In recent years the supply chain has been challenged by port backups, factory closures, material shortages, and labor and driver shortages. While disruptions caused by the pandemic and geopolitical turmoil have made some of the biggest headlines, severe weather-related disasters such as drought, fire, flooding and earthquakes have further compounded those bottlenecks, placing further pressure on a supply chain that’s already severely strained.
Weather-related supply chain disruptions are happening with markedly increased frequency. Last summer factories shut down across Southern China due to a severe heatwave and drought around the Yangtze river basin that depleted water levels, hindering electricity generation at hydropower plants and halting manufacturing for companies like Toyota and the Chinese lithium battery giant CATL. Stifling temperatures and drought similarly shrank water levels along the Rhine River in Western Europe, a waterway relied on by much of the continent. Some ships had to reduce their loads by as much as 75% so they could traverse the shallow waters.
And you don't need to look far back for other examples of extreme weather that’s rocked the supply chain. In 2021, an unprecedented freeze across Texas spurred mass blackouts and closed chemical plants, disrupting chemical supply chains and causing global shortages of some plastics. Later that year Hurricane Ida’s tear through the Gulf of Mexico shut down semiconductor plants, resulting in production delays and product shortages. These kinds of weather disruptions will only grow more common as climate change results in more extreme weather patterns.
Weather-related disruptions are especially difficult for businesses to navigate because they’re so unpredictable. They hit the supply chain without warning, and businesses are alarmingly vulnerable to them. A survey from the University of Maryland’s Supply Chain Management Center of the supply chains of 100 manufacturers, which include more than 12,000 U.S. and Asia production facilities, found that half of those sites were at high risk of being hit by floods, storms, droughts, heatwaves and fires. Yet most of those sites had no business continuity plans and no alternative sites lined up that could be quickly put into operation in the event of a disruption.
In order to get ahead of likely disruptions, supply chain leaders need strategy and process reengineering to comprehensively describe their supply base risk exposure and identify actions necessary to manage rapidly evolving circumstances and unanticipated shocks. Ensuring a 360-degree view of the actors and entities that make up the supply chain network forms the foundation of those strategies to cover as many unplanned situations as possible.
A More Expansive Control Tower
Brands and retailers that mostly outsource their manufacturing need technology in place to facilitate better planning far earlier in the process. Having built a high level of agility in your supply chain platform allows you to adjust rapidly to these unforeseen circumstances and limit the impact on the business.
While companies cannot directly mitigate the higher trending trajectory for severe weather and its ensuing supply chain disruptions, they can take steps to better mitigate risk. Digital tools are available that can provide visibility into freight in transit. With visibility comes efficiency so you can start acting on foreseeable delays rather than reacting at the time of disruption.
Technology can help reduce demurrage and detention charges and avoid the follow-up cost of lost shipments. Having end-to-end transparency and access to real-time data and alerts is an integral part of achieving improved KPIs in the areas of staff productivity, customer service and financial cost management. Better visibility can also help businesses identify new material providers and efficiently onboard new suppliers, while ensuring that those vendors adhere to your environmental, social and governance (ESG) standards and your products are sourced responsibly.
There’s a popular concept in logistics known as the control tower—a connected dashboard for tracking orders from seven days before shipping until they arrive. But a comprehensive supply chain management platform can do so much more than that, serving as a control tower of everything, from the earliest stages of product development. The right system should connect not only logistics, but all critical steps in product development, from design to sourcing, costing and quality management.
By taking a unified view of their supply chain planning and ensuring that every department has access to the same accurate, real-time information, businesses can better prepare for and predict disruptions and minimize their impact. Comprehensive supply chain management software also creates efficiencies that build permanent cost savings into retail operations.
Weather-related disruptions are only going to increase, and companies will no longer be able to manage them without agile supply chain solutions in place. The right platform can limit the impact on their business, ensuring they’re sourcing smarter, planning further in advance, and staying prepared for whatever storms lie ahead for the supply chain.
Tim Chiu is senior vice president of TradeBeyond, a provider of global sourcing solutions. He has more than 25 years of experience in supporting retail product lifecycle and global supply chain automation and information technology that enables collaboration between global commerce communities.
