How DHS is Building Supply Chain Resiliency Through Predictive Integration

Machine Automated Transcript:

Folks, we’re in for a great show for simply trade podcast. Hey, today we have a great show. We’re going to talk about some supply chain resiliency and what the Sam Hill does all that mean. I love it. Hey, Lala, what do you what do you think here?

Well, it’s funny because this morning, I woke up and the big headlines this morning on TV was, the whole world is shut down because there was a little glitch in it. And the good news is, number one, they it’s not a cyber attack. So good news. Secondly is the everything’s shut down because something happened with a update or a patch to a vendor’s third party solution to a lot of systems that are used at enterprise type servers? Yeah, and so it shut down banks. It shut down airlines. It’s shutting down. It’s just a mess right now, but anyway, and I thought to myself, Wow, so it’s kind of a good segue into what we’re talking today is not that we’re doing cybersecurity or anything like that, but we’ll have our guests explain a little bit how there might be a little connection to that and but Andy, you and I have been talking about bringing on government officials and people in the government. Because when we do go to these conferences Andy, we run into, you know, like DHS or CV, they’re like, we’d like to do outreach to the public. And so we’ve looked for opportunities like this, and we got really, really lucky, like, extremely lucky, and we got an assistant secretary to come on our show and talk about their department, some efforts that they’re working with a supply chain resiliency. With

that, we’re bringing on chrisowski, if I’ve said that right, and then listen, if I haven’t, please forgive me, because I can butcher up more people’s names. Everybody’s like, oh, that’s just Andy, did you just walk in off the street and say, hey, you know I want to go for this job, or what happened? What’s your background? A little bit. Krista,

yeah, sure. You know, not, not necessarily off the street, but both old and new in a way. So just recently, back to the Department of Homeland Security, in their Office of Policy, where I’m the Assistant Secretary for trade and economic security. So that is a an existing function that’s been around for a bit. I’m new to it in my current capacity, coming on board. What was it late, late

November, I guess, of last year. So I’ve been on board for a while, a few months here, but returning from being with the Department of Homeland Security. I mean, really from the beginning, I was fresh out of grad school when I came to the department a month before 911 so and technically it was not even the department at that point, so still us custom service under treasury, so I’m one of the original plank holders, I’m proud to say, and have just had an incredible opportunity to to kind of grow and mature with the department and sort of see it as it as it moved through the different stages of becoming a department and increasingly taking on new and diverse missions.

Well, reminding our listeners and all that one of the things the whole objective with the creation of DHS was to, you know, obviously we got sucker punched in 911 and with that, is bringing the agencies together so that there is a stronger communication chain and a stronger, shall we say, a teamwork effort and protecting, obviously, the our country and our citizens and whatnot. So there’s a lot of things that are going on with that we’re going to be talking today about, the supply chain resiliency so there is a new center that has been set up that I understand is under your purview, the the supply chain Resiliency Center. Is that right?

Yeah. So simply put, the DHS established this supply chain resilience center late last year, and the idea is that we needed a center to lead and coordinate the department’s efforts to and this is where it gets important to assess and mitigate potential supply chain disruptions, but also improve our ability to manage actual supply chain disruptions. So it’s sort of that two fold mission. You know, I know that that’s a pretty broad statement, but I think now as as I, as I try to explain the core competencies of this new center, it’s really to emphasize the fact that we want to be better at predictive analysis and we want to be better at integrated problem solving. So sorry if that sounds too wonky. It really, I think, helps us differentiate what it’s going to do that’s additive to just the broad array of capabilities and experience that we already have within the Department of Homeland Security, and, frankly, that we have across the interagency. So maybe it’s helpful, if I just kind of frame this a little bit and give you a sense, if we step back, I’m like, Okay, what are the first principles here that kind of drove us to the realization that that we needed a center like this. So, you know, principle one is that, you know, I think it’s no news to you, no news to many of your listeners here, all professionals in the space that you know, we’re really at a an inflection point, you know, a time where we’ve got significant change is occurring, and that change is bringing unprecedented, you know, opportunities, but but frankly, some unprecedented risks and threats. And this has just simply accelerated a convergence of what we’ve seen coming for a while, which is convergence of Homeland Security, these things you had been talking about with, like terrorism and drugs and kind of what the bread and butter of what DHS was originally established, a convergence of that with broader economic interests. And what we’re seeing now is this concept, and this broader concept of national economic security. So that’s sort of framing principle number one. And the second framing principle, as we kind of think about how we how we wanted to to jump into this space with the supply chain resilience center, is that we’ve got a history and legacy of really strong frameworks, and that those frameworks of the past are really still relevant for the frameworks of the of the present. And I’m talking about things like the the need to to partner, the need to have advanced information, the need to do risk management. So we’ve got these frameworks, but what we’re trying to do with the center is to sort of ambitiously reimagine those and aggressively repurpose those, so kind of build upon these, these concepts that that exist but make them fit for purpose, for the future that we’re jumping into here. I can give you a little bit more granularity here, as we’re when I talk about the this inflection point that we’re at, and you guys have talked about it on your shows, quite a bit that we’ve you know, we’re coming out of the pandemic. We saw huge amounts of supply chain disruptions happening there. We’re also sort of in an era where climate change geopolitical tensions all driving a recognition that we’ve long had that this integration

