Top 10 Supply Chain Threats: Kathy Fulton of ALAN on the threat of disruptions from weather extremes
Weather is always a risk to the resiliency of a supply chain, and shifts in climate patterns seem to be making it an even more important risk for which supply chain executives need to be prepared. We run down the risks and how they could impact your supply chain operations.
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Transcript
About this week's guest
Kathy Fulton is executive director of the American Logistics Aid Network (ALAN). She leads the organization in facilitating donations of logistics services and equipment to enable delivery of millions of dollars’ worth of humanitarian aid. Fulton served as the organization’s director of operations from 2010 until her promotion in 2014.
Fulton’s passion is the intersection of supply chain and emergency management, focusing on the critical role logistics and supply chain professionals play in disaster relief. She serves on national workgroups focused on efficient coordination of logistics activities during disasters, including those hosted by the National Academies of Science, Engineering, and Medicine, the Department of Homeland Security, the Transportation Research Board, National Voluntary Organizations Active in Disaster, and the National Emergency Management Association.
Preceding her work with ALAN, she was senior manager of information technology services at Saddle Creek Logistics Services, where she led IT infrastructure implementation and support, corporate systems, and business continuity planning. Fulton holds a bachelor’s degree in mathematics from Northwestern State University of Louisiana and master’s degrees in business administration and management information systems from the University of South Florida.
David Maloney, Editorial Director, CSCMP’s Supply Chain Quarterly00:02
The Covid-19 pandemic showed us just how vulnerable supply chains are. Today we face many threats: shipping delays; a lack of workers; failing infrastructure; transportation rates that are out of control; cybersecurity threats; and of course, a worldwide pandemic that is still very much with us. But with each of these threats comes opportunities. Welcome to this limited podcast series from CSCMP’s Supply Chain Quarterly, the Top 10 Supply Chain Threats.
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Today, we focus on weather extremes. Here is your moderator for this segment, Mitch Mac Donald, group editorial director emeritus of Supply Chain Quarterly.
Mitch Mac Donald, Group Editorial Director Emeritus, CSCMP’s Supply Chain Quarterly01:13
Hello, and welcome to the latest installment in our podcast series on supply chain risks. Our topic today is extreme weather and the risks it pose[s] to supply chains worldwide. And with both severe weather and supply chains in the mainstream news like never before, who better to join us for discussion on this topic than Kathy Fulton, the executive director of the American Logistics Aid Network, or ALAN, for short. Kathy, thanks for joining us. I think it's your first podcast seating with us. We're excited to have you. The general consensus, clearly, is that not only is weather becoming more extreme, but it's popping up in nontraditional ways in nontraditional areas. Now, as part of your work with ALAN, you have to be much more plugged in than a lot of us on this. Is that general consensus, right? Is the weather getting worse, and is it hitting areas in ways it historically has not?
Kathy Fulton, Executive Director, American Logistics Aid Network 01:35
Hey, thanks for having me. Yeah, absolutely. I mean, you can see the number of extreme events climbing over the past, you know, decade even, but in different ways. Thinking, you know, I think about the drought we're having out in California right now, right, you know, just historic, low lake levels, and, you know, conversations we've never had to have before, because of these extreme events. You look at 2020 and the hurricanes that we had: record number of hurricanes. So, that number and the, not just the extremity of the events, but the impacts that they're having on populations. So, weather's not a problem if it's happening where nobody lives...
Mitch Mac Donald, Group Editorial Director Emeritus, CSCMP’s Supply Chain Quarterly02:43
Right.
Kathy Fulton, Executive Director, American Logistics Aid Network 02:44
but now we're building in places, and the weather is occurring in places, that is having an impact not just on humans, but on our supply chains, which means also more humans.
Mitch Mac Donald, Group Editorial Director Emeritus, CSCMP’s Supply Chain Quarterly02:55
Exactly. Yeah. And as you're saying that, I'm thinking about, in terms of places you wouldn't actually see it. I don't think ever in our lives that we've seen a video image of water running down the stairs into a New York City subway.
