The human race relies heavily on what the earth has to offer: minerals from underground, food from land and sea. We know how important these resources are for us, but what we don’t often think about it how important it is that these resources get to us.
You could say that our supply chains make the world tick. Without them, we just won’t be able to access all the products and services that we rely on day-to-day. But these vital linkages are under threat.
The 2017 Atlantic Hurricane season saw three major hurricanes make landfall in U.S. territories – something unprecedented in both strength and scale of damage. Earlier in the year, on the other side of the world, ex-Tropical Cyclone Debbie left a trail of havoc for both rural and urban communities as widespread heavy rainfall caused heavy flooding. Debbie left farms, mines, rail lines and storage facilities flooded, directly impacting global commodity prices.
So how can we make our supply chains more resilient in the face of these disruptive events? And with climate change expected to bring more severe, and possibly more frequent, extreme events – what do we need to do to ensure that they function as they are meant to?
Is it about complexity?
In a recently published study on the journal ‘Global Environmental Change’, Lilly Lim-Camacho and Eva Plaganyi-Lloyd of Australia’s CSIRO, with their co-authors, simulate climate-related disruptions to supply chains of three key sectors: fisheries, agriculture, and minerals. They compared how complex (those with lots of links and nodes) and simple chains performed under various states of disruption. Using network modelling approaches, they found that more complex chains tend to have more resilience to disruptions akin to extreme weather events, than simple chains.
There is not one measure for resilience, though. The authors used various indices including key elements, evenness, resilience, continuity of supply and climate resilience. These indices estimate the performance of simple and complex supply chains under disruption. Combined, they provide us with an indication of which chains are more likely to recover from climate shocks. And some chains don’t – particularly the really simple ones.
The problem is, we don’t like complexity. We like simple, efficient, lean chains.
For a long time, supply chain experts focused on the concept of ‘lean’. It makes sense; lean supply chains saves resources – time, money, energy. But this approach has already been challenged, as it doesn’t allow supply chains to retain a certain level of flexibility, or agility, which allows them to shift if circumstances need them to. So we need to find a balance between the quest for efficiency, and our attempt at agility, and the time to do that is now. Climate change and its swath of extreme events is upon us, and we no longer have the leisure to just learn from experience. Our resource supply chains are far too important for us to just ‘wait and see’. If we develop and apply ways to measure, monitor, adjust or transform the performance of our supply chains under disruption, then were one step closer to securing our place in the future.
This study, Complex resource supply chains display higher resilience to simulated climate shocks was recently published in the journal Global Environmental Change.