Statement of the Hon. Bradley Schneider on Supply Chain Resiliency
Washington, July 2, 2020
Good morning and thank you all for being here. I’d like to especially thank the witnesses for taking time out of their busy schedule to be with us this morning. I also want to thank the Small Business Committee staff for their diligent work during this unique time.
It is no secret that small businesses are reeling from the ongoing Coronavirus pandemic which brought entire sectors of the U.S. economy to a standstill. Unemployment is the highest it has been since the 1930s and many businesses have been forced to shut their doors to comply with stay-at-home orders. Businesses and essential services that remained open faced shortages for high demand products, higher costs for production materials and the inability to get finished goods to market.
And we saw how disruptions in the supply chain can hamper our ability to respond to the crisis at hand. Early in the pandemic, there was a scramble to ensure the integrity and continued flow of Personal Protective Equipment (PPE) and ventilators. With severe covid outbreaks at several food processing facilities, consumers also saw the impact the pandemic was having on the food supply chain.
Small firms can be particularly vulnerable to disruption in supply chains. Many employ “just in time” supply methods and only have between two- and ten-weeks of inventory in stock. Many others have limited knowledge of their supply chain and dependence on lower prices from overseas to support only thin margins.
The pandemic has exposed weaknesses in both domestic and global supply chains. An over reliance on foreign countries for manufacturing components was already an issue before the pandemic hit. As the health crisis spread, we realized too much of our medical supplies and personal protective equipment were unable to be imported to meet the needs of hospitals and medical professionals.
However, as they always do, small businesses throughout this crisis have demonstrated their resiliency---shifting product lines, moving to more e-commerce and utilizing different suppliers and distribution chains across a variety of industries. Some shifted to making PPE and hand sanitizer in a matter of days, and others came up with new and innovative ways to source their products.
That is why we called this hearing today - to discuss, as we rebuild, potential solutions to establish more resilient supply chains so that we are better prepared for our next disaster and to also build a stronger domestic economy. And to ensure we have the federal leadership in place to ensure the integrity of essential supply chains like PPE and food.
First, improving our nation’s supply chain resiliency will require an “all-hands-on-deck” approach as both domestic and global supply chains are vastly interconnected yet can vary significantly from product to product. We must also recognize that trade is an essential part of supporting small businesses in a modern economy. 95 percent of the world’s population resides outside the U.S. and exporting provides small businesses with literally billions of new customers. However, it is important that we prioritize making things at home that protect our national security and public health. Doing so will also create jobs here and build a stronger economy.
Second, if our goal is to increase resiliency, we can do this by utilizing the strengths of small companies. In many ways, smaller firms are more nimble than larger ones, and can quickly shift their manufacturing, distribution, and sales capacities to meet increased demands for certain goods. I’m excited to hear the challenges small firms faced and the steps they are taking to ensure their survival.
Third, as we rebuild, we need to establish better lines of communication so that we can anticipate shortages of essential goods and coordinate overcoming bottlenecks. This way, we can recognize any potential problems and solve for them in real-time rather than waiting for the next disaster to strike. For this step, it is essential that all around the country, firms have access to high quality broadband connection and new technologies in distribution mapping, so they can make decisions as individual companies that can increase resiliency. And it is vital that the federal government play a leadership role when necessary in coordinating the flow of essential goods like PPE.
And finally, when it comes to supplies essential to our national security and public health, we need to create incentives for small companies to increase their supply chain elasticity. Whether it is by diversifying the countries from which we import, providing small firms with more access to capital or establishing and maintaining a greater strategic national stockpile, we need to ensure that we are sustainable during disasters such as the current pandemic.I look forward to hearing from our expert witnesses and small firms about the steps we can take to establish more resilient supply chains in the future. Hopefully, this hearing can help us establish best practices for our small firms and some principles for our federal government as the economy recovers.