Kathy Fulton, Executive Director, American Logistics Aid Network 03:08
Right.
Mitch Mac Donald, Group Editorial Director Emeritus, CSCMP’s Supply Chain Quarterly03:08
Yeah.
Kathy Fulton, Executive Director, American Logistics Aid Network 03:08
Right, yeah, I mean, and the loss of life that accompanies that, because we're not accustomed to dealing with that, right? We're just—we have not built our infrastructure to handle these extreme events. So, as we look at, how do we mitigate, how do we prepare for these things, it's going to take really creative thinking, not just for, like our built environment, but also how we live our lives.
Mitch Mac Donald, Group Editorial Director Emeritus, CSCMP’s Supply Chain Quarterly03:34
Right. Right. Now, things are changing, and they'll continue to. On the difference of some different geographic areas being impacted, ALAN is coming up on 15 years?
Kathy Fulton, Executive Director, American Logistics Aid Network 03:46
Sixteen. Hurricane Katrina in 2005, so 16 years.
Mitch Mac Donald, Group Editorial Director Emeritus, CSCMP’s Supply Chain Quarterly03:49
Yeah, um, in, you know, a lot of experience now, a lot of sense of how to best rally support, how to deploy support, how to get things where they needed to be, but now that they're starting to have to be in different places. Is that complicating, or are you in the routine and say, we just do the same things, but now it has to go to New Jersey rather than Mississippi.
Kathy Fulton, Executive Director, American Logistics Aid Network 04:13
The Gulf Coast, right. Yeah, it is different. But the thing that I would say that helps us is that there are logistics operations everywhere and, with pushing more logistics into urban areas, you know—and we can talk about whether that, whether that has an impact on some of these extreme events—but as those you know, as those logistics hubs get closer to point of consumption, that means that those assets and resources become available to us to support the humanitarian activities.
Mitch Mac Donald, Group Editorial Director Emeritus, CSCMP’s Supply Chain Quarterly04:49
So, the naturally occurring expansion of logistics operations, to quote get closer to the customer is being done for capitalism reasons, for commerce, for business, but it's actually, there's a side benefit that now we have more options deployed in more areas?
Kathy Fulton, Executive Director, American Logistics Aid Network 05:07
That's right. Yeah, I mean, you know, we still have pockets of the country where, you know, it just doesn't make sense to have that density of logistics. Fortunately, at least for now, those are still areas where the extreme events, you know, don't have as much impact, you know. As more people move to Wyoming and Montana, for example, the logistics, you know, infrastructure will follow. So, it's a race.
Mitch Mac Donald, Group Editorial Director Emeritus, CSCMP’s Supply Chain Quarterly05:38
Yeah. Is, are there any specific things that—not speaking in terms of, in support of ALAN, and response, but just, you know, in crisis situations, it affects supply chain resiliency?
Kathy Fulton, Executive Director, American Logistics Aid Network 05:51
Yep.
Mitch Mac Donald, Group Editorial Director Emeritus, CSCMP’s Supply Chain Quarterly05:52
Any thoughts on any changes in approach a process that supply chain folks might have to consider to prepare for the fact that the resiliency of my supply chain is going to be tested more often, and in more ways than I ever thought.
Kathy Fulton, Executive Director, American Logistics Aid Network 06:04
Yeah.
Mitch Mac Donald, Group Editorial Director Emeritus, CSCMP’s Supply Chain Quarterly06:05
What should they be doing?
Kathy Fulton, Executive Director, American Logistics Aid Network 06:06
Well, you know, this is one of the areas where I think technology is keeping pace or advancing beyond how we're using it. So, the visibility that has been, you know, growing over the past few years, you know, this, this push towards being able to see end to end with your supply chain, gives us an advantage to also say, "Okay, well, if we know this information about our supply chain, about our nodes and flows, right, where our physical components are, then we can layer on top of that the particular risks that are occurring." So, we can see how a new extreme event, you know, that may not have occurred in a place previously, is going to impact our supply chains, okay? So, I think from that perspective, having that visibility, applying it in those ways, whether it's digital twins, or whether, you know—I don't know all the technology terms anymore—but I think that that's going to help us better respond to prepare or mitigate against these extreme events.
