Climate change and other environmental impacts can affect your supply chain.
By Steve Dowse
Alongside the technology advancements and digital transformations happening across supply chains, climate change may ultimately cause the most disruptions, particularly in certain industries. For instance, it’s worth noting that scientists from the United States, United Kingdom and China all issued research forecasting how barley harvests would be disrupted by different climate scenarios this century.
Because changing weather patterns have always affected beer making, brewers have worked to make it more resilient. Despite these efforts, we’re now witnessing such an increase in droughts and heat waves, that it will ultimately reduce the global production of barley and therefore decrease the supply of beer and drive up prices. As a result, we’ll see the average price of an average six-pack of beer rise to $16 in the United States.
This is one example of why introducing more ethical and sustainable supply chains is good practice for any business. It will improve regulatory compliance, enhance business branding and reputation, reduce waste and overhead, and reassure consumers on ethical environmental sourcing.
To start, creating a purpose-driven supply chain will mean the seller/shipper has taken steps to improve its internal procurement and shipping processes to eliminate unproductive practices. That includes everything from improving shipping routes to eliminating empty miles, to upgrading trucks to cut back on emissions.
A purpose-driven supply chain is optimized, efficient, effective and beneficial to the larger supply chain ecosystem. To achieve a more sustainable supply chain, organizations should consider the following best practices.
Consolidate Shipments Using Supply and Demand Planning
Predictive analytics can forecast where and when goods will arrive, and consolidate shipments from multiple suppliers destined for multiple destinations. At the same time, predictive analytics combined with artificial intelligence and machine learning, can predict likely demand and ensure much more efficient supply and manufacturing processes. Ultimately, this makes the most efficient use of assets (i.e., containers, trailers, etc.) and transportation, reducing the total amount of greenhouse gases generated per unit of cargo by minimizing empty miles. An empty container is a wasted container.
Reduce Fossil Fuel Consumption by Optimizing Routes
Artificial intelligence can work with GPS devices to optimize international, domestic and local shipping routes. Advanced analytics can even update routes in real time by taking into account congestion and other relevant data. Until logistics moves to electric and other smart vehicles, route optimization is one of the best ways to reduce the environmental impact of transportation and distribution.
Decrease Overproduction Through Efficient Supply and Demand Planning
Misalignment between supply and demand results in too much or too little production of raw materials, manufacturing of goods or distribution of products. This creates rework and waste that all impact the environment. Artificial intelligence, machine learning and predictive analytics can predict demand and ensure much more efficient supply and manufacturing processes.
Monitor and Plan for Existing Environmental Risks and Impacts
Many supply chains are already impacted by climate change and other environmental factors. Issues like wildfires in California, rising sea levels, water scarcity or lower agricultural yields have a profound impact on the efficiency, quality and speed of the supply chain. Supply chain technology helps to predict these risks and allows supply chain managers to mitigate the impact and put contingency plans in place.
While breweries such as Anheuser-Busch and MillerCoors are expanding their sustainability techniques, they realize climate change is a threat to their business. In response, they’re moving their production facilities to more favorable areas and developing more heat- and drought-resistant barley. Companies like this can move further north and utilize more winter-hardy breeds that will be less affected by the rise in temperatures.
Food producer Nestle has also responded to the effects of climate change on the supply chain, and by 2020 it plans to use only 100 percent responsibly sourced palm oil and cut ties with companies that don’t align with their policies. It will also utilize satellite technology to confirm no deforestation is taking place in its supply chain.
Organizations must start reconsidering the impact their supply chains are having on the environment as consumers become more conscientious about how their goods are sourced, manufactured and distributed. By implementing the right technology solutions, businesses can create a more ethical and responsible supply chain that benefits all industries.
Steve Dowse is senior vice president of product management at Blume Global. He has over 30 years of IT experience within global transportation and logistics.