Supply chain focus shifts from efficiency to resilience
Strategies and financing need to be radically reassessed to achieve sustainability in a rapidly changing world.
Creating sustainable and resilient supply chains is perhaps the most urgent challenge faced by corporates today.
“Climate change is already impacting supply chains,” explains James Binns, global head of trade and working capital at Barclays corporate banking. “In China, the low water levels of the Yangtze river resulted in hydroelectric power shortages, which in turn had an impact on local factory production and global supply chains. In India, record temperatures resulted in an export ban on wheat, and in Europe we will all remember images of marooned transport barges on the Rhine.
“In the very short term, the impact of this in terms of where and when it will strike is difficult to predict, so assessing key concentration risks and building in contingency in terms of stock levels and alternative suppliers are realistic immediate options,” he adds. “Understanding how to diversify supply chains is no longer a choice but a necessity."
There has been more engagement on sustainability in recent years, but is it enough?
“All of the attention on professionalising sustainability means a lot of resources are being consumed on reporting, marketing, positioning and purpose,” warns Pamela Mar, managing director of the International Chamber of Commerce.