Mitch Mac Donald, Group Editorial Director Emeritus, CSCMP’s Supply Chain Quarterly07:12
They actually, as you're saying that, they're actually, I mean, the purpose and objective of a supply chain in its normal state, is not all that different than the purpose and objective when it's trying to help respond to a disaster. So, the same approaches, as you're saying this thing, it's the standard answer: It's your job to fully exploit enabling technologies, if you don't, you'll be at a disadvantage. That's really where [we've come].
Kathy Fulton, Executive Director, American Logistics Aid Network 07:35
We talk about not just exploiting the existing technologies, but exploiting their design. So, if you think about, you know, exactly what we talked about, we have these planned bottlenecks, as they were, of logistics hubs.
Mitch Mac Donald, Group Editorial Director Emeritus, CSCMP’s Supply Chain Quarterly07:51
Yeah. Yep.
Kathy Fulton, Executive Director, American Logistics Aid Network 07:51
Right? But that also means that's a concentration that we can draw upon, and because they're closer to the people, that means there's more of them. So, if Hub A within a city is down, maybe Hub B can surge to support it. But it's thinking about, how do we do that on the fly? So, how do we, how do we recognize that we can shift those flows to continue to serve a population?
Mitch Mac Donald, Group Editorial Director Emeritus, CSCMP’s Supply Chain Quarterly08:18
Has ALAN's ability to respond when needed during this pandemic period, at a time that many supply chains are, if not fully broken, at least seriously impaired, has that trickled down to impact ALAN's ability to respond in the way you want it to, and if so, could you tell us how that...?
Kathy Fulton, Executive Director, American Logistics Aid Network 08:39
Short answer is, absolutely, yes, one hundred percent, and because, you know, I don't want to take resources away from a supply chain that is already stretched thin, right? So, being able to ask our partners, Hey, can you donate your services to support this, you know, other supply chain, this other need that is occurring?, that we have to think about that closely. Like, is it better to keep that pre existing supply chain moving, or is it better to, in that moment, serve the the replacement supply chain? We've had amazing support from the, from the industry. You know, people are finding creative ways to support us, whether that is, you know, working not with just their primary assets, but partner assets, you know, helping us to really dig down through the supply chain, find that available capacity, find the ways to continue serving those who are affected by crisis.
Mitch Mac Donald, Group Editorial Director Emeritus, CSCMP’s Supply Chain Quarterly09:39
To close: Neither of us are scientists, and I would not suggest either of us are experts, but by the nature of your work and the great work you do. you may have some insights that are a little deeper than the rest of us. Is this going to continue to escalate? Is this going to—are we not yet near the end of seeing what climate change could do in terms of impact to supply chains?
Kathy Fulton, Executive Director, American Logistics Aid Network 10:06
In my unscientific, but studied, opinion...
Mitch Mac Donald, Group Editorial Director Emeritus, CSCMP’s Supply Chain Quarterly10:12
You asked the question better than I did!
Kathy Fulton, Executive Director, American Logistics Aid Network 10:14
No, I truly do believe that we are reaching that tipping point where it's going to be very hard to come back from, right? So, we have to think about, how do we restructure our supply chains so that there is less impact on the environment, so that we're not doing more harm by our activities, than good, you know? And whether that means, you know, nearshoring, reshoring, or just, you know, completely changing our model, we do have to change something.
Mitch Mac Donald, Group Editorial Director Emeritus, CSCMP’s Supply Chain Quarterly10:50
Both the business case and the human case for having a more sustainable supply chain is being made right in front of us
Kathy Fulton, Executive Director, American Logistics Aid Network 10:57
One hundred percent, because, I mean, what's the point of having fabulous supply chains if there's no one, you know, if the earth can't support the people to... ?
