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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To meet these ever-changing needs, organizations need flexibility not only from systems but also from processes and people that support the supply chain. However, the issue is that achieving operational potential is a continuously changing target.

Maximizing efficiency with continuous process improvements

No matter how efficient the supply chain is running, finding ways to improve efficiency is something that organizations’ should always be doing.

However, knowing how to optimize and improve your supply chain can be a challenge. This is because it is an ongoing pursuit of moving inventory efficiently to meet the rising demands of your consumer and also manage cost pressures. The organizations that do this effectively don’t just purchase new technologies but look for efficiencies in day-to-day operations.

Organizations need to drive continuous in their operations and supply chain, enabling better order processing, shipping turnaround, reduced costs, increased cash flows, improved stock management, better transparency, and enhanced customer satisfaction. Process improvements become necessary for supply chains and operations to adapt to ongoing changes, technological innovations, increased demands, changing trends, and growing consumer expectations.

The role of continuous process improvement (CPI) in supply chains

Supply chains encompass all operational activities of a business internally, as well as entities and various partners externally. Therefore, supply chains cannot act as a sole entity, they depend on their suppliers upstream and require to continually intensify the level of customer satisfaction downstream.

The strategy of CPI is based on three aspects- people, processes, and technology. All three factors should work in tandem for continuous process improvement to be effective in the long term. By aligning people, processes, and technology around a CPI allows for a more effective collaboration between the operational and infrastructure technology teams, and leads to higher productivity, and better deployment of complex supply chain systems.

When organizations ensure that their employees are trained to work within predetermined processes and operational structures and these processes are integrated with technology that streamlines the delivery of preferred topline outcomes- the entire business will benefit from the new levels of productivity and precision.

Continuous process improvement is the key to realizing the supply chain potential

Continuous process improvement is an ongoing project to elevate functions and processes across the supply chain. The process should aim at gradual improvement over time and not ‘one-time’ breakthroughs. The aim should be to reduce inefficiencies in operations at each level. The organizations may be enabled by reducing the time it takes for completion of a procedure, enhancing process efficiency and improving the supply chain quality. Such improvements are based on small tweaks and basic changes and not big breakthroughs or innovations.

CPI is essential for supply chains to cope and adapt to continuous changes, meet higher demands and customer expectations, technological improvements, and deal with uncertain market situations. That said, regular feedback is an integral part of continuous process improvement. It helps in constantly identifying opportunities for further improvement by effectively prioritizing and evaluating the development of designs and concepts.

Conclusion

The bottom line is that ensuring top-line growth is not the only purpose for any organization, but to survive the changing market conditions, and competition in the long run while keeping the customer base satisfied. This can be achieved by managing and controlling the entire supply chain, both internally and externally.

The pre-requisite for supply chain operations is to improve efficiency and effectiveness to the same level by using applicable methods that can facilitate and enhance its implementation. With continuous process improvements, organizations can reduce costs and time, eliminate waste, and ease inventory, increase profits and customer satisfaction levels.

To stay relevant in the constantly evolving market and to maintain market share and competitive advantage, it is important that the organizations endorse extensive use of continuous process improvements throughout the supply chain. This will ensure that their potential framework is adjustable, logical, and resilient to uncertainties, technological innovations, and an increasingly informed customer-base.

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