The Panama Canal, through which up to 40% of US container traffic flows, has been struggling. Drought conditions have hindered water levels and reduced traffic through the main waterway between the Pacific and Atlantic. While weather has always been part of the supply chain risk assessment, climate change introduces new and longer-lasting realities for shipping.
Global Supply Chain Risk
The dynamic nature of climate, along with geo-political challenges, means manufacturers must be even more vigilant about their global supply network. As we point out in our Best-Cost Country sourcing, direct price is only part of the equation. When supply is disrupted, the cost can be exponentially greater than the price of the materials.
Executive Responsibility
Within the supply chain management team, there is direct ownership of the relationship with suppliers and a need to understand the various elements of supply and logistics (including weather). This is their responsibility.
However, understanding the geopolitics, climate, and culture of the geographies on which the company depends extends to the executive team. Long-term trends are being disrupted as new issues impact the day-to-day operations of the supply chain.
While the supply chain group must raise concerns and provide solutions, executives must maintain a deeper understanding of the issues to give these concerns the proper attention. Being unaware can cause delays, which may cause a company not to soon recover.
If a global supply chain review has not been completed in recent years, now is the time to do so. Volatilities around the world are introducing risks that must be mitigated if a company is to survive potential disruptions.
