How Procurement Professionals Can Tackle the Next CO2 Shortage

Following our post "Carbon Dioxide Shortages Bite, Highlighting Procurement & Supply Chain Issues," in July this year, Paul Ellis, Managing Director, Wax Digital,  has some advice on how we can be better prepared in future.

2018 has been a year of weather-related extremes. Earlier in the year, The Beast from the East brought an unprecedented cold snap to the UK. And later this year, from May onwards, Britain sizzled for months on end.

The hot weather arrived at the right time for the World Cup, BBQ’s, and of course, lots of beer. But, in late June, Europe was gripped by a carbon dioxide shortage (CO2), and our insatiable appetite for grilled meats and carbonated drinks made it a lot worse.

Thankfully, the situation has been resolved. But businesses that require CO2 to manufacture products should take now as a time to put a plan in place if we’re hit with the crisis again.

Where and how is CO2 used?

As a society, we produce CO2 for a wide range of day-to-day purposes, with most being in the food and beverage industry. Dry ice for instance, used in theatre productions and for chilled food delivery services, is made using CO2.

In the food and beverage industry, animals are ethically slaughtered using CO2, and the gas is also used when packaging meat to lengthen shelf-life. Fizzy drinks get their fizz by drinks manufacturers adding CO2 at high pressures.

Other industries make use of CO2. For instance, certain medical procedures require it, as well as oil companies seeking to extract crude oil.

The climate and a perfect storm

The CO2 shortage was caused by combination of bad planning and misfortune with the good weather.

In the UK, five plants produce and supply CO2 across the nation - and at the height of the crisis - only two were operational. The other three weren’t active because they were undertaking routine maintenance in-line with seasonal trends.

The plants specialise in producing ammonia for the fertiliser industry. A by-product of producing ammonia is CO2, which is a happy coincidence for those that need it. In the summer months, fertiliser isn’t as readily required, hence why three UK plants halted production for routine maintenance.

Unfortunately, a particularly harsh winter and a sustained period of good weather drove up demand for CO2. With the World Cup on too, the number of BBQ’s and carbonated beverages such as beer, cider and fizzy drinks increased exponentially.

The demand outstripped supply, and as such, it led to the CO2 crisis we suffered.

Planning for future

At this stage, it is difficult to say whether this will happen again in the future. The variables that brought this sequence of events centred on an increased average temperature for a sustained period, a massive sporting event as well as a failure to coordinate routine maintenance.

There are three key ways that businesses can be prepared in case another CO2 shortage takes place:

1 Double check your suppliers

How well do you know your suppliers’ ability to withstand significant environmental events? When was the last time you carried out scenario-based stress tests to evaluate their strengths and weaknesses? There are tools available that can help reduce the admin of collating and evaluating responses.

Check all parts of your supplier’s own supply chain too. Are there any weak links that could break because of unforeseen circumstances in the future? If just one part of their own supply chain fails, it will impact their ability to deliver their services or goods to you.

2 Monitor macro-environmental factors

Use PESTLE analysis, a tool featured heavily in business and marketing to scan and monitor environmental conditions that may interrupt your supply chain.

PESTLE is an acronym for Policital, Economic, Social, Technological, Legal and Environmental and helps you focus your thoughts around issues beyond your control that may impact your organisation. With PESTLE, you’ll improve your ability to anticipate scenarios that may impact your business and therefore, be able to act.

3 Source alternative suppliers

Finally, we’d recommend building a comprehensive list of additional suppliers in the event of your existing suppliers being unable to fulfil your orders.

You’ll need to ensure any switching of supplier is fully documented and agreed with your stakeholders, with a clear process of who does what and when. As well as being able to supply at short notice, the evaluation process should ensure any temporary provider doesn’t impact the overall quality of your offering.

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