Mitch Mac Donald, Group Editorial Director Emeritus, CSCMP’s Supply Chain Quarterly11:08
Absolutely. Kathy, thank you, as always, you've given us some great insight for our audience, and thanks for joining us for a conversation. And thank you for tuning in. If you haven't done so already, please subscribe to this podcast so you can listen to our entire upcoming series on supply chain risks. I'm Mitch Mac Donald, and thanks again for listening to the Supply Chain Quarterly podcast.
David Maloney, Editorial Director, CSCMP’s Supply Chain Quarterly11:32
Thank you for joining us for this podcast from CSCMP’s Supply Chain Quarterly, the Top 10 Supply Chain Threats. We encourage you to subscribe wherever you get your podcasts.
Just 29% of supply chain organizations have the competitive characteristics they’ll need for future readiness, according to a Gartner survey released Tuesday. The survey focused on how organizations are preparing for future challenges and to keep their supply chains competitive.
Gartner surveyed 579 supply chain practitioners to determine the capabilities needed to manage the “future drivers of influence” on supply chains, which include artificial intelligence (AI) achievement and the ability to navigate new trade policies. According to the survey, the five competitive characteristics are: agility, resilience, regionalization, integrated ecosystems, and integrated enterprise strategy.
The survey analysis identified “leaders” among the respondents as supply chain organizations that have already developed at least three of the five competitive characteristics necessary to address the top five drivers of supply chain’s future.
Less than a third have met that threshold.
“Leaders shared a commitment to preparation through long-term, deliberate strategies, while non-leaders were more often focused on short-term priorities,” Pierfrancesco Manenti, vice president analyst in Gartner’s Supply Chain practice, said in a statement announcing the survey results.
“Most leaders have yet to invest in the most advanced technologies (e.g. real-time visibility, digital supply chain twin), but plan to do so in the next three-to-five years,” Manenti also said in the statement. “Leaders see technology as an enabler to their overall business strategies, while non-leaders more often invest in technology first, without having fully established their foundational capabilities.”
As part of the survey, respondents were asked to identify the future drivers of influence on supply chain performance over the next three to five years. The top five drivers are: achievement capability of AI (74%); the amount of new ESG regulations and trade policies being released (67%); geopolitical fight/transition for power (65%); control over data (62%); and talent scarcity (59%).
The analysis also identified four unique profiles of supply chain organizations, based on what their leaders deem as the most crucial capabilities for empowering their organizations over the next three to five years.
First, 54% of retailers are looking for ways to increase their financial recovery from returns. That’s because the cost to return a purchase averages 27% of the purchase price, which erases as much as 50% of the sales margin. But consumers have their own interests in mind: 76% of shoppers admit they’ve embellished or exaggerated the return reason to avoid a fee, a 39% increase from 2023 to 204.
Second, return experiences matter to consumers. A whopping 80% of shoppers stopped shopping at a retailer because of changes to the return policy—a 34% increase YoY.
Third, returns fraud and abuse is top-of-mind-for retailers, with wardrobing rising 38% in 2024. In fact, over two thirds (69%) of shoppers admit to wardrobing, which is the practice of buying an item for a specific reason or event and returning it after use. Shoppers also practice bracketing, or purchasing an item in a variety of colors or sizes and then returning all the unwanted options.
Fourth, returns come with a steep cost in terms of sustainability, with returns amounting to 8.4 billion pounds of landfill waste in 2023 alone.
“As returns have become an integral part of the shopper experience, retailers must balance meeting sky-high expectations with rising costs, environmental impact, and fraudulent behaviors,” Amena Ali, CEO of Optoro, said in the firm’s “2024 Returns Unwrapped” report. “By understanding shoppers’ behaviors and preferences around returns, retailers can create returns experiences that embrace their needs while driving deeper loyalty and protecting their bottom line.”
Facing an evolving supply chain landscape in 2025, companies are being forced to rethink their distribution strategies to cope with challenges like rising cost pressures, persistent labor shortages, and the complexities of managing SKU proliferation.
1. Optimize labor productivity and costs. Forward-thinking businesses are leveraging technology to get more done with fewer resources through approaches like slotting optimization, automation and robotics, and inventory visibility.
