With rising temperatures across the globe, scientists say that climate-related disruptions will intensify in the coming years. The level of carbon dioxide is increasing faster mostly due to human activity which has led to rising temperatures, rising sea levels, glacial ice loss, and extreme weather events. With almost 90 percent of the world’s freight moving by ship, the increasing sea levels will eventually threaten the supply infrastructure. A 2020 paper^⁠ in Maritime Policy and Management even asserted that if current climate science is correct, “global supply chains will be massively disrupted, beyond what can be adapted to while maintaining current systems.”

With the growing frequency of extreme weather events and warming temperatures, organizations will now have to invest in climate mitigation efforts including the shift to green energy and regulations on environmental due diligence.

Here is how the rise in temperatures could affect the supply chains globally-

Reducing global supplies

One of the most disruptive effects the rising temperatures would have on the supply chains is on the supplies. Climate change has already started to affect various industries thereby decreasing their output. With this trend, supply chains might have lesser and lesser reliable sources for some products.

Extreme weather events could decline global supplies even rapidly. For instance, the wildfires in North American forests are a grave threat to the lumber industry, and as climate change worsens it might become more frequent. Similar events like flooding, and hurricanes will have a negative impact on the seaside and oceanic industries.

Transportation challenges

With the rise in temperatures globally, transporting products and parts across the globe might become more challenging and even dangerous in a few cases. Severe weather events could delay transportation and can endanger employees. For instance, high-intensity rainfalls have become a common occurrence due to climate change and this alone can slow down ground transportation as it can cause storms in the sea, impact ocean transport, and delay flights leading to global disruptions.

Workplace challenges

Workplaces that sustain global supply chains are also facing the impact of climate change. The rise in temperatures can cause exhaustion and illness among workers. Besides that, the rising sea levels and severe weather conditions can displace the workforce thus making it difficult for some facilities and warehouses to maintain adequate staffing. Moreover, these facilities could themselves face physical damage, for instance, weather events like tornadoes, fires, floods, and hurricanes have all become more frequent and severe due to climate change.

Increasing costs

The above-mentioned challenges could also contribute to a rise in operational costs across global supply chains. For instance, as the workplace face staffing shortages due to severe weather-driven displacement, and suppliers decline, it is likely that output will see a downward trend. With demand remaining the same and output decreasing, the organizations would have to raise costs to make up for the gap.

In fact, supply shortages could alone have a significant impact on the costs. Even the staffing costs may increase due to environmentally driven displacement. Supply chains across the globe may have to offer higher pays to engage the workforce to remain in that area or to move to other place. For smaller companies, it can become a bigger challenge as they may not be able to adapt and face going out of business.

Supply chains will have to get ahead of the problem for sustainability

Rising temperatures will have a significant negative impact on the global supply chains and many of the trends are already visible. To mitigate the impact of extreme weather impact organizations will have to map their supply chains to understand better where the risks lie exactly, whether it is the supplier whose area is subjected to hurricanes or it is the transport unit that is susceptible to flooding. Organizations will have to find ways to cut emissions to improve resilience and reduce risks in future.

The bottom line is that the threat of climate change is grave but it’s not inevitable, businesses will have to be proactive. Companies will have to look at creating a comprehensive strategy including all stakeholders in the supply chains to mitigate climate change risks.

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This crisis has been a wake-up call to companies about how opaque the supply chain is. The quest to source materials and products at the lowest probable price has led to more complex and longer supply chains. As a result, there has been a lack of transparency, flexibility, and an over-reliance on certain suppliers or regions.

With the global economy beginning to get back on its feet, businesses are thinking of ways to protect themselves in the future from such a sudden crisis. The answer lies in building a more resilient supply chain network that balances cost with a range of other risk factors. It is now clearer than ever before that the global supply chain model needs to be more transparent, resilient, responsible, and sustainable. It has become a business imperative rather than being just a company strategy.

What Is Supply Chain Sustainability?

Sustainability in a supply chain is a strategy that takes social, environmental, and economic factors. Evidence suggests that the businesses that follow this kind of approach are likely to weather the storm of a crisis like this pandemic than their competitors. The reason being that accounting for social and environmental performance in a supply chain network requires communication, transparency, and a thorough understanding of suppliers and the risks that they are open to. This information will be vital in managing weaknesses and retorting quickly in a crisis.

Why Is Supply Chain Sustainability Important Than Ever Before?

The first aspect that will lead a business to a more sustainable future is the supply chain, especially manufacturing inventory. Manufacturers need to develop new ways to track and manage their practices in the supply chain, sales and marketing, and the manufacturing process. Now, even customers have become increasingly active in supporting these measures.

Furthermore, more than improving the product quality, sustainability in the supply chain improves customer relations. Consumers become loyal to brands that they share their values with,. This is why businesses are now focusing on more sustainable practices that use ethically sourced materials and reduce waste. For instance, cosmetic brands that use recycled packaging and plant-based components and label themselves as “cruelty-free” or “vegan” build their customer base faster. Thus sustainability in the supply chain results in brand enhancement and loyalty.

Sustainability in the supply chain model has proven to bring better efficiency in the long term. Organizations experience a significant decrease in their costs over the long run, which is eye-catching to both manufacturers and consumers. Thus, making it a win-win situation for both parties when companies move to a sustainable supply chain model.

To create and implement a sustainable supply chain management system, the companies need to identify their sustainability goals and objectives and then develop a plan to achieve them. Businesses need to create a sustainability policy for consumers and suppliers that covers all factors.

Lastly, evaluating the supply chain from top to bottom to determine if it is sustainable or you need to change some things like vendors, suppliers or transportation options etc. For instance, if a business is over-reliant on certain suppliers or regions that face environmental risks, a business can manage that risk by diversifying the sources of supply.

Conclusion

Most companies now genuinely want to push in just labor practices and environmental responsibilities throughout their supply chain strategy. They are working towards improving their supply chain sustainability, often experimenting with unique collaborations with suppliers, consumers, and even competitors across geographies and sectors.
Moreover, companies are now using technology to analyze, tweak, measure, and optimize operational processes with continued advancements in technology. The insights gained through data analytics and machine learning are being leveraged to exploit opportunities for sustainable processes.

Furthermore, many rival organizations are now partaking portions of supply chains and collaborating on creating and establishing sustainable practices that can benefit everyone. By combining efforts, they are advancing the objectives and offering an opportunity to build credibility with industry and consumers while creating positive public perception.

Although the road to sustainability cannot be reached overnight since it requires initial investment and necessary changes in terms of procedure and culture. Companies are now focusing more on sustainability as they have realized that a sustainable approach to supply chains is now the only viable choice for success in the long term.

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