GlobalData: DoD global supply chain exposure poll

A recent poll conducted by GlobalData found that 58% of respondents expect the Department of Defense (DoD) to reduce its global supply chain exposure as a result of the COVID-19 pandemic. A likely result of COVID-19’s effects will be an increase in domestic sourcing of key components in the US market and attempts to increase supply chain resilience. As the crisis peaked in the US, disruption to the supply chain was countered by funding through the CARES act which sped up contract obligations and led to the DoD allocating more than $3 billion into the supply chain to mitigate the effects of COVID-19, processing over $2 billion in invoices as of 20th June.

COVID-19 has also affected domestic and international trade and highlighted problems with international supply chains. Supply chain security is not a new focus for the DoD and Congress and was already relevant before the COVID-19 crisis, spurred by US-China trade tensions. The recent CHIPS for America Act can be seen in this light, which now has renewed impetus. This bipartisan legislation would reduce foreign imports of microelectronics via a range of measures, including bolstering domestic capacity. However, there are inherent limits to this. International sourcing will remain, but focus will likely shift to overseas multi-sourcing to reduce single points of failure along with additional domestic production.