2020 Exposed Cracks in America's Supply Chains. Here's How We Learn From It. By studying shortcomings, we can become stronger, faster and more resilient.

By Jonathan McDonald

Opinions expressed by Entrepreneur contributors are their own.

Busakorn Pongparnit | Getty Images

If there is anything businesses should have learned throughout this pandemic, it's that nothing in this world is certain. 2020 exposed shortcomings in U.S. emergency preparedness, but some of the most glaring and alarming cracks — and ones that will need a lot of attention going forward — are the cracks in America's supply chains.

What happened?

There's little doubt that America's supply chains were stretched almost to the breaking point in the initial weeks of the pandemic. Besides panicked shoppers purchasing toilet paper and hand sanitizer by the case and the sudden upsurge in demand for Amazon's delivery services, the circumstances underscored just how much American businesses depend on international suppliers.

As other, more authoritarian countries like China shut down production centers and factories, American enterprises and government agencies suddenly found themselves staring down two stark realizations: They were entirely too dependent on overseas manufacturers, and they had no idea just how dependent they were.

Consider, for example, the F-35 Lightning II fighter jet. This fighter for the U.S. Air Force, arguably the most advanced stealth fighter jet in the world, is extraordinarily complex. Lockheed Martin, the lead on the project, has more than 25,000 vendors supplying them with the various parts. The F-35 has 250,000 different parts and components, and beyond the second or third tier of supply, Lockheed cannot easily know who all of their suppliers are or the risks associated with each and every supplier in such a complex vendor/supplier ecosystem. This was made all too clear during Covid-19 shutdowns when parts and supplies suddenly dried up.

Related: How Covid-19 Has Affected the Global Economy

Bringing manufacturing back

One solution that's been embraced by both the American government and businesses is to bring manufacturing back to America. In 2020, then-President Donald Trump signed an executive order that instructed government agencies to purchase, among other things, medical supplies primarily from domestic U.S. companies. That was in addition to an executive order in May 2019 that ordered the Secretary of Commerce to explore how to better secure critical infrastructure and the digital economy in the U.S.

President Joe Biden's administration has also intensified efforts to invoke the Defense Production Act, so the government is clearly, consistently concerned with critical manufacturing and supply chain integrity.

Bad actors and identity-proofing

Covid-19 also showed how willing and able bad actors are to pose as legitimate businesses to take advantage of strapped supply chains. Luckily, even though these individuals change their names and their businesses, they usually keep their devices and principal members, and we can connect the dots to ensure everyone is aware of their nefarious pasts. However, this also poses a crucial dilemma: how to identity proof in a world where there are highly advanced cyber techniques and threats. The solutions are many and varied, but it has never been more crucial than now to vet anyone with whom you do business.

Related: Overcoming the Covid-19 Supply Chain Strain

Way ahead

Obviously, there's much to be done to address these shortcomings. Covid-19 has provided many opportunities to strengthen American supply chains, and taking advantage of those opportunities will both better enable American businesses to support their consumers, as well as allow the American government to better protect national security and provide critical services.

Bringing manufacturing and supply chain upstreams back to the U.S. will have to be done in an incremental approach, and it remains to be seen how the new administration will continue prioritizing this agenda. Be that as it may, these steps should be taken with proper risk awareness and mitigation strategies to keep the process secure.

Wavy Line
Jonathan McDonald

EVP & GM, Public Sector at TransUnion

Jonathan McDonald leads TransUnion’s Public Sector business, which provides a suite of mission-critical solutions to help U.S. federal, state and local government agencies manage risk and reduce costs. He has hands-on experience managing large technology programs within various government agencies.

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