The bat effect
19 Aug 2021
This week: Wondering what’s going on with supply chains? The weather? What happens when a bat flaps its wings? We’ve got big questions too, and maybe some answers.
TROUBLE IN THE SUEZ
Remember when a single boat stuck in a canal caused a global pile up?
International supply chain systems are complex, fine-tuned, and usually well oiled. Turns out, they are also really precarious. What a metaphor for our times.
• Ports around the world – from Southern China to the American West Coast – are jammed. Retailers are ordering way ahead of time to ensure holiday deliveries, reported RetailWire. “The continuing lack of labor, equipment and capacity has highlighted systemic issues and the need to create a truly 21st century supply chain,” said Jonathan Gold, VP at The National Retail Federation. Hmmm, and what might that look like?
• Green Street, a new initiative launched by the UK’s Retail Sector Council, aims to help indies fight global warming through policies tailored to SMEs. “Because retailers rely so heavily on international supply chains it’s estimated that nearly 40% of all UK greenhouse gas emissions are accounted for through the retail channel,” said RSC member Victoria Robertshaw. As the country’s largest private sector employer, retail has the potential, and the duty, to make a big impact.
• Over 30% of small businesses in the U.S. have reported significant supply chain disruptions. Will this spur a widespread shift towards nearby networks? As always, we’re looking at the upsides for local shops. “After decades of long supply chains and distribution networks, local is once again at the forefront. There has been a resurgence of smaller shops… even in massive cities such as London,” wrote Jambu Palanappian, managing partner at OMERS Ventures.
Where might this supply chain chaos be most immediately noticeable? Market shelves. The dining table.
Facing empty food warehouses, local restaurants from New York to Seattle are trimming their menus. “For the last three months, every day is like the Christmas rush,” said Wayne Samiere, CEO of Honolulu Fish Company. “This is not a drill: Nandos has run out of chicken,” ran a headline this week in TimeOut.
THE WEATHER UNDERGROUND
Logistics are one thing. Climate catastrophe is another. The recent report issued by the UN’s Intergovernmental Panel on Climate Change – a “code red for humanity” – warns of the disastrous consequences of a warming planet.
“Weather has had a greater effect [on sales] than economic numbers, we’ve known that forever,” said Andy Street, MD at John Lewis, all the way back in 2014.
So what does that effect look like today?
• “A seasonal temperature change of just 1 degree celsius higher or lower than average typically causes a 1 percent fluctuation in sales,” reported Fashion United. The fashion industry in particular, needs to move a lot faster in delivering on green commitments, reported The Business of Fashion. “There’s no way of getting around the fact that transitioning to a low-carbon supply chain is going to take investment and brands historically have not been willing to pay for that,” said Michael Sadowski, a sustainability consultant.
• It’s also impacting the COGS. The price of coffee futures is at the highest in years. “Retail brands like Folgers, as well as independent coffee chains, are raising prices or plan to soon,” noted The Wall Street Journal. Why? “Extreme weather conditions like heatwaves and floods also affect agricultural markets, and these climate issues have created global supply chain issues for coffee growers”.
• Tracking your individual carbon footprint is a concept invented by big oil. But anything that helps companies actually reduce, not just count, emissions gets our vote. Watershed, with clients like Everlane and Sweetgreen, is one piece of software that aims to do just that. “Decarbonization is the big economic transition of the next decade. Companies are on the front lines,” co-founder Taylor Francis told Fast Company.
“The collective voice of retail has the potential to influence future policy, the actions of businesses, customers and the scale to change global supply chains for the better,” wrote Helen Dickinson, CEO of the British Retail Consortium.
Feeling deflated? Or galvanized? The choice is yours.
Words by Amy Tai, creative consultant and native New Yorker now based in London.