Unraveling the Gordian Knot: Considering Supply Chain Resiliency

An overview of testimony by Caolionn O'Connell presented before the House Energy and Commerce Committee, Subcommittee on Consumer Protection and Commerce on October 14, 2021.

Transcript

Caolionn O'Connell; Senior Physical Scientist

My name is Caolionn O'Connell. I'm a senior physical scientist at the RAND Corporation. I testified before the House Energy and Commerce Committee, Subcommittee on Consumer Protection and Commerce, in a hearing about mitigating supply chain disruptions.

Supply chains, defined as the raw materials and components required to manufacture a product, have frequently been called a Gordian knot, so large and complicated that simply understanding all the links can feel like an intractable problem. But that definition is grossly incomplete in our modern-day society. We are entering a world where cyber disruptions can easily become supply chain disruptions.

In today's globalized economy, it is neither feasible nor desirable to return all production to the United States and eliminate all foreign sources from U.S. supply chains in an attempt to increase resiliency. In addition to the fact that it would be economically challenging to move all production to domestic sources, foreign sourcing can help mitigate some forms of supply chain risk. For example, when U.S. sources face disruptions from natural disasters, the ability to turn to foreign alternatives to reduce risk of disrupted supply is invaluable.

The public sector's role in mitigating disruption can be to make investments to increase the overall effectiveness of a given sector's supply chain. The public sector can shore up vulnerable supply chains that support critical national security functions and essential elements of the U.S. economy, for which the private sector has an incomplete appreciation of the risk or for which the cost burden outweighs the perceived benefits.

If everything is considered essential, then nothing will truly be protected. Just as businesses must assess the cost and benefits associated with supply chain resiliency, the U.S. government also needs to understand the value proposition.

Supply chain vulnerability stretches across whole sectors of the U.S. economy. It's a national security issue in the most basic sense, a set of interests that, if disrupted, could directly affect the health and well-being of the United States and its allies. Meeting the challenges will take considerable effort, analysis and thought.

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