Even as businesses try to deal with what many believe to be the end of the pandemic, a host of other social and economic issues loom large; specifically, climate change. The discussion around the state of the environment has been ongoing for quite some time. But these days, it's top-of-mind for sourcing and procurement professionals like never before.
Sourcing- and Procurement-Specific Challenges
So how, exactly, does this issue impact our industry? To start, an increase in natural disasters (both in severity and consistency). Issues like torrential flooding to devastating hurricanes can (and will) affect environments in which materials are sourced, leading to decreased supply and price increases. They'll also undoubtedly hinder production timelines and capabilities, as well as the transportation of said supplies and products.
Managing the Mayhem
So, which techniques should sourcing and procurement leaders employ to manage these challenges?
First, we must use a new lens to view supply chain design. Climate change impacts are a new stress test for all supply chain firms, even those with advanced risk management techniques.
We must also assess our supply chain's geographic distribution to allow for flexibility; it's like some of our supply chain nodes are in high-risk areas. As a result, the long-term availability of critical ingredients may be in jeopardy. This will necessitate inventory assurance and planning with significantly longer time horizons.
Implementing relevant legislation through industry collaborations and public-private partnerships will undoubtedly be crucial. The goal is not to let this be something that just happens to you. Instead, it should be something we can plan for and (hopefully) influence.
The Key to Success
In the interim, investing in powerful sourcing and procurement solutions is key. Specifically, ones that allow you to fast-track new product introduction, save money, and mitigate risks. Simply reacting to the challenges posed by climate change will leave your organization vulnerable to devastating disruptions. However, if you're able to predict, analyze, and plan around these roadblocks, you'll maintain a competitive advantage.
Are you equipped to deal with the effects of global warming? If not, turn to LevaData. Our AI-powered integrated supply management platform streamlines the actions-to-insights process and takes the guesswork out of spend decisions, risk mitigation, and new product integration. Learn more about the power of our platform, and then contact us to see what we can do for you.
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