On the heels of the United Nations Paris Climate Change Conference, now seemed like an appropriate time to revisit an often talked about supply chain topic. The impact of climate change on your supply chain operations.
Tumultuous weather is perhaps the most commonly thought of supply chain risk related to Earth’s climbing temperature. Undoubtedly, the impact of wild weather is substantial. An increase in the number of devastating hurricanes, earthquakes, wildfires, floods and droughts should be worrying to everyone, not just those concerned for their supply chains. In 2014, three of the top five biggest supply chain disruptions were related to natural disasters. Typhoon Halong in Southeast Asia capped the list, causing a 41-week disruption at a cost of more than $10 billion for companies doing business in the region. Are we looking at a future where Mother Nature is responsible for the majority of disruptions?
Companies will need to evaluate the risk of losing a supplier in a specified geographic region, and whether there’s a case that needs to be made to diversify where raw materials are coming from, having multiple suppliers, and how far to take contingency plans. The same can be true for evaluating different transportation options. Severe weather can cause substantial delays, or even total shutdowns, of certain routes or modes of transportation. Supply chain managers need to have backup routes and options available and at the ready, and need to be able to quickly and effectively run scenario simulations to determine which course of action will allow for the smallest overall impact.
Another thought I had is whether these severe weather phenomenon will cause shortages of certain raw materials, like what we’re currently seeing with cocoa. What will that do to already unstable price fluctuations in some global commodity markets? Will supply chains be able to cope with the potential added costs? Can we expect to see an increase in civil unrest (and the associated supply chain challenges) as communities fight over dwindling resources? A good supply chain risk plan should take into account all of these factors.
In the current corporate climate, most companies are seeking to increase market share by flexing their supply chain to meet the needs of both the company and the customer. The question for many corporations comes back time and time again to: How can market share be retained or even post gains with on time performance? […]
Gartner recently released a new set of findings on supply chain management issues based on research they’ve done with end customers (you can purchase the research here). Among the many good insights is this: about 93% expect the pace of change will increase through 2010 (the specific question was: “Between now and 2010 do you expect […]
Top negotiators from countries around the world recently came together to form the final draft of the Paris agreement on climate change. All eyes were on the group taking part in the two-week long conference, where discussions centered on decisions crucial to the planet’s sustainability for future generations and us.
Although not enforceable at this point, it’s still a big step toward acting on this critical issue. With the stakes so high, I thought it was important to reiterate several key points and promote awareness on what individuals and businesses can do to contribute to global sustainability at a collective level.
As individuals, there are lots of things we can do to help preserve our world and reduce our own carbon footprint. A wide range of options as simple as installing a smart thermostat, to controlling food waste, driving fuel efficient or hybrid/electric cars, or taking part in ride sharing are all ways we can do our part.
For businesses though, options and impact are much larger, particularly when it comes to implantation across the entire supply chain.
With demand patterns so volatile and competition in markets so intense, there is often less chance for businesses to consider what’s best to help our world while they also focus on trying to achieve other corporate level targets.
As an example, you could have a last minute order that needs to be delivered within a short time period, or you could have a disruption that will force you to change the type of transportation you originally planned. You could even see your forecast for your new product is way lower than what the market is demanding (hopefully you are using RapidResponse for your stat forecast!). However the change occurs, you have to act fast and recognize impact before it’s too late. And you need to consider the environmental impact of that change.
Insight #4 – Embracing Supply Chain Technology as a way to change SCM
I have been following the United Nations Climate Change Conference. If you were to ask anyone what he or she thought about climate change, you would probably hear:
- Concern or Fear
I came to the realization that you would get the same reaction from a supply chain executive when discussing supply chain technology.
When I refer to supply chain technology, I am talking about software to support the fundamental supply chain business processes — Demand, Supply, Inventory Planning, and Sales and Operations Planning.
- We have electric cars, new transportation systems, wind turbines, solar panels. There is much excitement about technology favorably impacting the climate.
- Like climate change, when you hear about new supply chain and manufacturing technologies, and the advancements being made, you want to be part of the sea change. Advanced analytics, cloud solutions, cross functional collaboration, big data, in-memory computing, 3D printing. These are all advancements in supply chain that are changing the way you do business. You will be more competitive, more profitable with more market share if you embrace these advancements.
“It will never happen to my supply chain,” said the first planner.
“We’ll sort it out when the time comes,” said the second planner.
Perhaps these fictional quotes resonate a familiar refrain. After all, on the list of things to do when managing your supply chain on a daily basis, ‘prepare for natural disaster’ likely sits far down the list, somewhere between ‘submit expenses’ and ‘organize file folders.’ I totally get it.
If you had anything to do with supply chain planning in the early days of enterprise resource planning (ERP), you may consider those years the “good ol’ days”. Spreadsheets were the latest and greatest thing, your biggest headache was a supplier failure, and collaboration meant walking down the hall to visit with your buyer or dropping by the shop floor to check on a machine breakdown.
Times have changed. Supply chain planners (I’m lumping in all the silos, including demand, supply, inventory and capacity planning) today are dealing with challenges that were unimaginable when Lotus notes were the next big thing. Arguably, changes to the good ol’ days started with product proliferation, increasingly shorter product life cycles, globalization and a more educated, demanding customer.
Aligning the supply plans to these new volatile demand profiles was no easy achievement. However, none of this physically destroyed your supply chain. The increase in extreme weather events is becoming commonplace for the supply chain community and the challenge of managing around these supply chain disruptions is the new norm.
Chocolates, wine, flowers, jewelry? What will you buy for the special person in your life this Valentine’s Day? Not planning to buy anything at all? You might want to seriously rethink that decision before you show up empty-handed.
Over the years, Valentine’s Day has become big business.
As you know, Valentine’s Day is an annual holiday, celebrated on February 14. It originated as a Western Christian liturgical feast day honoring one or more early saints named Valentinus. Today, Valentine’s Day is recognized as a significant cultural and commercial celebration in many regions around the world.
Commercial celebration is right.
According to the National Retail Federation, Americans are poised to spend more than $18 billion on Valentine’s Day gifts in 2017. That comes to about $137.57 per person. I’d really love a $137.57 box of chocolates. Heck, let’s round it up to $140 and skip the sentimental greeting card.