Supply chains in a warmer, wetter and wilder climate

Did you know that 94% of Fortune 1000 companies experienced supply chain disruptions from extreme weather in 2023 alone?

As climate effects increase in intensity, supply chains are at risk like never before. Events such as floods, droughts, and storms can quickly disrupt or halt operations within just a few hours.

Without comprehensive visibility into your supply network, these climate disruptions become business-threatening blind spots.

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How climate change disrupts modern supply chains

Global supply chains are extremely vulnerable to climate disruptions. Understanding and prioritising risk management is therefore essential for maintaining operations.

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Primary climate-related supply chain risks

Extreme weather events: Hurricanes, floods, and droughts can damage infrastructure and obstruct transportation routes, leading to immediate disruption in operations.

Resource shortages: Changing rain patterns and higher temperatures lower crop production. This puts food and raw material supplies at risk in many industries.

Geopolitical tensions: Resource scarcity intensifies conflicts, destabilising regions and disrupting established trade partnerships.

Infrastructure damage: Rising sea levels and extreme temperatures damage ports, roads, and manufacturing facilities, creating bottlenecks throughout supply networks.

South Asia exemplifies these challenges, with climate impacts creating disruptions that cascade through global supply chains.

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Over 99% of surveyed executives reported that their supply chains are affected by climate change, according to Economist Impact ¹

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Why supply chain visibility matters in a changing climate

Supply chain visibility identifies vulnerabilities and builds climate resilience. Without it, businesses face operational disruptions, cost increases, and reputational damage.

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Key benefits of enhanced supply chain visibility

• Risk mitigation: Mapping suppliers and assessing their climate resilience helps anticipate disruptions before they impact operations.‍
• Regulatory compliance: Policies like the Corporate Sustainability Reporting Directive (CSRD) require companies to disclose climate risks and demonstrate due diligence.‍
• Sustainability goals: Transparent supply chains enable businesses to reduce environmental impact while meeting stakeholder expectations.‍
• Cost management: Proactive risk identification avoids expensive emergency sourcing during climate disruptions.

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A Software-driven strategy for developing climate-resilient supply chains

Organisations must move beyond reactive measures to implement proactive resilience strategies.

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4 essential steps for climate resilience

• Map your entire supply chain: Identify each stage from raw materials to final consumers, making sure not to miss often-ignored tier-2 and tier-3 suppliers.‍
• Assess climate vulnerabilities: Use climate risk assessment tools to evaluate supplier locations and exposure to weather-related disruptions.‍
• Collaborate with suppliers: Work together to develop sustainability strategies and improve collective resilience across your supply network.‍
• Implement continuous monitoring: Track progress and adjust strategies to align with evolving climate conditions and regulatory requirements.

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Leveraging software for supply chain resilience

Modern businesses require sophisticated tools to manage climate-related supply chain risks:

• Data-driven platforms that track supplier performance and environmental risks in real-time
• Scenario modeling capabilities to anticipate potential disruptions
• Compliance management systems that standardise risk assessments
• Collaborative platforms that facilitate communication during disruptions

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How Factlines' SRM software makes your supply chain more robust

At Factlines, we empower companies to achieve sustainable growth by transforming supply chain data into actionable business practices.

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‍Feel free to book a demo or contact us for more details!

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Sources: 

1. Impact.economist.com