At the height of the COVID-19 pandemic, supply chains became mainstream news when the Suez Canal was blocked by the Ever Given, and ports were clogged with countless vessels waiting to dock, resulting in the idling of 10% of the world’s container capacity. While most disruptions have dissipated, continued challenges led to the White House giving supply chains another bump in the news cycle with its inaugural meeting of the Council on Supply Chain Resilience.

The industry has been advocating resilience ever since the pandemic, and it’s welcome to see the government picking up on the theme. It’s important to note, however, that resilience is an outcome and not a factor in a supply chain. 

During the pandemic, companies facing high consumer demand tried to be resilient by increasing inventory levels. These days, cost has returned as a critical factor because inflation and interest rates are high, and demand is uneven. To be resilient in this landscape, companies are reducing inventory levels and refocusing on agility so they can be better prepared to pivot when the next disruption comes along.

The White House unveiled more than 30 actions to make sure America’s supply chains continue to get stronger and stay resilient. It’s a positive that the government wants to partner with the industry, and it should include other stakeholders to improve supply chains, as well.

The Institute for Operations Research and the Management Sciences (INFORMS), for instance, is a key driver of supply chain science, and deserves a seat at the table to help define what the next generation of supply chains looks like. It’s critical that government agencies engage with such organizations, because they show the strongest commitment to changing processes and developing next-generation innovations based on industry-fueled academic research.

Strong working partnerships should also extend beyond our borders. We live in a global economy, so collaboration with allies and partners is a critical component of building a resilient supply chain. Of course, the 30 actions go deeper than just partnerships.

Following are five takeaways from the initial meeting of the Council on Supply Chain Resilience, and what they mean for the industry.

Supply chain resilience is still top of mind. No doubt, resilience is having a moment. An executive order on supply chains in the midst of the pandemic is one thing, but this new set of actions shows that supply chains have sticking power on the executive agenda.

Becoming resilient in today’s global landscape means optimizing inventory levels and gaining visibility across the end-to-end supply chain. But if the pendulum swings too far, and companies trim too much inventory, they lose resiliency.

The right strategy can mitigate drug shortages. Invoking the Defense Production Act is one path to ensuring access to essential medicines, but it’s not the only one. In fact, there’s already a winning strategy within the pharmaceutical industry that doesn’t require government intervention.

A concurrent supply chain with full transparency across its networks can also rebalance inventory, even under extraordinary circumstances. Global biopharmaceutical company Ipsen took this approach during the pandemic and had zero stockouts, despite demand spikes of up to 70%.

Other sectors may not qualify for the Defense Production Act because their products aren’t imperative for human life, but with end-to-end supply chain visibility, we can achieve resilience without the government compelling private industries to act.

Data-sharing is an enabler of transparency. The government rightly called out the importance of data. Cross-functional information sharing is a step in the right direction toward end-to-end transparency.

In the age of artificial intelligence, companies need as much data as possible to build AI models that can augment humans’ ability to make better, faster decisions. Data can help provide a better understanding of supply networks so that companies can gain more knowledge of how their supply chains are performing, and what changes they may need to make.

Stress testing supply chains creates a playbook. Resilience is about being prepared for disruption, and the scenario planning cited by the White House is an excellent way to have a plan in place for when the worst happens.

These planned exercises allow you to stress-test supply chain capabilities and simulate crucial decision-making required in times of instant response. While the government called out “supply chain risks resulting from threats and vulnerabilities inside U.S. ports” as a near-term priority, companies need to be prepared on a broader scale. The more simulations you run across a variety of stressors, the better prepared you’ll be for a wide range of potential disruptions.

Climate change is a supply chain issue. Disruptions in supply chains are increasingly being attributed to climate change, but supply chains are also the greatest contributor to climate change. According to the EPA, supply chains can account for more than 90% of an organization’s greenhouse gas emissions.

Many companies are struggling with their overall sustainability goals, and building a more resilient and sustainable supply chain can mitigate climate impact. For instance, reducing inventory levels can enhance sustainability objectives by minimizing expirations and obsolescence that send excess product to the landfill. Sitting on excess product and squeezing cash reserves in today’s economic climate hurts on both a financial and environmental level.

By addressing weaknesses through better data sharing, stress testing and climate change impacts, companies can assemble the building blocks needed to reconstruct supply chains in an era of constant disruptions. With cooperation between government and industry, a future of reliable access to goods and medicines critical to public health and the economy is within reach.

Polly Mitchell-Guthrie is vice president of industry outreach and thought leadership at Kinaxis.