of supply chains, of just globalization and economies, which has been so great and given us so many sort of great things, has also triggered a lot of upsetting and alarming trends, and that we need to take a look across the way that not only DHS, but the whole homeland security and national security and economic security enterprise is set up, and pull the tools that still work, sharpen them up, make new tools if we need them, and have identified areas where, hey, look, we’ve just got a gap here, and really take a hard look at the authorities, the data, the expertise and the relationships that we have in the department, and transform that into something that’s going to be able to better predict what some of these impacts are going to be and prepare for them, as well as continue to respond and mitigate them as they arise. And do this all in the context of continuing to deliver on the core missions and the the historic missions of, you know, security, safety, and of of the of the US and and citizens. Alright

with that. Let me ask this question. Is that, as we’re going through this, you know what’s coming to mind? And I want to say, you say, okay, so I love the the fact that you’re looking at it utilizing data for analysis to try and predict, all right, where’s the hot spot? You know, obviously the for example, you know, we’re alright. Let’s, let’s kind of review some of the disruptions out there. The Panama Canal has had a drought. It’s recovering from that. The frequency of vessels now is moving through the Panama Canal is definitely increasing back to close to normal levels, which is good the hoodie situation in the Red Sea and the vessels having to go around. I mean, obviously we’re talking a lot about the i. The ocean carriers. You know, we were just talking about where rates, right now are skyrocketing out of the China region to the US, which is going to be another major cost factor. But with that, the question comes into play is, do you foresee? You know, like the Western ports congestion in there are there now due to the routing of vessels using the back door, going all the way around and going around the Cape of Africa to the eastern side of seaboard of the US, is there a situation where maybe there are port congestion issues there, and all that, container shortages, aircraft and cargoes and different things that you’re looking at saying all that? Here’s, I guess, my question that I have is that okay, let’s just say, and I’m going to oversimplify it. Let’s just take the Western ports, you know, Long Beach, la areas and all that, yeah, because, all right, there’s a congestion. There’s their ships that are, you know, waiting to get in there is like, I hate to be so flippant, but on part of it is like, okay, gee, there’s the Southern California ports or congested. What do you do about that? I mean, what is the objective here? Because I know it’s taken time to ramp up. So this isn’t like, Okay, I’m going to get you here. This is a case where I’m like, so what do we do about this?

Yeah, absolutely. And, you know, added to the list of sort of potential disruptions that you had, you had detailed there. I mean, look, we’ve got, we’ve got potential strikes at borders. We have rail closures at our own borders. We’ve got, you know, the potential for cyber events, I mean, and we’re really trying to get our arms around envisioning disruptions that are not only going to happen sort of one at a time, you know, having a cyber attack, you know, potentially, but, but what a weather event, maybe a health emergency, but what happens if these converge on us? And so that’s where we’re wanting to do better at sort of predicting, sort of concentrations and risks, concentrations of commodities that could then translate into a risk of those not being available for citizens, for the DHS mission, for manufacturers that are critical to, you know, producing some of the goods that companies rely upon in the United States, so being predictive and and having that analysis so that we’re not in the moment responding to each of those things that you had just mentioned, but then also having a structure integrated decision making structure where we’re able to deal with many of those disruptions all at once. And what I mean by that is what happens if, you know, we have that situation that we had at long LA, Long Beach with, you know, containers stacked, or vessels sort of

