Risk Reduction and Building Resilience
Supply chains cover the entire network of goods and processes that originate with raw materials and end with the delivery of goods and services. The elements of supply chains include, but are not limited to:
- Raw materials
- Production facilities
- Transportation services and infrastructure to move goods
- Delivery services
- Access to utilities (especially water and electricity)
- Logistics at each step of the chain
In the context of the Federal government, the supply chain may end with either the delivery of services or goods to the agency or with delivery beyond the agency, such as services provided to taxpayers or international military operations. Many agencies lack clear insight into their supply chains, particularly when broadening scope beyond the first tier of service providers or suppliers. This lack of visibility into supply chains is exacerbated by the increasingly global nature of supply chains, making it increasingly difficult for agencies to effectively manage risks in their supply chains.
The Interaction between Weather, Observed and Expected Changes in Climate, and Supply Chains
Historical climate—the long-term average temperature and precipitation conditions in a given location—is one of many factors that already influences supply chains. For example, historical climate patterns influence where and how agricultural materials are produced, and thus where those products are sourced.
Extreme Weather Events
Extreme weather events and other natural disasters such as hurricanes, floods, tornadoes, earthquakes, and blizzards also already affect how agencies manage their supply chains. When these events occur, they can damage raw materials, disrupt transportation routes, or affect the final delivery of goods and services.
Agencies already use many risk management strategies to reduce the risks to their supply chains from extreme weather events, such as:
- Continuity of Operations (COOP) planning
- Extreme weather “mock events” or planning exercises
- Multiple sources of supply and/or flexibility in sourcing (and the inherent value of sourcing through GSA due to their flexibility in sourcing)
- Explicitly pushing risk management responsibilities to contractors
These tools will be useful in combating any added climate risks.
Observed and Expected Changes in Climate
Observed and expected changes in climate is expected to affect long-term climate trends as well as the frequency, severity, and location of extreme weather events and other disruptions (e.g., nuisance flooding). Both, in turn, could create risks to supply chains such as limited supplies, increasing costs, and inability to provide critical services.
For example, over the long term, changes in climate could affect growing seasons and thus change the timing and geographic availability of agricultural commodities. Risks of gradual long-term climate shifts may be particularly acute if they affect raw materials that are only available in limited locations around the globe.
Extreme weather events, meanwhile, are becoming more frequent in some locations, which could cause more frequent supply chain disruptions and potentially increase the costs of goods.
Risks presented by observed and expected changes in climate or extreme weather may be similar to those presented by other threats (e.g., political or economic instability, aging transportation infrastructure, poor communications) and for which there may already be compensation built into risk management. The mechanisms that agencies already use to manage their supply chain risks will be critical to combating any added climate risks.
Content developed by the the Office of Acquisition Management, Federal Acquisition Service, General Services Administration.