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Following our publication on "Carbon Dioxide Losses, Highlighting Supply and Supply Chain Issues" in July, Paul Ellis, Managing Director of Wax Digital, has some tips on how to better prepare for the future.
2018 has been a year of extreme weather. At the beginning of the year, The Beast from the East caused an unprecedented cold spell in the UK. And later this year, starting in May, Great Britain experienced months of crisis.
The warm weather arrived at the right time for the World Cup, barbecues and, of course, lots of beer. But at the end of June, Europe was struggling with a shortage of carbon dioxide (CO2) and our insatiable appetite for grilled meat and soft drinks made the situation worse.
Fortunately, the situation has been resolved. But companies that need CO2 to make products should take the time to put a plan in place if we are facing the crisis again.
Where and how is CO2 used?
As a company, we produce CO2 for a wide range of daily tasks, most of them in the food and beverage industry. Dry ice, for example, used in theatrical productions and refrigerated delivery services, is manufactured with CO2.
In the food and beverage industry, animals are morally slaughtered with the help of CO2 and gas is also used to pack meat to lengthen shelf life. Beverage manufacturers add high-pressure CO2 for soft drinks.
Other industries use CO2. For example, some medical procedures require it, as well as oil companies looking to extract crude oil.
The climate and a perfect storm
The CO2 shortage was caused by a combination of poor planning and bad weather bad weather.
In the UK, five plants produce and supply CO2 across the country – and at the height of the crisis – only two were operational. The other three were not active because they were doing routine maintenance according to seasonal patterns.
The factories are specialized in the production of ammonia for the fertilizer industry. One of the byproducts of ammonia production is CO2, which is a happy coincidence for those who need it. In the summer, fertilizers are not as easy to obtain, hence three plants in the UK have stopped production for routine maintenance.
Unfortunately, a particularly harsh winter and good weather resulted in higher CO2 demand. With the World Cup, the number of barbecues and soft drinks such as beer, cider and soft drinks has increased exponentially.
Demand outstripped supply and, as such, led to the CO2 crisis we experienced.
Plan for the future
At this point, it is difficult to say if this will happen again in the future. The variables that led to this sequence of events were the increase in average temperature for a prolonged period, a massive sporting event, and the inability to coordinate routine maintenance.
There are three main ways to prepare companies for CO2 shortages:
1 Check your suppliers
How well do you know the ability of your suppliers to withstand important environmental events? When did you last perform scenario-based stress tests to assess their strengths and weaknesses? There are tools available that can help reduce the administration of the collection and evaluation of responses.
Also check all parts of your supplier's supply chain. Are there weak links that could break due to unforeseen circumstances in the future? If only a part of their own supply chain fails, this will affect their ability to deliver their services or their goods.
2 Monitor macro-environmental factors
Use PESTLE analysis, a widely used tool in the business and marketing world to analyze and monitor environmental conditions that could interrupt your supply chain.
PESTLE is an acronym for Policital, Economic, Social, Technological, Legal and Environmental and helps you focus on issues beyond your control that can impact your organization. With PESTLE, you can better anticipate scenarios that can impact your business and, therefore, be able to act.
3 Source alternative providers
Finally, we recommend that you create a complete list of additional suppliers in case your existing suppliers are unable to fulfill your orders.
You need to make sure that any change of provider is fully documented and agreed with your stakeholders, with a clear process to know who does what and when. In addition to being able to provide quickly, the evaluation process must ensure that any temporary supplier does not impact the overall quality of your offer.
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