Despite recent precipitation bringing welcome relief and downgrading of the drought status in some parts of the country, the long term picture shows challenges remain.
Changing weather patterns and increasing likelihood of extreme weather events are pushing sustainable supply chain management up the agenda for many companies. The US drought is just one of many examples of how changing weather patterns can create clear and present supply chain risks.
Evaluating & managing these risks will require a mix of reliable data, working with your suppliers to improve sustainability (in this case reducing water consumption in drought affected areas) and ultimately evaluating the long term viability of certain industries continuing in areas that no longer have the ecological services required to support them. In this example, it raises the question whether heavy water using industries will remain viable over the long term in areas severely hit by the drought.
Increasing insurance premiums, water tariffs, reduced output, increased costs of refrigeration etc. could all affect the operating costs and therefore economic sustainability of vulnerable industries.
President, Virescent Consultants Ltd