Everything You Need to Know About The 2023 Supply CHAINS Act
An overview of the H.R. 763 – Supply CHAINS Act and how it can affect the way American supply chains operate
In recent years, global events like the COVID-19 pandemic and international trade disputes have exposed the weaknesses of supply chains. They have also highlighted the importance of building secure supply chain networks. To address these concerns, members of the United States Congress recently introduced H.R. 763, better known as the Supply CHAINS Act.
The Supply CHAINS Act is a comprehensive approach to addressing the vulnerabilities and risks associated with American supply chains. The key provisions of the Act focus on:
- Enhancing supply chain mapping and risk assessment
- Encouraging domestic production
- Supporting workforce development
- Fostering innovation
- Addressing national security concerns
By tackling these areas, the Act seeks to create a more stable and competitive supply chain landscape in the United States.
On October 5th, 2021, Congresswoman Carolyn Bourdeaux introduced H.R. 5479 – Supply Chain Health and Integrity for the Nation Act (the Supply CHAIN Act) to the United States House of Representatives.
Although the bill did not pass the House, it was a precursor to H.R. 763. On February 2nd, 2023, Congresswomen Lisa Blunt Rochester, Debbie Dingell, Robin Kelly, and Susan Wild introduced H.R. 763 – Supply Chain Health and Integrity for the Nation’s Success Act (Supply CHAINS Act) to address growing concerns over the vulnerability of American supply chains. The legislation aims to improve American supply chains by:
- Increasing supply chain resilience
- Promoting domestic production
- Reducing reliance on foreign suppliers, particularly in critical industries
The Act targets a wide range of sectors, including pharmaceuticals, electronics, and automotives. If passed, this bill will require the Department of Commerce to establish an Office of Manufacturing Security and Resilience to:
- Monitor the manufacturing, warehousing, transportation, and distribution related to critical supply chains
- Identify high-priority supply chain gaps and vulnerabilities in critical industries
- Identify and evaluate the effect of supply chain disruptions on U.S. economic security
- Collaborate with other governmental bodies and key international partners to identify opportunities to reduce supply chain gaps and vulnerabilities.
Additionally, the office must develop voluntary standards and best practices to reduce the risk of critical supply chain disruption. It also must evaluate the stability and reliability of the agriculture and food supply chain.
Bills Introduced as Part of the Supply CHAINS Act
The Building Resilient Supply Chains Act
The “Building Resilient Supply Chains Act,” introduced by Blunt Rochester and co-led by Dingell, Kelly, and Wild, creates a financial assistance program within the Department of Commerce to improve the resilience of supply chains. The legislation authorizes $41 billion of funding for fiscal year (FY) 2024 through 2028.
The Supply Chain Mapping and Monitoring Act
The “Supply Chain Mapping and Monitoring Act,” introduced by Kelly and co-led by Dingell, Blunt Rochester, and Wild, creates an office in the Department of Commerce to map and monitor supply chains, identify supply chain gaps and vulnerabilities, and identify opportunities to reduce supply chain risk. The bill authorizes $500 million of funding to the office for FY 2024 through 2028.
The Manufacturing Economy and National Security Act
The “Manufacturing Economy and National Security Act,” introduced by Dingell and co-led by Kelly, Blunt Rochester, and Wild, creates a program within the Department of Commerce to provide $35 billion of loans and loan guarantees for FY 2024 through 2028 for the relocation of manufacturing facilities from countries of concern into the United States and allied nations or key international partners of the United States.
The Supply Chain Security and Resilience Act
The “Supply Chain Security and Resilience Act,” introduced by Wild and co-led by Dingell, Kelly, and Blunt Rochester, authorizes $500 million of funding for FY 2024 through 2028, to create a program at the Department of Commerce that facilitates and supports the development of guidelines, procedures, and processes for manufacturers and their customers using a critical good or service to measure resilience, evaluate the value of resilience, and address supply chain vulnerabilities.
Key Provisions of the Supply CHAINS Act
Enhanced Supply Chain Mapping and Risk Assessment
Supply chain mapping and risk assessment are critical components of understanding the complex and interconnected nature of global supply chains.
Datex Fast Fact
49% of chief supply chain officers have invested in advanced analytics for supply and planning to tackle repeated supply chain disruptions
Supply Chain Mapping
H.R. 763 calls for the use of advanced technologies like blockchain, artificial intelligence (AI) and the internet of things (IoT) to provide businesses and the government with a clear view of the entire supply chain, from raw material extraction to the end consumer.
This process identifies key suppliers, manufacturers, and distribution channels, as well as the interdependencies between them. This enables businesses to assess risks and mitigate disruptions. Furthermore, the Act encourages collaboration between businesses, industry associations, and the government to share information and address supply chain challenges.
Datex Fast Fact
70% of companies are still grappling with information-gathering and evaluation
The Supply CHAINS Act also calls for the development of a comprehensive risk assessment framework that evaluates potential risks in American supply chains, such as geopolitical issues, natural disasters, or sudden demand changes.
By focusing on risk assessment, the Act enables businesses to develop strategies to mitigate disruptions. Moreover, it encourages businesses to diversify their supplier base, which can reduce reliance on single sources and enhance overall supply chain stability.
Incentives for Domestic Production
The Supply CHAINS Act acknowledges the importance of domestic production. Encouraging domestic production can boost the U.S. economy by increasing jobs in the manufacturing sector as well as increasing exports of American-made goods. Furthermore, by promoting domestic production, the United States can implement more stringent environmental regulations and encourage sustainable business practices, contributing to a greener economy.
