The Chips and Science Act 2022, effective since November 2023, holds significant implications for US Procurement and Supply Chain operations. We are just now experiencing the full impact.

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Procurement & Supply Chain's Impact from the US Chips and Science Act

Jan14

The Chips and Science Act of 2022, effective since November 2023, has major implications for U.S. procurement and supply chain operations to revitalize domestic manufacturing to create jobs in America.

The plan is for US companies to become more competitive by strengthening American manufacturing, supply chains, and national security. Funding includes investments in research and development, science and technology, and the workforce of the future to keep the leader in nanotechnology, clean energy, quantum computing, and artificial intelligence. We are just now experiencing the full impact.

WHAT IS IT?

The Act aims to boost advanced chip manufacturing domestically and reduce reliance on foreign suppliers.
$280 billion allocated for funding, with $52 billion dedicated to research, including support for green manufacturing initiatives, R&D, workforce development, and communications & marketing.

POLICY GOALS:

Enhance silicon chip production within the US
Strengthen Supply Chain resilience
Foster research and development activities
Mitigate national security concerns related to foreign chip manufacturing

IMPACT TO PROCUREMENT & SUPPLY CHAIN:

Reshoring manufacturing operations to the US, diminishing dependencies on China and Taiwan, mitigating risks and future delays.
Adapting Supply Chain structures to include new domestic suppliers.
Initial rise in short-term costs (operational, labor, switching, and other overheads).
More access to AI technologies for US suppliers leads to increased evaluation of suppliers by procurement entities.

NEXT STEPS

1. Review existing supplier networks to incorporate previously unconsidered suppliers.
2. Adjust supplier onboarding procedures for the influx of new suppliers.
3. Secure external compliance management resources compliant with US and EU regulations.
4. Evaluate and potentially modify contractual agreements.
5. Reassess supplier collaborations.
6. Conduct scenario analyses balancing cost and Supply Chain security.
7. Enhance team members' AI literacy concerning its impact.

CONCLUSION

This disruption, part of ongoing US and EU initiatives, necessitates proactive measures to adapt to the evolving landscape. It is not about transforming all over again. There should be steps to fold into the existing foundation that has already been developed. Expect more frequent changes shortly and have the foundation, resources, and skills necessary to adjust.

By MELISSA DREW

Keywords: Digital Transformation, Supply Chain, Procurement

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