according to the World Meteorological Organization. Excuse me,
La Nina events are likely to peak this winter.
The effects of La Nina make trade winds even stronger
than usual bringing in cold water leading to harsher winter
. But how will this extreme weather impact the global
food supply and energy markets here? To help answer
that very question is two K to Gandhi, a
global supply chain partner at Kearney. Welcome to the
show to K two were so excited to have you
first off we'll La Nina impact the global food supply
like leading to those high prices that we keep talking
about. That is a wonderful question Hannah um sounds
like the start of your truth and their segment that's
coming up next. The global supply chains are going
to be truly disrupted with Latina and one of the
things that's happening is this is just another in the
series of hits that the global supply chain has taken
. We had the hit by covid Political changes,
changes in how the demand change, supply change and
now there's just one more. So the Jenga called
supply chain is just one break away from falling down
completely. It's going to affect as we know consumer
product, it's gonna affect food and it's also going
to affect transportation. So those are some massive impacts
in an already strained global supply chain. I want
to remind our viewers that the last significant Latino event
was back in 2011 food prices like you are predicting
for now, hit record highs, how prepared are
we with food? Food prices already at such a
lofty level currently? And what options are there to
K 2 to fix this problem. Um a limited
number of options right? There is no magic bullet
, we know climate is the big next impact on
global supply chains but there are some immediate tactical things
you can work through like for example in improving and
increasing your inventory uh adding to the ingredients that go
into the products you make when it comes to shipping
lanes and transportation, you can start pre planning that
if there will be a slowdown, we've always seen
the slowdown of the course, it really affects the
U. S. A lot but planning for that
and last but not least though I were inflation,
we will see higher inflation because as food goes up
, the cost of labor increases and that leads to
higher inflation. So in the medium and short term
you can do those things and over a longer term
you can really start doing what we call sensing what
is happening and then having the ability to be flexible
and pivot as things evolve. But there are some
actions. La nina typically affects a wide range of
farming commodities And since, you know, since it
brings such unusual weather to regions like Australia and Asia
, what food crops are in danger here and what
are the exact threats to the global food supply.
Um you know the three big ones that get affected
our corn, rice, wheat and they are a
core part of everything that people consume, right that
they cook and eat it or it goes into the
manufacturing of other products. So they are fairly core
, they will affect everything along the way. The
other thing is there are certain unintended consequences for example
, you know when gas prices hit uh, europe
pretty hard, but there was a lower production of
C. 02 and that meant everything else that required
carbon dioxide started to suffer. So there are some
unintended consequences that are gonna come along the way.
Also, these are some pretty large impacts. Again
, already strained supply chain agenda supply chain that we
have right now does not need this and I think
as we talk to our clients, the preparations are
going on right now on how to respond to it
based on the three ideas we talked about, you
actually take me up for my next question because you're
right, it's not just the food supply that's being
affected major countries, china europe are grappling with the
surging fuel prices. How extreme, how is extreme
weather impacting the energy sector here? Uh the question
is, how is it, which area is not
impacted is the big challenge here? Uh it is
impacting transportation, uh it is impacting again, cost
the inflation work. The third thing it is impacting
is folks switching from one form of energy to another
. So when cole gets difficult, folks move to
oil, when oil gets difficult, they moved to
gas and this switching between that is basically whipsawing the
end to end supply chain in ways that we have
not seen in the last 50 years because our supply
chains were optimized for cost. That's where they're very
optimized for. And now the world is resiliency and
that is where the world is moving towards As we
make our supply chain stronger to deal with the anemia
. Again, this is the first in the series
and it hits ain't gonna stop. I have a
minute with you. But I do want to ask
these events are more than likely not going to go
away due to climate change. Are these regions infrastructure
ready for the extreme cold weather that we're expecting here
. Um only time will tell to be transparent because
we have not experienced these things, but there are
a specific set of companies that are reacting to it
well where they have not, they know that this
is coming down the pipe. So how do I
do a better job on on storage in certain situations
. The second thing is, how do we work
with customers and consumers to pre plan, what can
come? And then the last thing specifically in the
consumer product and food area is what options do I
provide that are viable and good options? And these
are the companies we recently disturbed a of companies from
5, 250 billion and what we found was about
12 to 15% of companies have started down this path
, and they will be the huge winners because we
are seeing more and more the payoff from a resilient
supply chain to be massive, such fantastic insight.
We hope you come back here, Sasuke to Gandhi
global supply chain partner at Kearney. We really appreciate
it. Thank you so much.