If you want companies to change the way they manage the supply chain, the government needs to have some form of intervention or incentives, in particular, for critical products that could affect people’s lives. Clothing items are not so critical, so they can go through the supply chain elsewhere, it’s fine.
But for personal protective equipment (PPE), medical equipment, for humanitarian types of products, I think the United States needs to keep some form of capability to produce locally. The reason I push for this (I’ve said this for decades but no one listens), a nation cannot afford to have everything critical made by other countries, especially when there is a world crisis. Each country needs to protect its own citizens, they need to fulfill the demand for their own country first. This is exactly what is happening now: in the race to secure medical supplies, many countries ban or restrict exports.
Therefore, for critical products, I think the government needs to work with private enterprises to ensure that there is at least adequate — or at least some basic minimum — capability to produce such products within the country. It may be a little more expensive, but if a company can produce a little bit in house, automatically, and also source globally, they can use the internal ability as a benchmark to compare cost, quality and delivery.
During normal times, at least we can use it as [leverage] to ensure that overseas suppliers would do the right thing, and do it well and cheap and fast. When you’re facing a crisis, at least the internal domestic operations can ramp up because you maintain some form of capability. Right now, there’s no hope to ramp up quickly. I have been lobbying for this dual-prong approach for a long time, and Brooks Brothers did exactly that. By using its domestic factories, Brooks Brothers is now making basic masks (probably not N95 masks) and gowns for medical professionals.
All this means that we need to have a domestic supply chain, with the global supply chain running in parallel. If one of them is broken, at least you have a backup supply chain that can run domestically.
The other element I like to raise is stockpiling.
I think there are certain things that we must stockpile in the United States, especially for humanitarian relief products. Otherwise, it is too risky. I think if the federal or the state governments can work with the local enterprises to maintain some stockpile of critical products, as well as production capability, that would create jobs and also maintain some capability internally. That would create opportunities for innovative products that we can make in the United States.
If we can, if we think about the global supply chains more strategically, I think that something good could come out of this crisis.