Demand for low-cost goods has pushed manufacturing into the world’s most remote regions, many of which are increasingly vulnerable to climate change and harsh conditions. Eliminating the most vulnerable links only creates more problems; brands are only as strong as the weakest link in their supply chain.
The COVID pandemic has been a test of the tensile strength of global supply chains; but it is by no means a final exam. The long-term challenge of climate change will continue to test supply chains for the foreseeable future. In the past year alone, flooding in Europe and
Asiaforest fires in California and freezing temperatures in Texas
each has shut down significant parts of the supply chain. Add an ongoing war to the equation and it’s hard to imagine a product or supply chain not being affected in the short term.
“You are the weakest link. Goodbye.”
In the early 2000s, this popular slogan from the game show, “weakest link“, was delivered week after week with icy detachment by the host
Anne Robinson as she summarily dismissed the losing contestants. It may have made good television, but it doesn’t make good business partnerships. Yet this is the approach many brands take when a link in their supply chain fails. They are looking for ways to replace the weak link or redirect it via another route.
Cutting the weak links in your supply chain poses several challenges, starting with visibility. Most companies lack in-depth visibility into their global supply chain, especially with Tier 2 and Tier 3 suppliers. As a result, these links are rarely exposed until something goes wrong. Second, while climate change is real, it is still difficult to predict what its impact will be and where. There are geographic information systems (GIS) and weather models that can provide advance warning, but few companies use this data to make supply chain decisions today. Finally, switching suppliers often comes with its own long-term supply chain risks, especially considering the impact on people’s lives.
Instead of immediately removing pain points in the supply chain, access to better data can help companies make more informed decisions. It starts with getting primary, high-frequency sustainability data from factories and partners, not just Tier 1 partners. Combining that information with impact data from sustainability platforms and environmental data from GIS providers and reinsurance companies before running them through the right analytical models can help brands identify which supply chain partners are most vulnerable to climate change and when. The question then becomes what to do with this information: do you use it to divest from risky suppliers or to reduce their risk exposure to strengthen your existing supply chain?
Whether or not it’s nobler…
The best way to mitigate the negative effects of climate change on supply chains is to become better stewards of our natural and human resources, which brings us to the question of sustainability. Brands are under increasing pressure from policy makers and consumers to ensure the use of environmentally and socially responsible business practices throughout their supply chain. This does not mean, however, that brands should become the main performers of sustainability, but rather supporters of durability.
Let’s see what this means in relation to climate change. Brands can do several things to help their suppliers protect their operations from climate-related disruptions: If a factory is at risk of flooding, brands may want to encourage their partners to create flood barriers or help them to qualify for low interest loans. modernize their factories. This assistance does not need to take the form of direct financial assistance, but could be made possible through creative arrangements, such as an annual production commitment to suppliers that helps them secure these loans. Climate change also affects human resources and could be solved by ensuring that factories have adequate heating/cooling during cold/hot seasons.
Sustainability is more than giving away a t-shirt
The sustainability challenge is very apparent in the apparel industry, where climate and social issues often go unnoticed due to a lack of data reporting. Giving t-shirts to factory workers may seem like sustainability in the form of circularity, but its measurable effect is superficial. What workers really need are better working conditions, job stability and access to low-interest loans. Building a sustainable supply chain is a better investment for apparel brands than creating redundant supply chains or constantly replacing links compromised by climate change.
It’s important to remember that while COVID and climate change may be the agents of supply chain disruption, the real culprit is our growing appetite for ever cheaper products. Demand for low-cost t-shirts, toys and other items has pushed production and manufacturing to the world’s most remote regions, many of which are vulnerable to increasingly heavy time and harsh conditions. Untangling these supply chains and eliminating the most vulnerable links is a solution that only creates more problems, due to the deep interdependencies between regional producers and suppliers. Instead, we have to accept that brands are only as strong as the weakest link in their supply chain. You can be a bully or you can be an umbrella; The choice is yours.