Supply chains based on high levels of redundancy can have a short-term negative impact on the bottom line; corporate boards and shareholders have rejected them in the past.
Although a variety of concerns, such as the firm’s financial health, macroeconomic conditions, SEC reporting requirements, and investor impatience, may serve as impediments to such a perspective, assuming a longer-term perspective may make investing in resilience a superior value proposition.
In response to real-time demand analyses, new information and industrial technologies have a lot of potential for enhancing resiliency and productivity.
In order to maintain inventory balance, real-time demand data can be used to decide raw material, work-in-progress, and final product transshipment decisions.
Real-time decision-making can also help to rebalance relocatable production. For dispersed multi-facility additive manufacturing systems, 3D-printers, for example, can be transferred as demand shifts regionally, while product diversification (postponement) is delayed for a more agile supply chain.
As a result, supply chain performance combines the benefits of distributed supply chain systems (having inventory and/or manufacturing capacity close to demand to enable quick fulfillment) and centralized supply chain systems (to enable economies of scale, inventory and risk “pooling,” reduced total safety inventory, and lower total capital expenditures).
This performance contrasts with lean supply chains, which aim to save money but may struggle to respond to and recover from unexpected and disruptive occurrences.
A data-driven supply chain network that is dynamically resilient will identify, respond to, and recover from such changes swiftly by modifying manufacturing capacity as needed. Depending on the situation, such a supply chain will be resilient and either lean or agile.
The role of government in supply chain resilience
The United States’ research and development programme has already prioritized supply chain resilience.
The White House Office of Science and Technology Policy has called for the development of resilient advanced military capabilities as well as improved resilience of critical infrastructure and U.S. advanced manufacturing to natural and man-made disasters, including cyber-attacks and exploitation of supply chain vulnerabilities, in its R&D priorities for federal agencies for fiscal year 2021.
Following the COVID-19 pandemic, officials are pressing for key goods supply chains to be reshored to the United States, particularly medical supplies and high-tech products. However, completely reshoring such supply chains is not the solution.
Domestic suppliers may be affected as well. And such a move would make American businesses less competitive, putting them at odds with enterprises in other (often antagonistic) countries that continue to embrace globalization and support vital industries with aggressive industrial policies such as subsidies and currency manipulation.
Complete reshoring would hinder its openness to ideas, people, and sourcing of parts, and may not make the US economy more resilient to pandemic-type shocks.
The result could be reduced appeal of US products in foreign markets, increased costs to US consumers, reduced shareholder value for investors, and erosion of the US’ global innovation leadership.
A supply chain’s design and functioning are heavily dependent on the product. Supply chains for functional items with lengthy life cycles and low demand variability must be cost effective and offshored.
Market-responsive supply chains with nearshoring or domestic sourcing and manufacture are required for innovative products with short life cycles and relatively high demand variability.
The federal government must pay special attention to supply chains for products that are vital to military, security, health, and national competitiveness.
Rare-earth metals, artificial intelligence, hypersonic weapons, 5G technologies, semiconductors, medicines, synthetic biology, and specialized medical equipment are examples of such items today.
The competitiveness, resilience, and security of these supply chains, which encompass R&D, planning, procurement, manufacturing, distribution, and maintenance, as well as the development of a national manufacturing ecosystem of small and medium businesses, are critical to the United States’ national security.
This necessitates an understanding of a given industry’s “clock speed,” which refers to the rate at which new products, processes, and organizational structures are introduced; government and regulatory processes; and manufacturing operations for repair and maintenance, which are frequently not synchronized across supply chains.
Knowledge-sharing within the supply chain
The federal government might benefit from embracing best practices and cutting-edge initiatives established by industry and academics in its efforts to strengthen the supply chain.
The transfer of best practices should not be limited to the private sector. Military logistics can teach commercial supply chains a lot, including how to best deliver vaccinations in the case of a future pandemic. The old saying that the public sector must climb to the level of the commercial sector no longer holds true today.
There is a convergence of policy management and business, and corporate leaders have much to learn as they deal with an increasing number of constituencies and comply with demands for greater transparency.
We’ve witnessed firsthand how public-private collaborations may help with supply chain resilience efforts.
One such partnership is Texas A&M University’s new SecureAmerica Institute, which is made up of a network of roughly 100 partners from various technological areas within the manufacturing base.
To build on policy, economics, and supply chain management research and education, the programme adopts an innovative interdisciplinary paradigm.
The United States has tremendous opportunity to increase the competitiveness, security, and resilience of its supply chains by bringing academics, business, and government together to boost its worldwide technical, military, economic, and geopolitical might.
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