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From COVID to climate, managing supply chain disruptions in 2022

By John Armstrong, CTO at Higg

Over the last two years, COVID-19 and climate change converged to reveal the fragility of the global supply chain.

At the beginning of the pandemic in spring 2020, online shipping in the US spiked just as factories in Asia were forced to close - beginning a domino effect that continues to this day. In parallel, climate disruptions - from wildfires raging across the western United States, to floods taking over the streets of New York City and Berlin - are making sustainable transformation a pressing concern for brands, retailers, consumers, and investors.  

These events underscore a need to understand impact across the value chain - at an ever more granular level. Looking ahead to 2022, traceability technologies will be key to helping businesses make sense of a product's impact, cradle-to-grave, both from an operations and sustainability standpoint. Whether gaining insight into a product shortage or a brand's full carbon footprint, I foresee businesses needing strong data collection and visualization solutions to set goals, find areas for improvement, and measure against actions taken. 

The shift to traceability 

By definition, supply chain traceability  documents the Chain of Custody (CoC) of raw materials to finished goods production. Traceability technologies will support this documentation by collecting, organizing, and validating claims on product quality, compliance, and performance. 

Traceability initiatives have been nascent in recent years and businesses lacked the technical means to implement truly global solutions. However, as consumers, regulators, and investors begin to demand detailed and verifiable visibility into every step of the product journey, new options and technologies are emerging to satisfy these new requirements and support businesses in this transition. 

As brands and retailers balance production while managing environmental and social impact, they lean on supply chain data collection to help them understand the full picture. Industry leaders from Subway to Nike are embracing traceability technologies to track and disclose product-level data from inception at farm or factory, all the way to the consumer point of purchase. Both of these companies found holistic traceability solutions that enabled granular, contextualized, product-level insights. We need to take the guesswork out of managing sustainability within the supply chain, and I predict technologies that help businesses accurately predict their impact will soon become ubiquitous in supply chain management.  

Experimentation is hot again

We have arrived upon a season of innovation in 2022. Companies have a new willingness to explore and test emerging technologies, recognizing the value of a smarter, more sustainable supply chain. Many of today's leading solutions have become so low-cost and scalable that every company must have a sustainability SaaS solution line item (at least) in the budget. Organizations are experimenting with a broad range of solutions, ranging from looking at single product attributes, such as the carbon generated from raw material production, to holistic ‘all-in' calculations. Those calculations reflect not only the impact to create and transport the product, but how the company manages their own relevant operations to support that product's journey to the consumer, and how that product continues to create impact post-purchase.

Ignoring the supply chain or climate crisis is already proving to be far more costly than an upfront investment. Blackrock predicts that a 25% reduction in global GDP is at stake if we do not transition to a low-carbon economy. This means significantly  rethinking not just how we make more sustainable products, but how we get items from point A to B in a verifiable and methodologically rigorous way.

As businesses invest in supply chain optimization and ESG, we have an exciting opportunity to rebuild the supply chain from the ground up that meets consumer demand: integrating the need for products and the need to impact climate and social change.  

Collaborations win, silos lose 

It will take time to know which traceability solutions will fit enterprises' needs long-term, but the safest bet will be on those that embrace collaboration. Complementary solutions that allow data streams to be interpreted side-by-side are most likely to scale alongside companies. This data must be sourced as close to the point of generation as possible and all supply chain actors will need to be empowered to contribute their own data to the system if we are going to be able to realize the scale that is required. There is no time to waste on siloed instruments that won't work together - open systems that host data contributed by partners at  each step of the supply chain will help pinpoint hotspots and illuminate where to apply effort. 

The stakes are too high to not work together. In the wake of COP26, it became clear that we have to collaborate to solve our pressing climate challenges. As businesses devise strategies to roll back CO2, for example, they will have to use collaborative technologies to wholly measure carbon as a result of corporate operations. Even more helpful will be solutions that can help businesses prove the ROI of ESG programs. Ultimately, the solutions worth investing in will allow businesses to surgically measure, reduce, and prove reduction in impact areas. 

Rebuild - Better

While Covid may have broken our fragile just-in-time supply chains, reverting back to the old ways of managing how we create and move products around the globe is simply not an option. New regulations and consumer demand ensure that, as the supply chain reforms, it will do so with traceability, transparency, and collaboration as fundamental metrics that must be optimized alongside cost and time. 2022 will usher in a new chapter of rebuilding the supply chain through the lens of environmental responsibility and risk management. Accurate data combined with flexible traceability and collaboration solutions will be critical in getting products moving from manufacturer to shelves while also reducing our impact on both the planet and one another.

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ABOUT THE AUTHOR

John is the Chief Technology Officer at Higg, where he builds the robust software that enables brands, retailers, and facilities of all sizes - at every stage in their sustainability journey - to accurately measure a company or product's sustainability performance.

He has deep experience conceptualizing, architecting, launching and scaling products for a wide variety of organizations including start-ups, nonprofits and publicly traded corporations.

John studied Computer Science at the University of California, Santa Barbara.