stacked outside the port waiting, you know, but maybe on the east coast a weather event, and maybe, you know, God forbid, the military is also looking to deploy and sort of pulling resources. And so what this, that it’s really at the core of the center, and you’re right, we all are just sort of standing up is to try to put some formal structures in place in the Department of Homeland Security that are going to be able to integrate across the 22 different DHS components, where they’ve got immense data and expertise and resources, but also connect to other centers across the federal government, you know the Department of Commerce or the Department of do T’s flows initiative, so that we’re really able to provide our policy makers. This is essentially a policy function with the information, the analysis, the options that they’re going to need to make informed decisions and and so it’s really that distinction of not necessarily being the operational body that’s going to rush to put on that, put on that reflective vest and head out to the border and sort of fix the problem, but to try to actually get ahead of it. And then, as you know, the the structure that’s been a core mission of DHS is in the US governments for decades, to like, respond to that, to to deal with that emergency. We’re in the background, really understanding, okay, what are the impacts to supply chains? What can we learn from this to be better at predicting it into the future? And how can we put mitigations in place, both to deal with whatever that acute incident might be, but also to reduce the likelihood that this happens again. What

I was going to ask is, what about those situations where maybe we, the importers, might have control over and I mean, very. Specific. Now I’m just gonna go right to the point is with forced labor. I mean, I It doesn’t sound like that that really falls into the resiliency or anything. But, like, how are, I know it’s, it’s addressed by DHS. But how does that work into this? Like, or would it even work into it? Because, I mean, technically, we need to be tracing back and finding out if there’s forced labor or anything. But how does this work into like the program, if it even does?

Yeah, it does. And I think that’s an interesting reason why we decided to put this office here at DHS headquarters. You know, we’re building upon new authorities that were given to DHS under, I think it was the NDAA from from last year, where they’re really giving to DHS policy, the specific Express authorities for economic security and and for bringing additional capabilities, but also structures to ensure supply chain resilience and forced labor. I view that as sort of a piece of having a resilient supply chain, sort of it is an example of a regulatory regime that has shifted, and as a result, you’re there are requirements across the board, for increased transparency into supply chains and an increased appreciation for, you know, potential geopolitical risks that could result in what you had thought was a supply chain that was resilient, no longer being resilient. And so I see forced labor is really a, you know, a an example of a shifting dynamic and landscape that we’re certainly watching at the supply chain resilience center, and it’s sort of feeding into our decision making. You know, foreign investments is sort of another it is an area where DHS, among others in the interagency, are constantly assessing information about, you know, investments made by foreign entities into, you know, us, businesses, or into real estate that might be right next to a major port, and we’re looking at the security implications of those investments. You know, what we don’t want is for that information that’s being developed as folks take a close look at the those investments, to be over here on one side and then on the other side, to have all the great information that CBP has about the goods and the of the businesses that are coming across our borders, to be over here in CBP ace, and then to Have all of the information that CISA has about critical infrastructure owners and operators and risks to be sitting over here, and then to have all the information that ice has about bad actor networks and counterfeiters and folks that are, you know, moving drugs in and out, to sort of be sitting over here, we really want to pull all that those signals into sort of a centralized framework, or a centralized hub and and to be able to then draw even better conclusions about where the risks are, and then

have so that’s the predictive analysis piece, but then also have the structures in place to do something about it, to be able to empower our decision makers to look across the full set of authorities that DHS has and realize that a customs problem identified by customs at the border might have a solution that requires FEMA to do something, or Coast Guard to do something, or a completely different agency to do something. And so we really are trying to take a model of not only pulling from all the DHS components and making sure we’ve got access to their authority, their expertise and their data, but that we’re then empowering the decision makers in DHS and across the US government to figure out how to proactively put in place mitigations, or to have sort of a broader, deeper set of tools to use if something does happen.

