Concerns about climate change impacting supply chain arise after Hurricane Sandy

As some scientists and climate-change advocates voice concerns that the devastating Hurricane Sandy was caused by global warming, some fear that more enormous storms may be on the horizon. Not only could this have an effect on company sales when businesses have to close for inclement weather, it could also cost enterprises heavily by disrupting worldwide supply chains. The 2012 CDP Global 500 Climate Change report revealed that 81 percent of reporting businesses now identify risks associated with global warming.

Taking action for cost savings
Some companies are doing what they can to implement more green technology and sustainable practices throughout their supply chains. Businesses may hope that by publicizing their environmentally friendly efforts, others will follow their lead and take action against climate change. This trickle-down effect could benefit supply chains all over the world by limiting natural disasters and therefore slashing unnecessary expenses.

Natural disasters thought to be caused by climate change can add up, and companies can take a serious financial hit if not prepared to deal with a disaster. After hurricanes, severe flooding or earthquakes, roads and ports may be closed, not allowing a company's products to flow as usual. This means a business must either wait to receive shipments and potentially lose money by not having enough goods in stock for consumers, or they have to find alternate ways of getting goods to store shelves, which can also be costly.

Expenses throughout supply chain
When natural disasters occur, companies face unexpected costs throughout vast supply chains. A storm in one area of the world could limit raw material procurement, which may lead to production delays and product shortages down the line. Even if a company supply chain is not disrupted until the final products are shipped, delays at ports, closed airports or blocked roads can still contribute to lost profits and customer frustration.

Companies that do not have backup plans or suppliers to provide them with vital materials in the event of a disaster put their supply chain operations at risk. They may find themselves with even greater expenses because they didn't plan ahead. While many companies are beginning to see the impact climate change has on the function of their supply chains, they are developing back-up plans in case of an unexpected event. This is also why others are making commitments to sustainability and lessening their contribution to climate change and the costly natural disasters that may come with it.