August 1, 2023

Heat Waves Ignite Need for Supply Chain Technology Innovations, More Solutions for Cooling Down

But technology is providing some much-needed relief, cooling catastrophic disruptions and setting supply chain operators on a course for better control.

Heat Waves Ignite Need for Supply Chain Technology Innovations, More Solutions for Cooling Down

Soaring temperatures and mounting global heat waves are gripping cities, businesses, and consumers in a boiling battle for enough resources to stay cool. Climate extremes are creating spikes in demand for air conditioning, even in places not accustomed to needing central air and wilting supply chains as unpredictable weather patterns break vital supply links. But technology is providing some much-needed relief, cooling catastrophic disruptions and setting supply chain operators on a course for better control.  

Heat is On 

Over the past 60 years, the heat-wave season in 50 major cities has increased by 49 days, according to the Environmental Protection Agency. The Wall Street Journal reports that on average, U.S. households' energy costs in June, July, and August will rise nationwide by 11.7% to $578, compared with last year's $517, according to a NEADA analysis of U.S. energy data. 

In the face of extreme heat, U.S. cities are scrambling to protect their residents and physical infrastructure, Brookings notes. Wildly rising temperatures can wreak havoc, causing transit system malfunctions, strained electric grids, school closures, and more. In fact, Brookings reports that extreme heat kills over 600 people in the U.S. each year. 

Climate change is only making heat waves worse. They're getting more frequent, up from an average of two per year in the United States in the 1960s to six per year in the 2010s and '20s. Heat waves also now last about a day longer than they did in the '60s, and they're more intense; those two factors combined, in particular, make them more deadly. 

Cooking Supply Chains 

Extreme weather conditions like heat waves disrupt global supply chains globally. From agricultural production halts to changes in consumer behavior, supply chain operators struggle to keep up. Soaring heat can ignite a chain reaction of disruption. In 2010, when Russia suffered a severe heat wave, the resulting economic losses were estimated to top $15B as drought and wildfires claimed crops, especially wheat. 

Meanwhile, in the U.S., destructive heat conditions have repeatedly overwhelmed electrical grids and brought on droughts, flooding, and severe storms. That has led to loss of life, crop failures and supply chain interruptions on a massive scale, from demand planning to transport logistics. These disruptions can knock business, of course as well.  

Heat-related supply chain breaks are not new. Back in 2016, fashion retailer H&M posted a 9% profit drop in its third quarter after a heat wave led to a severe decline in demand for its autumn and winter collections, according to the Wall Street Journal. The company was unable to respond to the sudden shift in weather adequately and because the bulk of their product sourcing was in Asia, long lead times made quick pivots impossible. 

As weather-related catastrophes have continued to unfold, companies have come to grips with the impact of climate change and have looked for innovative ways to mitigate risk. Among those innovations are better forecasting, which can help retailers, wholesalers, and producers remain agile and respond flexibly to unpredictable weather. 

Sweet Technology Relief 

Greater supply chain visibility has been among the most important technological advances for supply chain. Control towers, better analytical capabilities, and more accurate demand planning and forecasting have driven down the most damaging impacts of severe weather. Some companies have even employed weather analysts to help them stay ahead of catastrophic weather shifts. 

These promising shifts in the availability of technology are helping to solve supply chain conundrums in the face of climate shifts. That includes the ability to find enough air conditioning units to keep warming geographic locations cool. And it couldn't come sooner. CBS News reports that Boston-area HVAC providers have been inundated with more service calls than they can handle this summer. Not only is a heat wave causing systems to fail, but chronic supply chain issues are creating a backlog of orders that can't be filled due to supply issues on HVAC parts. 

Nearly 90% of American homes had air conditioning in 2020, according to the U.S. Energy Information Administration, but there is room for growth, the Wall Street Journal notes. In San Francisco, about 45% of homes had A.C. in 2021, while 53% of households had them in Seattle, a survey released by the U.S. Census Bureau shows. 

All of this means HVAC providers for residential and commercial users are just one business segment that will continue to need the aid of technology innovation to stay ahead. 

Case Study in Cooling 

Carrier is a global leader in heating, air conditioning, and refrigeration solutions and understanding inventory levels and ensuring the speedy delivery of parts is vital to Carrier's operations. Carrier operates 51 factories and 39 research and design centers worldwide, with more than 53,000 employees serving customers in more than 180 countries. Carrier's APAC operations, based in Shanghai and Singapore, focus on heating, ventilation and air-conditioning spare parts. 

As a digital supply chain planning and automation platform, ketteQ equips companies with the ability to anticipate and prepare for ongoing industry disruptions by delivering an innovative scenario-based approach to optimizing supply chain operations. ketteQ also harnesses A.I. and automation to allow systems to operate at maximum capacity while keeping planners focused on what they do best. 

ketteQ deployed an easy-to-use solution that enabled the client to move from manual spreadsheet-based planning to an automated planning system. As a result of ketteQ's solution deployment, Carrier has seen an overall reduction in system-wide inventory and working capital. Its APAC operations have also experienced an increase in the availability of parts and increased the productivity of demand planners, producing easier and more accurate forecasts and results. 

You can read more about the partnership HERE

It's just one example of how today's technology can transform the ability of companies providing vital resources to keep one step ahead of the weather. 

If you are exploring the right technology partner to build supply chain planning muscle, reach out to ketteQ and let us help you get started. 

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Nicole Taylor
Sr. Director of Brand and Marketing Communications
About the author

Nicole has over 18 years of marketing experience across a wide range of industries including SaaS, Advanced Manufacturing, Hospitality, and Non-Profits. She is a data-driven, detail-oriented marketer adept at developing and executing all aspects of marketing to optimize and leverage visibility to drive growth for brands.