Let me ask this question, though, this that, as you’re looking at it, one of the things I’m not hearing right now, and I don’t know if there are plans for this, maybe it’s just assumed that it’s happening is input or boards or groups from the private sector, for example, you know, leadership from all the different ocean ports, leadership from the different transportation companies, things of that nature. So as you’re seeing something, and I’ll give you a good example. Here’s one of the things that comes into play. Is my first question is, is there, you know, private sector involvement? And secondly, let me give you an example of I know that there was an issue with the during the pandemic, the Western poor. Ports were struggling. There was such a congestion, and surprisingly, California was not allowing 724 operation of those ports, and the Biden administration had pushed to get that and and supposedly those ports were opened up to allow 724, operation. The unfortunate was, the unions didn’t respond, nor did the, you know, some of the other operations around there. I can understand you can’t turn that on a dime. I get that, but I mean it really, they, they never, really did create a third shift, if you want to call it that and whatnot. And so is that something that you would be able to deal with to say, hey, look, hold these folks accountable to try and deal with getting more vessels or more cargo moving.

Yeah, I think you’re maybe the easiest way to address that is to, first of all, to your question of the private sector engagement, like, Absolutely, that’s going to have to be critical. Right now, we’re a growing team, and we are relying upon inputs that we’re getting from the private sector directly, largely educational us, telling them about what the supply chain resilience center is, what do we want it to be? And trying to get input on, sort of, okay, what, what? What should it be? What are, what are the problems it should be tackling? But we’re largely for formal structures, relying on, sort of the just vast array of existing, you know, FACA committees, or other types of advisory committees that, you know, we’ve got dozens of them just across DHS, and pulling some of those relevant inputs through that structure. So we’ve got that educational output, you know, pulling a formal input through existing structures. And we’d love to grow and evolve that, and to meet, to do that, to meet sort of that particular problem set you just mentioned, I mean that that problem set of policy decision being

made by the White House, but needing to orchestrate that across, you know, scores of government agencies and that just are the ones that have authorities at The border. You know, the operators, the vessel carriers, the port authorities, and then the staffing from both the private and the public sector side. You know, that’s really, I think, where you see a lot of these supply chain disruption centers coming, where the White House has is building upon, sort of the existing structures, where departments and agencies have their authorities and their missions and their roles, and they do that, but then the pandemic, pandemic happened, and you had a whole lot of things happening at once, you know, in super fast time, and you needed more flexible structures To be able to give decision support to leaders and engage with the private sector and run analysis of like, what’s going to work and what’s not. And so you know, past this Prolog in many ways here where the experiences that I had working with CBP and with the interagency in setting up something like the US single window, the

international trade data system, and we put in place sort of a structure, the border interagency executive committee. And the idea then was to first try to digitize important export documentation so that we could just be more agile and making decisions about processing at the border just in regular times. But there’s applicability to times of disruption that we’re talking about now. So that was the, you know, the analysis part, but like, take that back 1520, years, and then the integrated decision making part was this structure, the biec, where the idea was, look, we can have all the best information in the world and have it like moving quick, super fast. But if we all still disagree on kind of the the decision, you know, it would be great if you know, as you had said, parts of the government, or only the government, is ready for 24/7 operations. And, you know, a critical part is not it brings everything to a standstill. So when I say past is prolog, we’re building on those structures that had worked. You know that we that we needed to be more agile and moving goods across the border by digitizing it, but we’re just taking that into the next step of like, we need to be more agile by not only digitizing all this information and having these structures in place, but now, you know, applying things like no conversation is complete without like AI. You know, applying AI and machine learning to really fast track the. Us and give us the ability to not only make sense of the current environment, but make better sense of the future environment. And then look across the range of authorities the DHS has and says, Okay, I see you know a geopolitical risk here that is resulting in X, Y or Z. So let me play out a couple of policy scenarios and feed those to my decision makers around, how could we be more flexible and reroute cargo if we’re anticipating a border closure, or if we are seeing a convergence of a hurricane, a cyber attack and maybe a health incident, Tee those scenarios up to our leadership, and do that in a way that we’re doing it with the DHS leadership and then the interagency leadership and the White House leadership as well, well,

and taking that a step further is that if you’re seeing, like, your predictive analysis here, seeing some trends or some possible, say, hotspots, the geopolitical thing comes to mind is, right now is China’s sword rattling with Taiwan and that situation. And there’s a lot of things going on with that. And course, then the other side is, you know, the Russia situation and and their subs in the in the Black Sea, and different things, all right, so as all that is going through, the other question would be, in part of DHS, are you also reaching out to the military? So if there are actions or potential actions, whatever, is there a cause and effect discussion going on.

