As the supply chain, with its global reach, increasing complexity, and clear interdependence throughout the organization, has evolved as a strategic differentiator for electronics OEMs, the importance of planning excellence has also come into focus. Meanwhile, more and more disruptions that impact that critical supply chain have been traced to climate change.
A climate-related event can bring a supply chain to a screeching halt, making production costs skyrocket, hindering responsiveness and speed of delivery, damaging goods, and harming the organizations economic position. The Task Force on Climate-related Financial Disclosures (TCFD) has identified two categories of risk created by climate risks:
- Physical climate risks ranging from acute weather events and chronic climate patterns disrupt the availability of raw material and energy supply, supplier operations, and local communities along the supply chain.
- Policy and legal risks related to the transition to a low-carbon economy have the potential to disrupt several trends, including the pricing of greenhouse gas (GHGs) emissions, potential disruptions from new technologies such as blockchain, market risks related to customer demand for climate friendly products and services, and reputational risks to the company.
To address these evolving risks, organizations need to examine and structure their supply chains with an eye toward which geographic areas are most at risk for climate-related events. By working with key suppliers, OEMs can implement supply chain strategies linked to measurable targets to address potential risk. Of course, it’s an ongoing effort, so organizations should make these shifts by adjusting strategies and targets over time.
A recent report titled Climate and Supply Chain: The Business Case for Action from BSR takes a deep dive into the topic of climate change and the supply chain. The infographics below highlight some of the key points in the report.
How aware is your organization of the potential impact of climate change on the supply chain? How are you building resilience into the supply chain to address these challenges? Let us know in the comments section below.
— Hailey Lynne McKeefry, Editor in Chief, EBN