Redesigning The Global Supply Chain To Endure Climate Change



Credit: Nathan Cima/Unsplash

In May 2022, France ran out of mustard. The country’s most famous condiment has been available through revolutions and world wars. However, heatwave-induced droughts in Canada – the world’s largest mustard seed exporter, failing domestic harvests due to wet winters and cold springs, and the war in Ukraine (France’s back-up supplier) have left shelves empty.

Fragility Of Supply Chain

Global supply chains have evolved to take advantage of easily available labor, lower manufacturing costs and, in the case of food production, better growing conditions. Yet, the longer the link, the more potential bottlenecks, the greater the risk of disruption. In January 2022, for example, a Resilinc report found that supply chain disruptions had increased 88% by the end of 2021. 

The Covid-19 pandemic caused havoc to supply chains by closing borders, restricting movement, and reducing the available workforce. But while the pandemic could cause an empty aisle, the climate crisis could lead to empty supermarkets entirely. “Our food systems are based on highly efficient supply chains, which have become very long and complex as processing and manufacturing becomes increasingly specialized,” says Tim Benton, Research Director at Chatham House, and an expert in food security. 

Long Term Effect

Compared to the short-term derailment of the pandemic, climate change could affect every track and station across the global supply network for centuries to come. Firstly, there’s extreme weather itself. From fires, flooding and freezing to hurricanes, droughts and intense heat, extreme weather can directly impact the ability to grow food, mine minerals and power factories. For example, droughts in California this summer have devastated tomato harvests threatening pizzerias as far as New York.

Then there’s transport and logistics. Shanghai is the world’s busiest container port, handling over 40 million TEU (‘twenty foot-equivalent units’) per year, but flooding in 2020 closed areas of the port, restricting trade. Finally, there’s the labor force. Whether affected by unmitigated climate change in the long term, or disasters like war in the short term, when areas around ports become inhabitable, those ports become unworkable.

Rethinking The Supply Chain

Climate change disruption requires a rethink of supply chain management. According to Thomas Goldsby, Director of the Global Supply Chain Institute at the University of Tennessee, businesses need to “alter their supply chain designs and operations to navigate around the problem and mitigate their risks.

Although individual businesses can analyze, relocate, and strengthen their own supply chain, even reducing carbon emissions from their procurement and processes, impactful action requires collective effort. However, while supply chain redesign is both complex and risky, there are also opportunities. For Benton, that’s using emerging technologies and the data revolution to create a more resilient food system based on diversity, functional redundancy with more food being stored for example, pursuing modularity instead of centralisation and aiming for flexibility. 

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Source: Wartsila