On June 8, 2021, President Biden's administration outlined broad measures and recommendations to address the widespread supply chain issues, intending to revitalize the U.S. manufacturing industry and reduce the reliance on other countries for crucial goods.
These measures come following an Executive Order issued by President Biden in February, which called for a 100-day review of the U.S supply chain to identify near-steps that can be taken to address its vulnerabilities.
The Biden administration review covers four areas: large capacity batteries used in electric cars, pharmaceutical and active pharmaceutical ingredients, semiconductors used in products such as phones and cars, and rare-earth minerals that are vital to the defense and technology industries.
While the recent deterioration in the supply chain has been amplified by the public health and economic crisis, decades of poor public policy choices and underinvestment in the supply chain are the major causes of its fragility across various industries.
Below we will take an in-depth look at how President Biden's plan hopes to improve the supply chain and how it might affect your eCommerce business:
Taking Measures To Address the Deficiencies in the Critical Products Supply Chain
The first measure to improve the supply chain is the enhancement of domestic competitiveness and supply chain resilience. Here are some of the measures the plan takes in addressing the vulnerability of the supply chain of the four critical products:
- Securing an end-to-end domestic supply chain for advanced batteries: The Department of Energy will launch a new effort to support the federal government's deployment of energy storage initiatives. Additionally, it will also leverage the $17 billion in loan authority set aside for advanced technology vehicles to support the domestic battery supply chain.
- Support the production of vital medicine: The Department of Health and Human Services will establish a consortium of private and public drug production professionals to deal with advanced manufacturing and onshoring essential medicine production.
- Investment in sustainable international and domestic production of critical minerals: A group composed of the Environmental Protection Agency (EPA) and the Department of Agriculture will be tasked with identifying mineral-rich sites domestically. Also, there will be an increase in international investments in projects that will increase the production of critical minerals.
- Addressing semiconductor shortages: The Department of Commerce will bolster its partnership with semiconductor producers, suppliers, and end-users to help address the scarcity.
Establishment of Fair and Sustainable Industrial Bases
The Biden administration will take a series of actions by the Federal government to support supply chain resilience, production, innovation, workforce development, and enhance the sustainability of the supply chain.
It will accomplish this using the following strategies:
- Investing in a sustainable supply chain both domestically and internationally: The Biden government will invest in a robust suite of Build Back Better initiatives focused on broadening and strengthening the supply chains of the food production and distribution industry.
- Combating unfair trade practices: A trade strike force will be established to deal with unfair trade practices. This strike force will propose unilateral and multilateral actions against unfair foreign trade practices that diminish the supply chain. Moreover, it will identify opportunities to be used in enhancing the resilience of the U.S supply chain.
Dealing With Short-Term Supply Chain Disruptions
The increase in vaccinations, the economic relief efforts, and the removal of the movement restrictions have stimulated a return in economic activity. However, most businesses have not regained their pre-pandemic stability, given the significant disruptions of the supply chain because of the pandemic.
To address these immediate challenges with the supply chain, the Biden administration will establish a whole-of-government effort to address the transitory supply chain issues. A task force will be formed to address the short-term supply chain issues in a bid to restore the economy. This task force will convene stakeholders from various industries to diagnose supply chain problems and try to find solutions to these problems.
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What Are the Key Recommendations for Strengthening the U.S. Supply Chain Resilience in the Long Term?
Here are some of the long-term recommendations put forth by the 100-day review to strengthen the U.S supply chain in the long term:
- Provision of financial incentives to spur consumer adoption of electronic vehicles
- Provision of dedicated funding for the semiconductor manufacturing industry
- Investment in next-generation batteries
- Investment in pharmaceutical manufacturing processes
- Investing in disadvantaged businesses (small and medium) in the vital supply chain
How Do These Supply Chain Improvements Impact eCommerce Sellers?
The Biden-Harris administration's plan to improve the supply chain is poised to stabilize the U.S. supply chain and rejuvenate the U.S manufacturing industry. In so doing, it will help grow the economy. So how exactly will eCommerce sellers benefit from this?
For starters, the stabilization will increase the production of domestic products such that there will be more products to sell both locally and abroad. Also, the removal of unfair foreign trade policies will create a conducive international trading environment and enhance the eCommerce seller's ability to collaborate with various stakeholders in international trade.
While the plans to improve the supply chain go a long way in enhancing the eCommerce business, you need a reliable 3PL fulfillment company to actualize your domestic and international logistics needs. Your 3PL partner should have a network of spacious shipping and fulfillment warehouses, be adept at supply chain management, and have the ability to take care of different freight operations, domestically and internationally.
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