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How to Limit Nature’s Impact on the Supply Chain

12/07/2018 By

Spend Matters welcomes this guest post from Graham Parker, CEO of Gravity Supply Chain Solutions.

Real-time data will provide visibility and inform decision-making that safeguards the supply chain from the unexpected.

Wildfires, tsunamis, earthquakes and hurricanes.

These are just a few examples of the types of natural disasters the world has experienced in the last 12 months. With California still reeling from the catastrophic impact of the recent wildfires, it is increasingly evident that natural disasters are becoming a regular occurrence.

It seems that the world is set to experience increasing disruption from natural disasters with recent climate change data shared by the UN suggesting the regularity of such disasters is set to continue and might even get worse. The UN’s report also suggests that a global effort to reduce greenhouse gas emissions is our best hope if we have any chance of lowering the rate at which natural disasters take place.

Global efforts to make amends are in motion with 194 countries committed to the Paris Agreement, which aims to accelerate greenhouse gas reduction to combat climate change. However, the impacts of natural disasters continue to cause devastation and disruption on communities, wildlife and industry.

Supply Chain Risks Intensifying

The tragic consequences that natural disasters can cause to human life is readily apparent and covered extensively by the media. What’s less recognized is that natural disasters also wreak immense havoc on global supply chains, because they result in the cancellations of flights, the closure of ports and the shutting down of highways. So the delivery of raw materials, consumer goods and other components are delayed, sometimes substantially, which can seriously harm the bottom line of businesses.

For example, the catastrophic Tohoku earthquake and tsunami a few years ago resulted in a massive $210 billion in costs for Japan. Unable to import or export needed parts, Toyota, GM and Nissan all temporarily  closed their facilities in Japan and the United States. In a similar fashion, when Puerto Rico was struck by Hurricane Maria earlier this year, the supply chain of two of the island’s most important industries, pharmaceuticals and medical devices, came to a halt.

How, then, can your business protect itself from the risks of such overwhelming supply chain disruptions? The key is to see them coming before the mainstream news media even start covering them.

Real-Time Data Drives Insights

How much more effective would your planning be if you could get real-time data to help you identify potential risks before they can cause havoc? Digitizing your supply chain management processes can enable you to do just that.

A digital supply chain management platform that monitors tens of thousands of data sources in real time, including weather feeds, port closures, traffic congestion and so forth, can immediately inform users of where a supply chain disruption may occur and how that could affect their business.

When this data is displayed in an easy-to-understand graphical interface, you can quickly react and adjust if you know in real time that a storm at sea may affect trade lanes. You could ask yourself whether you have an order on any ships in those lanes, the priority of that cargo and how you should adjust the shipping route. To put it simply, context matters. The faster you’re made aware of “breaking news,” the faster you can address and mitigate potential issues. You’re proactive, not reactive.

In addition to extreme weather events, the right solution should provide data on a range of other potential supply chain disruptions, such as political protests, transport strikes, economic upheaval or infrastructure damage, allowing you to foresee and minimize the damage that any external event can cause to your supply chain. Your chosen platform should be able to tell you today what is going to happen tomorrow.

Visibility is Key

The more informed you are about what is going on regarding your business, the better you can make strategic-data-led decisions that can help your business grow. You should invest in solutions that provide data on supply chain disruptions, but you shouldn’t limit their knowledge only to that.

You should aim to achieve visibility and transparency into all elements of your supply chain, including the status of vendor bookings, purchase orders and the movement of inventory, using an automated system that updates data instantly rather than relying on manual updates, which are slow, error-prone and out of date.

While natural disasters are inevitable, the impact on your organization doesn’t have to be if you are prepared properly with the implementation of a digital supply chain management platform.