The Biden Administration started sounding the alarm about America's supply chains just weeks after taking office in 2021 with an Executive Order, followed by the launch of the Council on Supply Chain Resilience in 2023 and additional instructions in 2024. While progress has been made on strengthening the resilience of supply chains, other gains are being left on the table. One reason why: The public and private sectors do not use a common vocabulary, leading to incomplete or misaligned incentives, priorities, and perspectives. It's time for a common vocabulary and vision. Fortunately, the inaugural Quadrennial Supply Chain Review of December 2024 lays the groundwork for an “enduring vision” for the incoming administration and for a truly common vocabulary and vision.
Let's define terms. In its simplest form, resilience is the ability to bounce back from large-scale disruption, according to supply chain expert and MIT professor Yossi Sheffi. On that much, the private sector and government agree.
However, a disconnect occurs when it comes to the term “supply chain.” In private industry, the supply chain is about logistics, transportation, distribution, and warehousing. However, in government circles, the phrase is used to indicate what industry would refer to as a “value chain (PDF)”— the multiple steps and companies that develop and assemble products. As a result, policy conversations about reshoring, derisking, and diversification focus on firm ownership, trade policy, and the role of the government in the economy. Fortunately, transportation and logistics, which are central elements to resilience in global trade, have been addressed in the “Quadrennial Supply Chain Review.”
In private industry, the supply chain is about logistics, transportation, distribution, and warehousing…in government circles, the phrase is used to indicate…the multiple steps and companies that develop and assemble products.
It's easy to see why this disconnect exists. Government works at the macro level, setting broad policy objectives. It uses the language of law, regulation, and compliance—all calibrated to the political economy. That framing trickles down to policy scholars, like academics and think tankers, who often have limited private sector experience, especially in supply chains.
Moreover, as William Alan Reinsch of the Center for Strategic and international Studies points out, senior governmental officials have incorrectly used the terms “friendshoring” and “onshoring.” That only muddles policymaking in the public sector and confuses the private sector.
All of this might be disregarded as pedantic word games, if it didn't mean that the government is missing opportunities to engage with the people who own, construct, maintain, and control the nation's logistical, storage, and transportation nodes and infrastructure. Policymakers need a better grasp of this rubber-meets-road level of the supply chain. That would certainly produce more targeted policies and investments.
This lack of alignment around vocabulary and vision can be seen in the differing views on industrial policy, such as the CHIPS Act and the Inflation Reduction Act. The public sector views this legislation as working to strengthen U.S. supply chains by filling in areas of the economy where the private sector is not incented to invest. The private sector tends to view financial carrots as picking “winners and losers.”
Similarly, the public sector sees the sticks, like export controls and sanctions, as there to promote compliance and supply chain resilience. To the private sector, they feel like arm twisting and smack of protectionism. Left to its own devices, of course, the private sector opts for low cost, often relying on single sources of supply—the exact opposite of the government's goal to increase resilience—in the name of “efficiency.”
To achieve real resilience of any supply chain, the United States needs both macroeconomic policies and our logistical nodes and transportation networks to be properly managed and modernized. There has been some movement in this direction. Supply chain resilience now has both whole-of-government and whole-of-country elements. For example, the White House National Security Memorandum on Critical Infrastructure Security and Resilience of April 2024shows some recognition by government that having a strong and modernized transportation infrastructure is vital to the country's ability to bounce back from disruptions.
To achieve real resilience of any supply chain, the United States needs both macroeconomic policies and our logistical nodes and transportation networks to be properly managed and modernized.
The memorandum also recognized the importance of “shared responsibility” and noted that “public-private collaboration is vital.” Encouragingly, at its Supply Chain Summit in September 2024, the U.S. Department of Commerce announced seven new strategic partners, including the National Small Business Association and three professional organizations for supply chain practitioners. “Shared responsibility” is a step in the direction of creating an “enduring” public-private partnership and for 'sustained industry attention to supply chain resilience' as the “Quadrennial Supply Chain Review” spells out.
These steps could allow for more nuanced and productive conversations with the private sector, while also advancing our national unity of effort to strengthen and maintain secure, functioning, and resilient critical infrastructure and, importantly, supply chains in the name of economic competitiveness and national security.
