Five tips for mitigating climate change risk
“Companies can shorten supply chains by shifting production to domestic facilities or nearby countries ”
SKYLER CHI GLOBAL HEAD OF THIRD PARTY & SUPPLY CHAIN RISK MANAGEMENT , EXIGER
Five tips for mitigating climate change risk
1 . Integrate tech systems Climate monitoring and predictive tools can allow for decades of data to be put to use in specific sites and locations , allowing users to understand essential vulnerabilities and risks . Such systems are most powerful when marshalled by experts who can interpret climate data and provide actionable , real-time guidance .
2 . Rethink manufacturing Taiwan is the biggest manufacturer of computer chips and is one of the most seismically active areas in the world . It is also prone to typhoons . China , a manufacturing powerhouse across most sectors , is not only prone to extreme flooding , but is still dipping in and out of COVID-19 lockdowns – with little sign that this will change any time soon . Reshoring manufacturing from volatile areas to less volatile ones nearer , or at , home can mitigate risk .
3 . Have the right mindset Every business should have an ‘ awareness statement ’ as well as a mission statement . Such a statement should recognise that the supply chains of the future need the interdependency , interconnectedness and the intelligence to predict disruption before it occurs . This is pretty much the silver bullet of global logistics , and the approach must be embedded as part of company DNA so that the necessary thinking is in place to pave the way for visibility and automation solutions .
4 . Manage upstream risk A weakness of many business continuity plans is that they often focus solely on nearby locations . Proactively managing supplier networks can allow businesses to more quickly identify alternative sources , as well as switch to new suppliers more efficiently .
5 . Collaborate with suppliers Companies can contractually insist that suppliers include business continuity plans – and they should . Suppliers are vulnerable not only to disruption from weather events but from all manner of things , including intervention from regulatory bodies and also environmental laws . Backup plans , alternative production sites , and recovery timeframes should all be in place . To ensure this is the case , collaborate with suppliers and help them understand their vulnerabilities to disruption . Supplier contracts should also insist business continuity plans are tested annually .
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