//php echo do_shortcode(‘[responsivevoice_button voice=”US English Male” buttontext=”Listen to Post”]’) ?>
There is great excitement and growing anticipation charging through the electric vehicle (EV) industry right now, and for good reason. The world sits on the precipice of a defining moment in human innovation, at the crossroads of technology and transportation.
It is an all-out race, and the United States is positioning itself to take the lead in EV production. But a handful of countries, including China, are so far ahead that catching up is not as easy as simply investing in domestic battery production.
China has one of the strongest long-haul advantages: a robust supply of lithium—the soft, silvery-white metal critical to the batteries that fuel EVs. It is expected that China will continue to outpace the U.S. in the production of this metal, potentially dominating a third of the world’s lithium supply by 2025.
Lithium is easily the most popular and necessary material for EV batteries, providing ideal conditions for storing more energy. It’s the commodity that every EV maker needs in its pipeline. But as more automakers ramp up their EV production plans, the competition for this finite resource is creating yet another logjam of the world’s supply chains.
Steep hill to climb for U.S.
The U.S. is on a mission to relieve itself of its “dependence” on non-domestic lithium, with the primary focus right now on getting the lithium supply chain in sync with its EV ambitions.
The country, however, has been an underdog in lithium production for decades. Since 1995, that gap has only widened—with Australia, Chile and China producing most of the world’s lithium. The U.S. has the steepest hill to climb with some of the most ambitious goals to achieve.
Leaders in Washington have made these goals—related to climate change and EVs—abundantly clear, and money is starting to flood the sector to get the country caught up. A public-private partnership known as Li-Bridge, under the helm of the U.S. Department of Energy, released a report in February. The conclusion? U.S. companies are a decade behind, to the point that the lack of a sustainable lithium battery supply chain teeters on becoming an economic and national security disaster.
The Inflation Reduction Act, signed into law last year, provides billions of dollars to spark investment and start tackling these issues—a that step, while vital, is not the whole answer. One important thing is missing: The role of strong supply chain management of the pipelines we have today.
A delicate balancing act
While China is third in overall lithium production, it leads the world in overall EV battery production capacity.
The U.S. will have to rely on non-domestic lithium supply chains simultaneously as it ramps up its own. The country is pushing investment via the Inflation Reduction Act, but it will take years to grow into a fully independent, domestic battery materials pipeline.
Critical to get ahead now
If the U.S. is going to win the race with other nations to dominate lithium battery production, effective supply chain management will be the key.
It is possible to do so, but getting ahead in this long-haul race now is critical. While local, state and federal government leaders work to develop a strong domestic supply of battery materials, the U.S. industry must stay focused on navigating the current lithium supply chains.
Resilinc works with companies like General Motors on these goals. Evolving from a reactionary approach to one grounded in foresight and early action—by putting preventative solutions like multi-tier supply chain mapping and monitoring into place—is game changing.
Knowledge is power
Information is at the core of supply chain risk management, while mapping is the foundation of supply chain resiliency.
Mapping enables manufacturers and companies to know exactly what parts or materials may be delayed by an event, such as a factory fire, extreme weather event, or ESG violation, affecting a specific site. Mapping also includes information about which activities a primary site performs, the alternate sites the supplier has that could perform the same activity, and how long it typically would take the supplier to begin shipping from the alternate site. This is the most effective method to ensure continuity of supply.
One of Resilinc’s global biotech customers leveraged part-site mapping to avoid supply disruptions after Hurricane Maria devastated Puerto Rico in September 2017. Before Maria made landfall, the firm was able to identify two Puerto Rican sites that supplied 25 to 30 items to its North American manufacturing operations. Assuming these sites would be compromised, the company made several million dollars’ worth of forward purchases from alternative suppliers that averted what would have been costly delays in manufacturing.
By contrast, Hurricane Maria left similar companies floundering for weeks trying to analyze which suppliers and materials would be impacted; many subsequently faced allocations and paid large premiums to secure constrained inventory. In the aftermath of Maria, hospitals also struggled for many months to obtain adequate supplies of IV bags.
Mapping, coupled with monitoring your supply chain for potential disruptions, gives manufacturers time to react and minimize risk. Resilinc’s early-warning system, EventWatch AI, which is a 24/7, real-time alert system on over 400 disruptive events and sub-event types, provides actionable insight that can impact an organization’s supply chain ecosystem.
Take, for example, another Resilinc customer: a U.S.-based electronics manufacturer with more than 30,000 employees worldwide that sells high-performance components globally to original equipment manufacturers in a wide range of industries. It operates its own manufacturing plants in the U.S. and other countries, and relies on hundreds of suppliers and manufacturing sub-contractors worldwide.
On January 4, 2020, the manufacturer was alerted by Resilinc’s EventWatch about the potential supply chain impacts of a “flu-like illness” that had infected “dozens” of people in the Wuhan region of China; Wuhan is a major manufacturing hub for NAND flash memory, optical electronics, semiconductors, active pharmaceutical ingredients, and other high-performance parts and materials. Aware that disruption was likely, the team logged into its Resilinc EventWatch platform and, within five minutes, was able to identify the specific Wuhan-area sites where its parts and materials were produced.
With Resilinc’s automated tools, the team didn’t have to scramble for the data it needed, but quickly generated a list of critical suppliers in the disrupted areas and ascertained whether they were impacted and how seriously. Procurement staff concentrated on communicating with the most critical suppliers, especially those that had reported impacts.
Supply chains are complicated, and keeping track of all the external forces often exceeds human capacity. That’s why AI- and ML-powered supply chain risk management will be so critical in helping the domestic EV market ramp up.
It will be years before the U.S. is a real contender in lithium production. Meanwhile, there’s little choice but to work within the supply chains as they exist today. Companies using high-level tools, technology and collaboration to manage supply chains and minimize risk are already one step ahead of the game.
—Bindiya Vakil is founder and CEO of Resilinc.
