Navigating Climate Change with Smart Supply Chain Management

Worldwide climate change is indisputable. Rising temperatures and the risk of destructive weather patterns are becoming increasingly frequent. Consequently, natural disasters such as droughts, wildfires, hurricanes, floods, and tornadoes are having a devastating impact on global and domestic supply chains.

Preparing for the inevitability of climate-related business disruptions has become the “new normal” for grocers, food service providers, pharmacies, and healthcare organizations. Smart supply chain management is therefore more critical than ever to maintain product integrity and to ensure customer and patient wellbeing.

The detrimental impact of climate change

One of the most common climate-related business disruptions is a power outage that can put inventories at increased risk across the end-to-end supply chain. Here are just a few examples:

• More than two-thirds of U.S. businesses were at heightened risk of operational downtime due to potential power grid blackouts.
• HVAC companies were inundated with service requests from commercial clients needing repairs, which has driven intense demand for spare inventory parts and replacement air conditioning units.
• Aldi stores in Germany were forced to stock locally grown asparagus and strawberries after heat-related droughts in Spain limited wide-scale suppliers.
  
  

Climate change causes harmful ripple effects: spoiling perishable food products, generating foodborne illnesses, and damaging temperature-sensitive medications. It also hinders staff-wide efficiency. According to an International Labor Organization report, heatwaves are projected to reduce working hours worldwide by more than 2% by 2030 — equivalent to losing 80 million full-time jobs and $2.4 billion globally.

Supply Chain Digitalization is critical to mitigating climate change risk

Supply chain digitalization is a crucial component for maintaining product safety standards, delivering a high-quality customer experience, and positioning employees to be productive. Integrating the following three digital technologies is imperative to navigate the unexpected twists and turns of climate-related disruptions:

• Internet of Things (IoT)
• Artificial intelligence (AI)
• Machine learning (ML)
  
  

For supply chain optimization, this specifically means implementing remote temperature monitoring and real-time location services for greater levels of visibility and traceability across each touchpoint.

The role of visibility: automated remote temperature monitoring

Prolonged power outages that disable refrigerators and freezers underscore the need for automated remote temperature monitoring of perishable food products and condition-sensitive medications. Inventory managers must be able to confirm whether products inside the affected assets were comprised during an excursion — which in turn diminishes their quality.

For customer and patient safety, organizations need verifiable proof of compliance. The integrated adoption of IoT-enabled supply chain technologies allows safety managers to act on data-driven facts instead of “guestimating.” A sensor placed inside assets that collect environmental data can confirm thresholds were maintained.

The role of traceability: scalable real-time location services

When products are shipped in extreme heat over the summer months, temperature thresholds often exceed their maximum limits inside warehouses, distribution trucks, and back-of-house inventory settings. An unfortunate consequence is a potential product recall. Real-time location services play a critical role in avoiding recalls by providing real-time supply chain traceability.

After detecting a temperature or humidity excursion that might require a recall, sensors can:

• Track and trace all products through the supply chain
• Ensure impacted foods and medications do not reach consumers
• Identify compromised products that were already sold
  
  

Logging real-time location data alongside corresponding temperature data empowers supply chain managers to pinpoint exposed shipments and take proactive steps to remove them from distribution or communicate to customers to discard them.

Emergency preparedness best practices for power outages

Once a Sensing-as-a-Service solution has been implemented, safety managers should consider employing the following emergency preparedness best practices to optimize inventory management through power outages:

• Define priorities to keep multiple asset types functioning within required conditions (e.g., walk-in refrigerators and freezers, warehouse rooms with sensitive ambient conditions, open-air refrigeration, individual cooler and freezer units, display cases).
• Document how long condition-sensitive environments will retain their temperature and humidity levels based on detailed and historical fact-based analysis.
• Outline labor requirements for different scenarios where on-the-ground execution will need to take place — especially the transfer of inventory between assets within a single location or to different sites to prevent loss.
• Map out asset locations and keep track of asset movements.
  
  

Predictive planning for extreme weather conditions

Predicting the weather with increased accuracy enables better priority analysis, thereby optimizing employee workflows and task checklists. With smart detection of disruptive weather patterns, food service and healthcare enterprises can plan ahead to preserve their inventories.

Lowering the temperature set points of cooling assets and environments by a few degrees helps extend the length of safe conditions in the event of a power outage. And by adjusting equipment in advance of a storm, employees may not need to transport inventory, depending on the duration of the outage and the presence of backup generators or batteries.

Automating action plans when weather affects temperature control

Automating executive actions in emergency situations helps fast-track decision-making crucial to timely inventory protection. Recent acceleration in practical AI and machine learning applications can now train predictive and prescriptive models with an abundance of real-time telemetry data, such as:

• Traffic and weather patterns
• Consumer intent indicators
• Temperature and humidity readings
• Inventory demand data
• Asset condition and health levels
  
  

As these models become more sophisticated and accurate, set points are adjusted automatically by integrating this data with asset operating systems that respond to shifting demand to optimize inventory management.

Navigating climate change with supply chain digitalization

The detrimental impact of climate change is visible far and wide. As the effects of climate emergencies generate increasingly destructive weather patterns, enterprises need to maintain their critical inventories.

Preparing and successfully navigating disruptive weather is essential to ensuring the well-being of our communities. Food retailers serve a crucial role in feeding their customers safe, quality food. Local pharmacies and healthcare organizations must ensure that the patients they serve receive the medications and vaccines they need to maintain their physical and mental health.

While it’s critical that we all do our part to reduce global carbon emissions with sustainable business models, supply chain leaders also need to put preventative measures in place at a systemic level to better mitigate climate-related operational risk. The integrated adoption of supply chain digitalization through IoT, AI, and ML is key to an effective and efficient supply chain. With the proper steps in place, businesses can be prepared for the worst while being confident in their ability to weather the storm.