Datex Fast Fact
An analysis by McKinsey & Company suggests that reviving manufacturing could add up to 1.5 million jobs to the U.S. labor market
Financial Incentives & Regulatory Reforms
The Supply CHAINS Act includes provisions for financial incentives such as tax breaks, grants, or low-interest loans to encourage businesses to build domestic manufacturing facilities or nearshore business operations in countries close to the U.S. These incentives can help offset the higher costs of manufacturing in the United States compared to other countries, making domestic production more attractive to businesses.
The Act also seeks to streamline regulations and reduce barriers to domestic production, making it easier for businesses to establish and expand manufacturing facilities in the United States.
Datex Fast Fact
Manufacturing is the main economic engine and primary employer in close to 500 US counties
Strengthening the Workforce
The Supply CHAINS Act recognizes the need for a skilled workforce to support the expansion of domestic manufacturing. A skilled workforce is an attractive asset for both domestic and foreign investors, potentially leading to increased investment in American manufacturing and supply chain infrastructure.
Workforce Development Programs
The Act supports the expansion of workforce development programs that will equip American workers with the skills necessary to compete in high-demand sectors and critical supply chain industries. These programs include classroom instruction, online courses, and employers upskilling and reskilling current workers.
Apprenticeships and Vocational Training
H.R. 763 promotes the creation of apprenticeships and vocational training programs that provide workers with hands-on experience and practical skills in manufacturing and other supply chain-related fields. By investing in these programs, the Act helps to bridge the skills gap and prepare the workforce for the future of supply chains.
Datex Fast Fact
By 2030, physical and manual tasks in the overall economy will have fallen by about 27%, replaced by increased demand for technological and cognitive skills.
Collaboration with Industry and Educational Institutions
The Supply CHAINS Act encourages collaboration between businesses, industry associations, and educational institutions to develop curriculum and training programs that meet the needs of the supply chain labor market. This collaboration ensures that workforce development efforts are aligned with industry demands and provide workers with relevant skills.
Incentives for Businesses
The Act provides incentives for businesses to invest in workforce training and development, including tax breaks and grants. These incentives encourage businesses to prioritize the continuous development of their workforce.
Investment in Research, Development, Innovation, and Competition
A resilient and sustainable supply chain depends on continuous innovation and a commitment to research and development (R&D). To maintain a competitive edge, the Act encourages businesses to increase investment in research and development, particularly in critical sectors.
The Act increases federal funding for research and development to support the creation of new technologies and solutions that can enhance the efficiency, security, and resilience of American supply chains.
Investment in R&D will help American companies stay at the forefront of technological innovation. This will enable them to compete more effectively in global market operations and potentially capture a larger share of the market.
H.R. 763 encourages the formation of public-private partnerships in key areas of the supply chain. By leveraging the expertise and resources of both the public and private sectors, these partnerships can accelerate the development and adoption of advanced technologies and best practices.
Support for Small Businesses and Startups
The Supply CHAINS Act offers financial incentives to encourage financial investment into small businesses and startups within the supply chain.
National Security Considerations
The Supply CHAINS Act requires federal agencies to assess risks posed by foreign suppliers and take appropriate action to mitigate and manage these risks.
Protecting Intellectual Property
The Act emphasizes the importance of intellectual property protection, ensuring that American businesses and inventors can maintain a competitive edge in the global market and safeguard sensitive technologies and innovations from theft or espionage. By securing intellectual property rights, the Act helps prevent criminals from gaining access to critical technologies that could be used against the United States.
What’s In It For 3PLs?
Distribution and Fulfillment
H.R. 763 encourages domestic production and supply chain diversification. Therefore, third-party logistics providers can expect an increase in demand for their distribution and fulfillment services. With more manufacturers and suppliers in the market, businesses will need efficient business logistics partners to ensure their products reach customers in a timely manner. This allows 3PLs to expand their client base, boost their revenue, and enhance their distribution networks.
Storage and warehousing
As American manufacturing grows, there will likely be a higher demand for warehousing and storage solutions. This can lead to the development of more advanced, energy-efficient, and sustainable storage facilities for 3PLs to meet the needs of a growing and diversified supply network. Additionally, the adoption of warehouse automation and digital transformation can help 3PLs optimize their warehousing operations and improve efficiency.
The Act’s emphasis on creating a more sustainable supply chain can lead to increased demand for energy-efficiency transportation solutions. As the transportation sector evolves, 3PLs can benefit from the adoption of cleaner transportation technologies. These advancements can help 3PLs provide more cost-effective and environmentally friendly services to their clients.
Though 3PLs typically do not engage directly in manufacturing, they can benefit from the growth of domestic manufacturing spurred by H.R. 763. As more manufacturers set up operations in the United States, they will require logistics support for the movement of raw materials, semi-finished goods, and finished products. This increase in demand for logistics services can lead to business growth and expansion opportunities for 3PLs.
In conclusion, H.R. 763 is poised to revolutionize the American supply chain model by fostering a more efficient and resilient value chain. By addressing key aspects of the supply chain process, the Act aims to transition from traditional supply chains to modern supply chains that prioritize efficiency, technology, and social responsibility. By enhancing supply chain management and embracing digital transformation, businesses can better meet customer demand while minimizing disruptions.
The Supply CHAINS Act emphasizes the importance of logistics management, warehouse automation, and improved efficiency to streamline business processes. As the dynamics of supply and demand evolve, the Act’s provisions will help ensure that logistics providers are better equipped to adapt and meet customer needs.
Overall, H.R. 763 is set to drive significant change in the American supply chain landscape, enabling businesses to thrive in an increasingly interconnected world. By fostering innovation, and addressing customer demand, the Act lays the groundwork for a more resilient and efficient supply chain in the future.
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