Supply Chain Resilience: an Urgent Priority
The cascading impact of disruptions to international supply chains has emerged as a key threat to the nation’s resilience, undercutting the maintenance and repair schedules of critical infrastructure sites and limiting access to affordable healthy foods and consumer goods.
Though the public at large generally understands the problem as one of delay and inconvenience, producers and supply chain experts are acknowledging that these problems are worsening and could soon lead to outages, breakdowns, and increased resource insecurity.
In efforts to address this, state and local leaders should gain awareness of the evolving supply chain situation and develop mitigation plans. This solution is not easy; however, emergency management has a key role to play in the ongoing communication among stakeholders to increase visibility and the development of cross-sector strategy aimed at supporting the private sector and prioritizing corrective measures.
In Rochester, Minnesota, power utility operators recently reported that the lead time on securing a fiber-optic cable has gone from four months to more than a year. Earlier this year, the United States (US) Department of Commerce (DOC) released a report warning that the semiconductor supply chain was in a “fragile” state with manufacturing fabrication plants operating at more than 90 percent capacity given the high-demand for computer chips for a number of products – from your cell phone to your car, to critical medical devices. To solve these issues, private sector leadership is also critical – the supply chain is almost entirely composed of private sector relationships that are invisible to other sectors.
Inflation of materials for critical infrastructure has forced several states to reassess road and bridge repairs for 2022. For example, the Michigan Department of Transportation regularly plans for a four percent inflation in its budgets, but is now charting a six to seven percent increase above the original budget. Additionally, a number of pressures on food markets – from geo-political crises to the COVID-19 pandemic – have also continued to increase prices and lower access.
Understanding the 21st Century Supply Chain
A supply chain is the network of production and enterprise that unify to create a product and deliver it for sale to the end user. The chain can include a truck driver who transports a product across state lines. Increasingly, it has included online distribution agents who may rely on multiple delivery agents like Amazon.
Based on our experience, once disorganization sets in – the compounded impact of missed delivery and production dates – products can sit in a warehouse due to a delivery backlog, and because no single actor is working to mitigate the impact of the disruption, prioritization is market-driven and can take time, causing gaps in service. In efforts to confront this challenge, the US House of Representatives passed The America Competes Act, providing over $100 billion to strengthen domestic supply chains.
However, at this time, it is unclear how comprehensive federal action will be and it will likely take time to have a meaningful impact on immediate circumstances.
Supply Chain Resilience at Regional and Local Levels
Even though addressing supply chain issues takes time, there are things regional and local leaders can do to help strengthen their supply chain mitigation efforts. Here are three ways local and regional leaders can build solutions and prepare to make the best use of any new incoming resources.
1. Leverage regional/multi-jurisdiction organizations to develop supply chain resilience work teams or work groups that include both private sector leaders and non-governmental organizations.
Regional planning, governance, and coordinating institutions were designed to confront complex, cross sector challenges and have established many of the key relationships necessary to gain situational awareness. Developing a cross-sector supply chain work group to better understand your region’s unique challenges is a strong first step.
The Centralina Council of Governments, an organization of more than 70 municipalities located in the Central Piedmont of North Carolina, partnered with the Center for Regional Economic Competitiveness (CREC) to analyze which industries are connected to one another through supply and distribution.Partnering with a regional Council of Government to approach the problem of situational awareness could be a key strategy to gain research capacity, convening power, and regional understanding..
This approach can also synergize efforts to identify and secure resources. For example, the recently restarted Regional Catastrophic Preparedness Grant Program (RCPGP) is a federal grant program to close known capability gaps and support local actors in developing solutions.
2. Identify key infrastructure owners/operators and proactively support dynamic private sector continuity planning for all elements of production.
Regional trade organizations, industry groups, and private sector stakeholders can show leadership by proactively mapping their supply chains and identifying key pressure points. This does not have to be a novel effort, but built on the existing capability of partner organizations to ensure they are able to continue their essential services and have an avenue to create awareness of actual or potential disruption. Private sector actors can collaborate to develop data dashboards that chart shortages of key resources, changes in suppliers, increasing demand, and anticipated downstream impacts.
Increased situational awareness and an active forum for information exchange and advocacy allows a more coordinated community-level response. Supply chain experts are exploring how public-private partnerships could be developed to support and finance these measures, even while acknowledging the risks of introducing top-down approaches.
Based on our experience working through similar challenges with our clients, there are limitations of approaching this task solely as an exercise in documenting corporate relationships and business practices. One of these limitations is that relationships must be understood in the context of shock (disasters and unanticipated events) and community stress (the challenges experienced by communities due to specific characteristics and local economies).
3. Create regional, cross-state compacts for the sharing of key and critical goods and services, supported by government coordination and communication.
Developing policies that promote resource sharing and resource re-routing could extend the viability of existing products and maximize current resource levels. We assert that government can play an important role in communicating to the public to prevent and limit hoarding and over-buying. Typically, disaster responders have worked with state and federal government officials to shift resources after a shock and to restore the functionality of the private sector. Prep-planning and policy support for these maneuvers would increase efficiency.
In this non-traditional disaster environment, we need to best understand how the government can best support and restore conventional systems to meet community needs.
Mitigating disruptions begins with building relationships, gaining strategic awareness and collaborating across sectors.Global supply chains have been disrupted now for more than two years and, given continued geopolitical impacts, there is seemingly no end in sight. Leaders at every level – even those whose portfolio does not traditionally include commerce – will need to quickly plan and prepare for these impacts.
Harrison Newton is a Senior Managing Associate at Hagerty Consulting. Prior to joining Hagerty, he spent nearly a decade in public service with Washington, DC. During his tenure with DC, he was responsible for establishing the District’s first Resilience Office, where he ultimately served as the Deputy Chief Resilience Officer responsible for promoting resiliency programs across various District departments and agencies.
Tory Littlefield is a Managing Associate within the Preparedness Division at Hagerty Consulting. Prior to joining Hagerty, Mrs. Littlefield spent seven years as an emergency management planner in Vermont with a regional planning commission.