US Gov's First Quadrennial Supply Chain Review Explained

The United States government has unveiled its first Quadrennial Supply Chain Review, a landmark initiative to address vulnerabilities in the supply chain.

The comprehensive report highlights efforts to tackle risks, ease bottlenecks and improve efficiency, particularly in critical areas such as semiconductor manufacturing.

The Biden-Harris administration views these actions as essential for protecting jobs and ensuring economic security across the country.

"Strengthening supply chains and revitalising America’s position in semiconductor manufacturing has been a cornerstone of the Biden-Harris Administration’s agenda from the very beginning," comments Gina Raimondo, US Secretary of Commerce. 

"This review underscores our commitment to partnering with industry to proactively address supply chain challenges, develop innovative solutions, mitigate future disruptions and bring back American manufacturing.

"By working together, we are bolstering economic and national security and building supply chains that can meet the demands of tomorrow – particularly in critical sectors like information and communications technology and semiconductors."

Tackling supply chain risks with SCALE

One key element of the review is the introduction of the SCALE supply chain risk assessment tool. Developed by the Department of Commerce (DOC), this tool evaluates supply chain risks using more than 40 indicators, offering a detailed framework for identifying weaknesses and vulnerabilities.

SCALE provides procurement teams with valuable insights, enabling them to address risks effectively.

Findings reveal that many industries face substantial exposure to structural risks, with a heavy reliance on high-risk inputs and minimal diversification. For instance, 38% of industries depend on single-country sourcing, particularly for essential sectors like electronics, chemicals and transportation.

The DOC highlights the importance of public-private partnerships in addressing these challenges, viewing collaboration as crucial to long-term resilience.

Strategic priorities and government actions

The review lays out several challenges and strategic priorities aimed at transforming supply chains. Key findings include:

• Structural risks across industries: Many sectors are highly reliant on inputs from vulnerable or high-risk sources.
• Import dependence: Limited diversification means a significant number of industries depend on products from single countries, increasing exposure to supply disruptions.
• Critical reliance on specific suppliers: More than 86% of industries are connected to medium-high or high-risk suppliers.

Addressing these issues requires a combination of government policies and private sector innovation. Some of the most significant initiatives include:

• CHIPS and Science Act: A US$52bn programme to bolster domestic semiconductor manufacturing and reduce dependence on global suppliers.
• Broadband Equity, Access and Deployment (BEAD) Programme: An effort to expand broadband infrastructure to underserved areas.
• Tech Hubs Programme: This initiative fosters regional innovation and workforce development.
• Public Wireless Supply Chain Innovation Fund: A fund designed to support secure and innovative wireless networks.

These initiatives have already spurred private investment, with more than US$450bn committed to semiconductor and electronics manufacturing since the administration took office.

The semiconductor challenge

Semiconductors, often referred to as the "brains" of modern electronics, are a key focus of the supply chain review. More than 90% of advanced semiconductor production occurs in East Asia, with Taiwan Semiconductor Manufacturing Company (TSMC) alone producing more than half of the global supply.

The US market share in semiconductor production has dwindled from 37% in 1990 to just 12% by 2020. The CHIPS Act aims to reverse this trend by incentivising domestic production and enhancing the nation's manufacturing capacity.

According to McKinsey & Company, diversifying the supply chain could reduce reliance on high-risk regions by 25%, but achieving this requires significant investment and collaboration.
Similarly, the Peterson Institute for International Economics highlights the need for aligned policies, infrastructure upgrades and workforce training to make reshoring efforts a success.

The Quadrennial Supply Chain Review marks a critical step towards strengthening the US economy's resilience.

By focusing on long-term stability and collaboration, the Biden-Harris administration seeks to create a supply chain capable of withstanding future challenges.

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