2. Maximize capacity with smart solutions. With e-commerce volumes rising, facilities need to handle more SKUs and orders without expanding their physical footprint. That can be achieved through high-density storage and dynamic throughput.
3. Streamline returns management. Returns are a growing challenge, thanks to the continued growth of e-commerce and the consumer practice of bracketing. Businesses can handle that with smarter reverse logistics processes like automated returns processing and reverse logistics visibility.
4. Accelerate order fulfillment with robotics. Robotic solutions are transforming the way orders are fulfilled, helping businesses meet customer expectations faster and more accurately than ever before by using autonomous mobile robots (AMRs and robotic picking.
5. Enhance end-of-line packaging. The final step in the supply chain is often the most visible to customers. So optimizing packaging processes can reduce costs, improve efficiency, and support sustainability goals through automated packaging systems and sustainability initiatives.
That clash has come as retailers have been hustling to adjust to pandemic swings like a renewed focus on e-commerce, then swiftly reimagining store experiences as foot traffic returned. But even as the dust settles from those changes, retailers are now facing renewed questions about how best to define their omnichannel strategy in a world where customers have increasing power and information.
The answer may come from a five-part strategy using integrated components to fortify omnichannel retail, EY said. The approach can unlock value and customer trust through great experiences, but only when implemented cohesively, not individually, EY warns.
The steps include:
1. Functional integration: Is your operating model and data infrastructure siloed between e-commerce and physical stores, or have you developed a cohesive unit centered around delivering seamless customer experience?
2. Customer insights: With consumer centricity at the heart of operations, are you analyzing all touch points to build a holistic view of preferences, behaviors, and buying patterns?
3. Next-generation inventory: Given the right customer insights, how are you utilizing advanced analytics to ensure inventory is optimized to meet demand precisely where and when it’s needed?
4. Distribution partnerships: Having ensured your customers find what they want where they want it, how are your distribution strategies adapting to deliver these choices to them swiftly and efficiently?
5. Real estate strategy: How is your real estate strategy interconnected with insights, inventory and distribution to enhance experience and maximize your footprint?
When approached cohesively, these efforts all build toward one overarching differentiator for retailers: a better customer experience that reaches from brand engagement and order placement through delivery and return, the EY study said. Amid continued volatility and an economy driven by complex customer demands, the retailers best set up to win are those that are striving to gain real-time visibility into stock levels, offer flexible fulfillment options and modernize merchandising through personalized and dynamic customer experiences.
Geopolitical rivalries, alliances, and aspirations are rewiring the global economy—and the imposition of new tariffs on foreign imports by the U.S. will accelerate that process, according to an analysis by Boston Consulting Group (BCG).
Without a broad increase in tariffs, world trade in goods will keep growing at an average of 2.9% annually for the next eight years, the firm forecasts in its report, “Great Powers, Geopolitics, and the Future of Trade.” But the routes goods travel will change markedly as North America reduces its dependence on China and China builds up its links with the Global South, which is cementing its power in the global trade map.
“Global trade is set to top $29 trillion by 2033, but the routes these goods will travel is changing at a remarkable pace,” Aparna Bharadwaj, managing director and partner at BCG, said in a release. “Trade lanes were already shifting from historical patterns and looming US tariffs will accelerate this. Navigating these new dynamics will be critical for any global business.”
To understand those changes, BCG modeled the direct impact of the 60/25/20 scenario (60% tariff on Chinese goods, a 25% on goods from Canada and Mexico, and a 20% on imports from all other countries). The results show that the tariffs would add $640 billion to the cost of importing goods from the top ten U.S. import nations, based on 2023 levels, unless alternative sources or suppliers are found.
In terms of product categories imported by the U.S., the greatest impact would be on imported auto parts and automotive vehicles, which would primarily affect trade with Mexico, the EU, and Japan. Consumer electronics, electrical machinery, and fashion goods would be most affected by higher tariffs on Chinese goods. Specifically, the report forecasts that a 60% tariff rate would add $61 billion to cost of importing consumer electronics products from China into the U.S.