Wednesday, March 20, 2013 by Tara Gallagher

Water-related power outages in India; over 900 vessels stranded on the Xijiang River in Guangxi, China; industrial projects halted in at least seven U.S. states; closures of the Yangtze due to water shortages — despite carrying 60 percent of the goods transported by river in China…

Water scarcity presents supply chain risks that companies are not adequately anticipating and managing. As population rises alongside increased water demand from agriculture and industry, the problem will worsen, with a 40% global shortfall in water resources projected by 2030.  Forty-five percent of CDP Water Disclosure participants in 2012 have already suffered water-related business impacts. Despite this, a Ceres report in 2012 found little discussion of water-related supply chain risk in SEC filings.

The wide adoption of life cycle assessment (LCA) studies as the tool-of-choice in improving product sustainability led to an LCA “mindset” where the benefits of considering cradle-to-grave impacts were internalized by decision-makers. Now companies need to embrace a water-scarcity “mindset.”

​Excellent new tools (Global Water Tool, Aqueduct) exist to facilitate mapping manufacturing locations and areas where agricultural inputs are grown.  River transportation routes for raw materials and finished goods should be included in this exercise and the effect of possible water shortfalls on energy supply assessed.  The resulting map is a great starting point for developing a water scarcity strategy.

Internalize the map. Put your company’s water scarcity map in the conference room where your logistics team meets.  Include the results in employee training. Integrate water scarcity considerations into your decision-making.

Use World Water Day this March 22 as the impetus for jump-starting your water program.  We have found that the Ceres Aqua Gauge provides invaluable guidance on developing a coherent strategy. As supply chains are the backbone of product delivery to market, a water scarcity mindset is vital to ensuring a resilient supply chain.