January 2022 | Commentary | Supply Chain Security

National Security Starts With Individual Manufacturers

Tags: Ocean, Security, Transportation

Shortages of personal protective equipment (PPE) and other critical supplies like pharmaceutical ingredients and materials used in key technologies during the earliest days of the pandemic prompted the Biden-Harris Administration in 2021 to outline steps strengthening critical supply chains. It's a long-overdue move that to some transportation experts may not go far enough in protecting national security.

Overly concentrated supply chains are the definition of national insecurity. The weeks of empty meat cases and grocery shelves experienced during the pandemic prove the fragility of the basic supply chains that impact every American every day. But we won't achieve national security until each one of our citizens is made secure by the free and dependable flow of necessities.

During disasters, even "safety" inventory doesn't stop the run on our stores. What businesses must do is have more resilient and redundant supply chains, with alternative resources and suppliers. That way we will not be entirely reliant upon China, slow ocean freight, and slow port operations for so many critical goods.

We must begin to address this situation, or we can never minimize the risks that bare necessities may be cut off from all small communities and urban neighborhoods. Until we do that, we just won't be there.

Not every American knows how dire shortages of critical supplies became in 2020.

The Biden-Harris Administration's Supply Chain Disruptions Task Force outlined how to secure rare minerals, the raw materials of pharmaceuticals and lithium for batteries. These items are also critical to our national security.

During the early days of the pandemic, the availability of life-saving essential items was threatened, and the role of the global supply chain in national security got real. Medical equipment and PPE became scarce commodities when they were most needed to save lives.

If all these materials are dependent upon China exporting them to the United States, the risk to our economy and our daily lives during an armed conflict, heavy-handed diplomacy, or a more serious pandemic becomes clear.

Most of our critical supplies are dependent upon a potential adversary. China's leadership watched this leverage play out during the pandemic's shut down of the economy and saw how the U.S. economy and citizenry could potentially be choked without firing a shot.

Government can only do so much in protecting supply chains. The Biden-Harris Administration is instituting the big changes that only a government can do. But if we define national security through the eyes of 335 million Americans, more needs to be done to secure global supply chains all the way down to the individual level.

If this is the case, the main actors charged with maintaining supply chains that protect individual security must be the individual producers, manufacturers, and merchants.

The supply chain decisions of sellers have tremendous impact. The collective role of individual companies in securing the global supply chains is everything. Through diversification of transportation and logistics resources, inventory management practices and sourcing strategies, they can bolster national security in a way that the government isn't equipped to do on its own.

Diversifying transportation partners is a key component. During the pandemic, producers with limited relationships with trucking companies were left with few options when their carrier partners failed. Their fates were tied.

For that reason, Tucker Company Worldwide favors a diversified approach that leverages micro-carriers, readily available and easily adaptable in changing conditions. Economics of the marketplace are favorable for small fleets to start and grow. The growing availability of multiple owner-operator trucking companies, and small to mid-sized carriers insulates manufacturers from uncertainties and provides options during disruptions like we saw during the pandemic.

To build a diversified transportation strategy, manufacturers have an incredibly challenging time hiring these carriers on their own. There are too many. They may never encounter that carrier again, and with the myriad of contracts, insurance, and other variables, it's too much to manage.

Alternatively, they can work with freight brokers who work with carriers of all sizes and specialties and will vet and negotiate on behalf of shippers.

Retailers are holding more safety stock and increasing lead times. Inventory strategies that hold safety stock and disperse inventory geographically are another means of ensuring supply chain continuity. As a result of pandemic-related shortages, 43% of companies surveyed by Gartner said they were increasing inventory and 11% planned to do so within two years, indicating a major move away from just-in-time practices is underway.

Companies that rely on often-unpredictable ocean transport are driving an increase in production lead time to 88 days—the highest level since 1987, according to the Institute for Supply Management.

Building on the Biden-Harris Administration's call for reshoring.

A significant part of the Biden-Harris Administration's plan supports domestic sourcing strategies for key materials and products, but what about the basics individuals suffered without during the COVID crush? Promoting domestic production mitigates supply chain risk at the source.

Diversifying manufacturing origins is another option. Nearshoring options in Central America and the Caribbean can mitigate the risk of being too heavily leveraged in source countries, trade lanes, and ports of entry.

Puerto Rico is an example. Its pharmaceutical industrial base is experiencing a lift post-pandemic. Shifting production closer to home enables companies to sidestep port congestion in the China to Los Angeles-Long Beach lane, too. America must encourage and incentivize business to manufacture in multiple locations or risk watching a dangerous, dysfunctional supply chain we created ourselves one day cripple the nation.

Landed transportation is the national security linchpin. The success of inventory, reshoring and nearshoring strategies hinge on reliable inland transportation. While the federal government is making moves to strengthen certain critical supply chains, it is equally important for individual producers to complete the task by diversifying their carrier mix to mitigate a world of risks to Americans' basic needs.

With more and more global supply chain disruptions being out of companies' hands, companies need to take measures to diversify supply chains that provide individual security. In that way, we all play a role in increasing national security.






Visit Our Sponsors