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How Companies Are ‘Riding the Wave’ of the Build America, Buy America Act

August 14, 2023
Keith Hartley

If you’re a manufacturer participating in infrastructure-related projects, you know that the Build America, Buy America (BABA) Act is designed to grow US-based jobs tied to domestic infrastructure. The Act also requires any infrastructure project receiving federal funds to source certain materials and products from the US. This is definitely impacting the way companies within and outside of the US are building products.

Basically, BABA contains new purchasing regulations for iron and steel, manufactured products used in infrastructure projects, and construction materials. It means that all manufacturing processes that make any of these materials must occur in the US, and US-made components must make up at least 60 percent of the total component cost through 2023. Although waivers exist for certain circumstances, such as unavailability or unreasonable costs, manufacturers may experience higher material costs.  

The key challenge for manufacturers lies with how to shift sourcing to comply with BABA while managing costs. Whether manufacturing within or outside the US, you’re going to have to shift how you source and build products impacted by BABA. For domestic manufacturers, this means determining what must be shifted to US-based suppliers and what will have to be waived. For foreign manufacturers, understanding the gaps in the US supply chain will be an important area of focus. After all, there are many critical parts and materials essential to US infrastructure projects that cannot be sourced from US manufacturers.

Additionally, if the government enforces these requirements for all the components necessary for an infrastructure project, significant delays may occur until sufficient US manufacturing capacity comes online. By working together, global suppliers and manufacturers can maintain a balanced supply chain that serves all customers.

Think about BABA as an opportunity to accelerate your organization’s digital transformation. What seems like a complex and costly transformation process using manual spreadsheets and email can lead to incredible new value for your manufacturing operations. As an avid surfer, I like to compare this shift in thinking to riding a wave. Think of your organization as the surfer who paddles into a wave with impeccable timing and enjoys the exhilaration of riding the crest all the way to the shore. US-based and global manufacturers who don’t successfully ride the AI wave will get dragged to the bottom along with their emails and spreadsheets. 

Is your procurement team up for the challenge? Juggling a tangle of emails and spreadsheets may get you to your destination, but it will take considerably more time and resources, and you will likely leave money on the table with all of the manual efforts to identify and vet suppliers, parts, and materials.

That’s where AI-powered direct materials sourcing platforms can help. These platforms pull from hundreds of sources bringing together billions of part data points. Utilizing sophisticated AI algorithms, all these data get contextualized almost instantly. With the most intelligent platforms, procurement professionals can quickly vet suitable suppliers and select them, down to the part level, based on cost, risk, lead times, and more. Once suppliers are identified, built-in collaboration playbooks can further expedite the negotiation process. 

These AI-powered platforms provide sophisticated yet simple-to-use dashboards to manage risk and costs. By turning the contextualized data into insights and recommended actions, teams can quickly monitor all their spend and identify the best price for parts, components, and even raw materials. This enables companies to dramatically reduce their overall costs while mitigating risk.

You can either think of BABA as an opportunity to shift efficiently with current and future legislated changes or as just another cost to be managed. If you’re ready to “ride the wave,” you need to take the leap now.

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