UK Prime Minister Rishi Sunak and US President Joe Biden have agreed on The Atlantic Declaration. An important part of the Declaration involves collaboration in building a robust supply chain. Oliver Chapman, CEO of supply chain specialists OCI, the UK’s fastest growing company in 2022, comments.

“The Atlantic declaration states that the UK and US will be working ‘together to reduce our vulnerabilities across critical technology supply chains, including by sharing analysis, developing and deepening our channels for coordination and timely consultation during crises.’

“It also talks about the two countries building resilient, diversified, and secure supply chains and reducing strategic dependencies.

“OCI also emphasises the importance of building a resilient supply chain — in other words, a supply chain that can bounce back from adverse developments. 

“Furthermore, OCI talks about the need for a robust supply chain — the ability to withstand shocks — and increasing redundancy in the supply chain — meaning spare infrastructure in case of sudden changes. 

“At a government level, a resilient, robust supply chain, with redundancy, is critical — defence, for example, requires it, and so does the economy.

“But even when you drill down and look at the supply chain from the perspective of individual businesses, these three requirements remain vital.

“It all ties in with the imperative to know your supplier’s suppliers (KYSS).

“Furthermore, one lesson of recent supply chain shocks, caused, for example, by the war in Ukraine, is the need to reduce over-reliance on any one region.

“Likewise, there is danger in allowing supply chains to become over-reliant on China. This is illustrated by China’s dominant position in rare earth elements, which are critical to modern technologies, including smartphones and renewable energy.

“But reducing reliance on China is neither going to be easy nor achieved rapidly. China does not hold any particular geographical advantages in the mining of rare earth, but it has developed a sophisticated supply chain, giving it an ecosystem which supports the refining of rare earth.

“Likewise, China has a dominant position in battery production, especially in the supply of cathodes and anodes for batteries.

“The US Inflation Reduction Act may well serve to ultimately allow the US and maybe via the Atlantic Declaration, the UK, to build critical infrastructure to supply chains which are not overly reliant on China. (Competition is good, but a situation in which one region holds an effective monopoly is not desirable.) But this will take time, probably several years.”