The Panama Canal, which handles up to 40% of US container shipments, has faced difficulties. Drought conditions have lowered water levels and slowed traffic through this key route connecting the Pacific and Atlantic Oceans. While weather has always been factored into supply chain risk assessments, climate change is creating new, longer-lasting challenges for shipping.
Global Supply Chain Risk
The ever-changing climate, combined with geopolitical tensions, requires manufacturers to be increasingly cautious about their global supply networks. As we emphasize in our Best-Cost Country sourcing approach, the direct price is only one factor. Supply disruptions can lead to costs far exceeding the price of raw materials.
Executive Responsibility
The supply chain management team holds direct accountability for supplier relationships and must understand all aspects of supply and logistics, including weather impacts. This responsibility lies with them.
However, a broader understanding of geopolitics, climate, and cultural factors affecting the regions the company relies on is essential for the executive team. Long-term trends are being altered as new challenges affect daily supply chain operations.
While the supply chain team must identify risks and propose solutions, executives need to maintain a thorough grasp of these issues to ensure they receive the necessary focus. Lack of awareness can lead to delays, potentially hindering a company’s recovery.
If a global supply chain assessment hasn’t been done recently, now is the crucial time. Worldwide volatilities are creating risks that must be addressed for a company to withstand possible disruptions.
