President Trump has taken aim at Huawei. The implicit risks introduced to the supply chain are as the President might say, “huge.”
Any competent supply chain professional is well versed in Risk Management, so we understand the logic behind President Trump’s move against Huawei. Word choice is important. The verb used was “understand,” which is not the same as “agree.”
The logic used to justify the lockout of Huawei is that they are susceptible to pressure from the Chinese mainland government. Based on current executive branch thinking, this means there is an inherent national security threat. In the words of Jack Clancy, Huawei is a “clear and present danger.”
Let’s peel back the onion in the information technology stack across the United States. There is an entire ecosystem of Tier 1 suppliers to American companies sourcing from mainland China. In 2019, according to statistica.com, the U.S. imported close to $65 billion in “cellphones and other household goods.” If Huawei is a risk, what about the rest?
There are so many rabbit holes we can spin down through the tiers in the supply chain. Picking one thread, where China is a key player, there are substances called rare earth metals. Rare earth metals are ubiquitous. These metals are essential inputs to the manufacture of things like smartphones, cars, night-vision goggles, and lasers. Around the house, rare earth metals are in ear buds, baseball bats, and golf clubs.
According to geology.com, approximately 80% of rare earth metal ore comes from China. We need these metals, not just for our ear buds, but as essential inputs to defense products. But, using the president’s rubric from the Huawei confrontation, shouldn’t we ban the import of rare earth metals?
As supply chain professionals, we have a responsibility to manage risk in the supply chain. The Huawei situation is a warning. There is a clash of the titans taking place, and it is our duty as supply chain managers to understand the emerging risks, through the tiers of the supply chain, and maneuver to get our networks out of the way.
