California Drought: Supply chain disruption that isn't easily avoided

The latest water shortage in California is a reminder that natural disruptions are omnipresent within our supply chains.

The headlines about the California drought have been a constant drum beat about the issues we face with this most vital of global resources. Of course when you look at what we here in New England suffered through this winter, it is hard to fathom a water shortage! Sometimes it is also surprising to read about water issues when over 70 percent of the planet is covered by water. But much of that water is not fresh water: in fact, only 2.5 percent of the global water is fresh water, and of that 70 percent is trapped in the icecaps of Antarctica and Greenland. Access to fresh water will continue to be a major global issue -- and an underlying one for our supply chains.

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  • Agriculture - no surprise here. The numbers from California demonstrate the heavy reliance on water usage. With the Golden State's farms using a whopping 80 percent of the state's water, it is clear this industry remains a leader when it comes to water consumption. Couple this with a growing global population, the agriculture supply chain will find itself under greater strain to meet this demand while controlling their
  • Usage of water. It will be interesting to see if this supply chain starts employing tactics that we are seeing in manufacturing - near shoring. When states like California supply 80 percent of the global almond supply, yet that crop consumes 10 percent of California's water - or 1.1 gallons per almond. Granted it is easier said than done since crops require much more than just water - soil and weather play major factors in crop growth. But moving crops to different locations is not that easy.
  • Manufacturing. Industries such as chemical, beverage, steel, and paper production -- to name a few -- are heavily reliant on water. By some estimates, it takes 80,000 gallons of water to produce on automobile, 700 gallons of water for one cotton shirt, and 24 gallons of water for 1 lb. of plastic. Supply chains have become more efficient when it comes to the manufacturing process, reducing some of the water strain from that angle. However, as our product supply chains are introducing products at a faster pace - and therefore taking out goods from the supply chain at an increased pace - the strain on the water usage is under pressure from that perspective.
  • Future of work. These water issues are not simply about how we produce goods, but the workers within the supply chain are also impacted. It goes beyond Californians' not being able to water their lawns and their quality of life. But in regions such as northern China, parts of India, the Middle East and sub Saharan Africa the issue of water directly impacts the work force. While some of these regions might offer affordable labor and new markets, if that population is more concerned about securing water that will impact their roles as workers as well as consumers.

The bottom line is the latest water shortage in California is a reminder that natural disruptions are omnipresent within our supply chains. Of course our supply chains cannot control natural occurrences such as droughts. But when it comes to simulating our supply chain networks, determining our planning and sourcing we must factor the possibility of these disruptions. Our supply chains function in a system that is still driven by natural forces. Those are variables we are the mercy of. Understand how they can impact your supply chain. Ignore them at your own peril.

Resources:

Retail: Prepare for the IoT Revolution

The State of Supply Chain Management