the goal is to determine which areas of the economy are most vital to maintaining the smooth functioning of the country and its economic well-being. This includes, but is not limited to, sectors like health, energy, food, technology, and defense.
This framework will play a key role in determining where federal resources, funding, and policy attention will be directed over the next four years, offering key insights for organizations to position themselves for future opportunities. Knowing which industries or sectors are deemed "critical" by official government criteria allows organizations to more effectively foresee policy patterns and future investments.
Staying Ahead of Emerging Supply Chain Policy and Risk
To ensure compliance with these new supply chain priorities and take advantage of the opportunities coming from the support packages and investment incentives from the U.S. government, having the right tools is vital.
“Companies being aware of regulatory developments and then what companies they're working with in those markets being impacted is going to be critical,” says Joshua Haecker, FiscalNote’s head of product, global intelligence.
Legislative tracking and intelligence solutions like CQ and FiscalNote enable companies to stay abreast of any policy shifts that might impact their operations. CQ’s non-partisan news and thorough analysis help provide companies with the insights to make informed decisions. FiscalNote allows you to track regulatory changes on a global scale, so you have advanced warning and visibility into changes impacting supply chains or a myriad of other operational risks.
Knowing what’s happening at the legislative and regulatory levels is one piece of the puzzle; the other is knowing what’s happening within your complex supply chains.
“Many companies do not have sufficient visibility of their own supply chains … and this blindspot is likely to be a major risk in attempting to disentangle their supply chains and adapt to government requirements,” says Koneska. “Conversely, those equipped with supply chain data and the necessary technology will be best placed to benefit from the opportunities provided by the U.S. government’s new focus on national supply chains.”
FiscalNote Risk Connector gives corporations the ability to uncover hidden risks, providing detailed, auditable risk data in areas such as compliance, vendor security, labor violations, and public trust. Risk Connector scans millions of websites every 15 minutes. It establishes connections across industries, detects emerging risks, monitors their evolution, identifies trends, and tracks their emergence. These proactive solutions track risks that arise or have already occurred within a network of vendor relationships.
“FiscalNote Risk Connector gives a comprehensive view of the entire supply chain,” says Koneska, “extending further into the fourth and fifth tier and beyond.” This way, businesses can proactively navigate through potential risks and disruptions, in line with President Biden’s announcement.