Anticipating Anomalies in Global Supply Chains

posted by Eleanor Hughes on June 25, 2021 - 9:56am

On June 9th, Foreign Policy, with additional support from the geospatial intelligence and data analytics company BlackSky, organized an hour-long webinar with experts from both the public and private sector. The panelists included Dr. Kelly Fletcher, Bob Kolasky, Brittany Masalosalo, Col. (ret.) John Mills, and journalist Maggie Lake as the moderator. It was a wide-ranging conversation on assessing the current state of global supply chains while coexisting with the COVID-19 virus.

Recent anomalies including the Taiwanese-chartered Ever Given’s blockage of the Suez Canal for nearly a week earlier this year not only captured the world’s attention, but have compelled decisionmakers from all over the world to reevaluate what comprehensive measures need to be taken to alleviate structural flaws, minimize inefficiencies, and propel more resilience within our supply chains going forward.

For the first twenty minutes of the virtual event, the moderator exchanged words with the keynote speaker, Gilman Louie, the Commissioner of the National Security Commission on Artificial Intelligence. The two discussed how to reconcile the necessity to cement more resilience rather than efficiency into our supply chains. According to Louie, COVID-19 has shed a light on how “just in time,” the inventory system that pioneered efficiency of contemporary global supply chains has proven itself to be a double-edged sword by being much more fragile than previously assumed. In addition, machinery and algorithms’ raison d’etre is to communicate and consume data at an unprecedented rate – something that human beings cannot do at the same speed and level of accuracy. Louie also pointed out that with the genesis of big-data, the mechanisms that have been put in place to employ satellite and earth observation have given industries the ability to track and store data over an extended period of time. Importantly, this enables planners to dissect this data to better discern abnormalities that may unravel in the near future through the use of prediction models. Despite these tremendous technological strides, Gilman underscored that black swan incidents will always be highly unanticipated.

After a few audience questions, Lake turned it over to the rest of the panelists. Brittany Masalosalo, the Senior Director for Commercial Diplomacy and Multilateral Affairs at 3M, spoke about how her employer responded to supply chain vulnerabilities in light of COVID-19. 3M’s supply chain footprint touches all corners of the world, and while the lessons learned from the SARs and other epidemics were deeply entrenched into their business and manufacturing practices, Masalosalo reiterated that nobody could calculate the extent to which the pandemic would destabilize global supply chains. On the other hand, she highlighted that 3M was quickly able to procure more PPE -- in particular, N95s – in weeks and days, rather than months. Advanced manufacturing and emerging technologies can uncover even more innovative solutions, which is why leaders from both private and public entities need to continue conversations to make supply chains more buoyant.

Bob Kolasky, the Director of the National Risk Management Center at the Department of Homeland Security, shifted the conversation by defining a few of the fifty-five national critical functions. They include the ability to transport raw materials via air and pipelines, and providing healthcare, to name a few. By defining which functions are necessary to effectively govern the United States, the government can then assess its risk tolerance to potential supply chain anomalies that can stymie municipalities from providing these essential services.

During the recent pandemic, the US government became acutely aware of five different factors that tested supply chain resiliency including the immediate availability of essential workers and confronting a gross scarcity of products that are in high-demand. Taking all of this into consideration, Kolasky recommended that if resiliency is to become a hallmark of supply chains, it behooves the government to ensure that it can deliver these critical resources. This mission cannot be pursued unilaterally, which is why the federal government must coordinate closely with private industries. 

Next, Dr. Kelly Fletcher, the Principal Director to the Deputy Chief Information Officer at the Office of the Department of Defense (DOD), gave high remarks to 3M’s initiatives, and then briefly delved into how the DOD routinely touches base with its commercial partners, including the defense contractor industry, to ensure that all stages of the supply chains that overlap with the DOD’s work are properly streamlined and secure. On a more granular level, she highlighted the importance for both the DOD and its partners to grasp the origins and fundamental mechanisms of the software networks; to what extent and where it has been tested; and its cybersecurity apparatus. Delineating these elements will then provide the baseline to better understand risk factors. While efficiency is worth championing, Dr. Fletcher also made sure to emphasize that resiliency cannot be overlooked.

Before taking questions from the audience, Lake asked Col. (ret.) John Mills, the Senior Project Engineer for the Federal, Civil, and Homeland Security Programs at the Aerospace Corporation, for his thoughts on the realities behind how smaller firms cope, whose multifaceted supply chains stretch just as extensively as that of the DOD and 3M. They also grapple with the daunting task of pinpointing where their materials are procured, which makes it all the more difficult to sustain security. As the ingredients of products consistently embed themselves deeper and higher-up into a particular supply chain, an assumption can be made that industries have placed their trust in the ecosystems from which the materials were sourced.

In addition, Col. Mills indicated that supply chain issues have been a major area of focus for over twenty years for the DOD. With artificial intelligence at their disposal, Col. Mills hopes that a dashboard can be utilized as a tool to better position leaders and planners from the higher echelons of the federal government and commercial entities to acquire and interpret data in real-time so that decisions can be made without confronting an insurmountable amount of risk.

In Closing:

The essence of a black swan event is that it is an unexpected phenomenon. No person can forecast when a supply chain will be gravely obstructed; what the immediate and long-term impact will be on the industries and entities or the people whose livelihoods depend on its viability. For better or worse, while we cannot liberate ourselves from all looming uncertainties, planners can make use of new and emerging technologies to craft comprehensive prediction models that can better help decisionmakers decipher when – or if – a seismic abnormality is about to disrupt the global economy.

As Brittany Masalosalo elucidated, I am heartened to see that supply chains have become a matter of urgency within the national security field in the US and the rest of the world. COVID-19 has severely handicapped the operations previously put in place to ensure a more efficient manufacturing process and distribution of goods and services, and global supply chains still feel its impact today. As William Reinsch aptly put it in his recently-published commentary, work has just started to spearhead supply chains as a national security priority in the US. More to the point, the onus is now on the Biden Administration to clearly underline which sectors are core national security interests, and to harmonize the forces that are currently placing efficiency and resiliency at odds with each other.

Reinsch made it clear that the Biden Administration will be shooting itself in the foot if it does not tread judiciously in ameliorating these vulnerabilities. Now that the American economy is beginning to rebound as a result of a wider availability of COVID-19 vaccines and a gradual reopening of municipalities both big and small, it would behoove decisionmakers from industry and the federal government to collaborate further to ensure that the frailties of our most critical supply chains are not compromised the next time another black swan event wreaks havoc on the global economy. As evidenced by the pandemic, the opportunity cost of not striking the right balance between efficiency and resiliency in global supply chains could be something that cannot be easily described in mere words and mathematical analyses.

Eleanor Shiori Hughes is an MA candidate in Asian Studies at Georgetown’s Walsh School of Foreign Service. She is also a Research Assistant at Georgetown’s Institute for the Study of Diplomacy, a Young Leader at the Pacific Forum, and a contributing writer for EconVue.