What To Expect from Supply Chain When Biden Becomes the President?

Joe Biden plans to elevate domestic manufacturing to build ‘more resilient’ U.S. supply chains in the wake of future crises. Let’s read the complete story.

Joe Biden has chalked out a ‘supply chain blueprint’Opens a new window for the U.S., which will ensure that the country does not face the dire situation of product shortages in times of crisis such as the COVID-19 pandemic. In the wake of the long-standing battle against the pandemic, Biden seeks to utilize the Federal government machinery to secure sufficient medical supplies, provide timely treatment measures and propel vaccine development programs across the U.S. He also plans to bring about a fundamental shift in the production domain, where critical products are domestically manufactured, which would open up the job market and ensure that the U.S supply chains are guarded against national security threats.

U.S. supply chain risks go beyond the current urgent needs of medical supplies and equipment. The U.S. is heavily dependent on foreign suppliers like China for a range of critical products, thereby exposing its supply chain vulnerabilities. It, therefore, requires a more robust domestic supply chain strategy across a diverse spectrum, including electronics, telecommunications, raw materials, semiconductors and related technologies, and energy and grid technologies. 

The current essential supplies that the country needs may be different from the essential supplies needed in the future as the technologies and markets evolve with time. Therefore, Biden plans to organize a wholesome government-wide procedure to manage supply chain vulnerabilities, identify the essential products exposed to these vulnerabilities, and take immediate corrective steps to close down the ‘vulnerable gaps’. He will work closely with the private sector ventures to improve supply chain productivity and avoid the economic losses incurred through it.

Biden’s ultimate plan focuses on aspects of self-sufficiency and resilience. He wants to ensure that the U.S. doesn’t face a shortage of essential goods, even if it runs into crises in the future or if a national need arises. Biden strives on domestic production, strategic stock management to meet the needs, employing smart plans to uplift the production capacity during the crisis period, and working closely with allies. Upon resuming office, Biden plans to initiate the above process with a 100-day review method to identify security risks across America’s supply chains. Biden will also request the Congress to adopt the Critical Supply Chain Review process permanently.

What Is Biden’s U.S. Supply Chain Policy?

After becoming president, Joe Biden has his tasks cut out:

• Biden plans to use the federal government machinery to build a resilient supply chain by promoting domestic manufacturing of critical products.
• He wants to ensure that the U.S. has the critical supplies of the essential goods at all times, which will allow them to withstand future crises.
• The president-elect also wants to ensure productive collaboration with the allies to protect their supply chains, and new markets open up for U.S. exports.

We’ve seen what happens when the federal government fails to secure sufficient supplies of critical products like PPE — and we can’t let it happen again. So today, I’m releasing my plan to rebuild U.S. supply chains:

— Joe Biden (@JoeBiden) July 7, 2020Opens a new window

The key hallmark of Joe Biden’s policy is the urgency for the U.S. to reinforce its supply chain woes by rectifying the damage inflicted upon by the COVID-19 pandemic and ensuring that the nation is well equipped with the tools to tackle future pandemics or crisis of any sort.

Also Read: 90% CPGs To Modify Their Supply Chain Due To COVID-19: Microsoft and Bain & Co. Study

Focus on Defense Production Act

Biden states that, at least in the short term, he will make appropriate use of the Defense Production Act (DPA). DPA is a legal right bestowed upon the U.S. president for accessing emergency authority over domestic industries, where the president directs companies and resources to support national security. DPA was used by Donald Trump to increase the production of certain essential supplies during the COVID-19 pandemic.

Biden plans to deploy DPA to push American companies to manufacture adequate volumes of essential and critical products, such as N95 masks and other articles such as personal protective equipment (PPE). Biden, on directing the companies for producing essential items, he will then use the 100-day review process for determining the optimal way forward, keeping in mind the significance of long-term decision making.

Biden also plans to exercise the DPA provisions to its “fullest extent” – to revamp and rebuild the domestic manufacturing capacity by absorbing the lessons learned during COVID-19 – which Biden claims that the Trump administration seemed to be “dragging its feet on”.

Biden also plans to collaborate with the American private sector and continue competitive public-private partnerships to encourage innovative manufacturing technologies and boost production capacities.

Encourage the production of medical supplies

As the COVID-19 pandemic jolted the U.S., throughout 2020, the U.S. Department of Health office Biomedical Advanced Research and Development Authority (BARDA), received substantial financial support of billions of dollars to fight against the pandemic. BARDA further distributed the funding amongst numerous companies trying to control the consequences of the crisis.

Biden assures that BARDA will continue to engage in such activities, with the prime focus on ‘rebuilding’ U.S. medical production potentiality. 

While identifying a potential COVID-19 vaccine remains to be the top agenda of Biden, he also claims that he will collaborate with large healthcare purchasers like Medicare and MedicaidOpens a new window to ensure that all the key medicines and clinical devices are priced fairly and transparently, in a manner that is not burdensome to masses.

Congressman Frank Pallone’s recent tweet hinted support in favor of Biden’s supply chain plans.

While there are still hurdles to overcome, this is welcome news and should give us hope. Biden’s plan to appoint a supply chain commander to equitably distribute an eventual vaccine will be critical to crushing the virus.

— Rep. Frank Pallone (@FrankPallone) November 9, 2020Opens a new window

Biden’s supply chain vision highlights that pharmaceutical and medical device supply chains have borne the brunt of the pandemic and have proved to be vulnerable during the current crisis. However, he further adds that the “world-class productivity” of American manufacturers implies that domestic production can be amplified. Medical supply chains can be secured at affordable prices, thereby allowing the consumers to avail of the medical essentialities at reasonable prices.

Biden also plans to utilize targeted financial incentives – including tax credits, R&D support, and matching funds at national and local levels. Such incentives would encourage U.S. companies to manufacture designated essential products.

Also Read: Apple Supplier Foxconn Sets Up Task Force To Beat Rival Luxshare

Handle future shortages

Biden’s vision for American supply chains has laid out several ways for mitigating the impact of future production crises. These include increasing the quantity of federal stockpiles of medical essentialities and ensuring that companies have plans in place to address future disruptions. These plans, where necessary, may involve imposing restrictions on imports from countries like China and Russia.

On similar lines, Biden proposes how he will set up a framework for the future that will enable ‘surge manufacturing’ in situations such as supply chain disruptions. Biden thereby outlines a skeleton on how the U.S. can upscale its production capacity to meet the rising demands, if necessary.

He plans to adopt an upscaling strategy by:

• Providing compensation to companies that maintain excess production capacities for certain products 
• Encouraging U.S. firms to create databases for designs of the critical supplies 
• Using legal authorities to make sure relevant Intellectual Property (i.e., designs and patents) can be authorized quickly during subsequent national crises.

Lastly, Biden’s plan for handling future shortages include setting up a new ‘Critical Supply Chains Workforce Development Fund’ to invest in the workforce skills needed to ensure production can be quickly ramped up in the future and to make sure that shortages of important medical equipment are minimal.

After winning the 2020 U.S. presidential elections, Biden has got the chance to implement these policies. It seems likely that the importance of domestic manufacturing, curtailing imports, and bringing production closer to home will be the way forward for Biden’s administration.

Conclusion 

With Joe Biden at the helm, U.S. supply chains are set to undergo a rejig, where the focus will be on encouraging domestic manufacturing and cutting down the dependency on foreign suppliers like China for essential supplies by reducing imports of products critical for national security. Besides, he may encourage supply chain corporations to employ Americans to produce vital supplies and equipment. This will secure critical U.S. supply chains for future times of crisis.

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