Yeah, I mean, and that is really a core function of, let’s say FEMA, in the case of DHS in particular, where looking at DPA or defense production act, I mean, we’ve got these muscles, but we just haven’t exercised them in a while. And so as we are looking at an increasing, you know this, as I said, this connectivity, this globalization, where we’ve now got our our domestic security sort of integrated into economic security, you know it, we are looking very closely now at, you know, what happens if? What happens if there, there does need to be a deployment, but at the same time, we’re seeing major This is, in fact, one of the big initiatives that we just had, where the ship to shore cranes that are responsible for offloading and bringing in and out all this containers. Are there vulnerabilities? Are there cyber or physical vulnerabilities associated with like a core piece of the overall ecosystem, and that’s where we sort of the playbook, if you will, of the supply chain resilience center was to understand largely from feedback that we had received from sort of folks that were using this equipment and engagement with the the Department of Defense, who also rely upon these things to put goods on their ships if they’re deploying. And to assess, well, wait a second, if this is a key node here, we’re going to assess the whole supply chain. And here’s a key node, here’s a key capability. Maybe it’s a key commodity. What happens if? And then run some analysis, and we realized, like, wow, that could, that could be a really bad day if either one or a network of those of those cranes go go down. And so then we looked across the the capabilities that the DHS had to put in place to

mitigate that. And the best tool immediately was authorities under the Coast Guard to provide, to require, put sort of cyber hygiene requirements in, and so that’s a play that we’re hoping to repeat time and time again, of identifying that threat, figuring out, you know where, where the the applicable tool is within DHS, or pushing that up to the out to the interagency or up to the White House in Building on these core missions of, you know, CBP and FEMA and CISA and Coast Guard and TSA. So the folks that are actually sort of doing the investigative work are using sort of the systems to be the detectives and to find the bad stuff. We want to take all the signals that are arising from that work and be able to now look forward and draw conclusions about this happened, or this is happening, and therefore what might happen

as we’re needing to kind of wrap this up. Here’s a question for you that as we’re looking at this, and this may be a little different, because most you know government, I can’t, you know, promote this or whatever, but basically is like, what are some things that you know, the public, if you will, or the private sector? Could do to help your your center and help yourself. In particular, I’m thinking, if there are people that have some ideas that would like to submit some things to you or whatever, what can we do to help you?

Yeah, I’d love, if you I’d love folks to be reaching out to me and my team directly. We are very much in the taking ideas on board stage, we’re piloting a bunch of new capabilities to just figure out what’s out there in the commercial space for sort of AI analytics and whatnot. You know, our big goal here, we’ve got a really interested team, folks that were actually at the created things that, I think, that was called the US digital services at the time. So sort of these bringing tech experts from the private sector to help DHS really try to be at the cutting edge of innovation. And we’ve got those folks that had created us digital services now. Was like our Chief Technology Officer. We’ve got Secretary Mayorkas, so he’s really excited about the potential to lean forward and use these systems in a new and innovative way. So we’d love ideas about how we can better integrate across the DHS mission space, and do that using technology, using AI, using new sort of mechanisms and ways to just integrate with the private sector, and we also that’s sort of piece one integrating across the DHS mission space, but it’s really imperative that we rethink the way that we’re able to integrate both in just talking, sharing information and having networks with the private sector, but frankly, having common understanding of sort of signals, demand signals, and sort of what emerging, disruptive trends look like. And maybe that’s a piece of technology, maybe that’s the utilization of AI. Maybe that’s just a better sort of network of relationships. I think we can go old school as well as like, looking into the future to figure this out, but those are the areas where we’re really looking for, for the best and the brightest ideas, from from, from everyone, including the private sector.

Well, listen, thank you so much for being on our show. I hope we get to do some more of these, especially as we start getting into maybe a little bit more detailed on what’s going on with the center, how it’s going through some of the challenges that you’re up against. Feel free to anytime you want to come on or have somebody come on with us. We’ll be glad to, you know, talk about the issues and hopefully get you some more support.

That sounds fantastic. And you know, I, as we come up on our one year anniversary in a little bit here. Maybe that’s a good time to reflect back on what we’ve done and also come with some ideas about what we’re doing.