Exclusive Interview: Gartner Opines on Biden’s Executive Order

As reported in SCMR, President Biden has signed an Executive Order to help create more resilient and secure supply chains for critical and essential goods. Koray Köse, Senior Director, Analyst, Gartner Supply Chain Practice, observes that now there’s much work to be done.

“The most important part of this mandate is that Supply Chain is recognized as the backbone of a functioning economy and not anymore the back office function that executes against other function’s directions and is tactical not strategic,” says Köse.

He adds that recognizing this will likely put supply chain leaders on the map and at the table with other leaders in the C-Suites, whereas often position below a tier or two. But he says the mandates is unclear on the 100 day review execution.

“It will be hard to take supply chain maps and complexities from many industry players under revision without touching confidential information and drivers for competitiveness of companies that will be reluctant to open their network structure publicly and to competitors,” says Köse.

According to Gartner, supply chains are market driven by supply/demand and innovations. Government interventions or mandates most often are intent to protect and execute in that manner through trade and tariffs. They also provide subsidies and tax benefits that are limited in time and scope, hence the markets react to other, more sustainable changes that could impact fundamental improvements.

“The market attractiveness and conditions would need to change to make significant and sustainable differences in mid/long term,” says Köse. “Government investments into capacities will likely be less effective and efficient and impact market dynamics, at times positive and at times negative. Subsidies create incentive, yet also support a less efficient process and supply chain to be profitable and that defies the purpose of this mandate since it is all about ‘Creating a resilient and efficient’ supply chain. Subsidies will likely be counter-effective to that.”

Questions remain, too, on how quickly these directives will be implemented. Gartner notes that the review process started with the execution of the order. Now, it will be important to see what experts and workstreams will be established to define actual scope of each stream / for each of the 4 categories listed for the 100 day review.

“One hundred days are also rather short, hence, I don’t see much information to come out of the review,” concludes Köse. “The one-year exercise funded with $37 billion is probably going to yield more valuable insights and activities that could improve the squeeze through shared investments, government-private collaborations and government to government negotiations with allies and countries that have a standing relationship with the U.S.”

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