AI helps manufacturers tackle climate-driven supply chain risks

Climate change is increasingly straining global manufacturing supply chains, prompting companies to implement AI-powered resilience strategies. Romanian clothing manufacturer Katty Fashion exemplifies this shift by participating in the EU-funded R3GROUP project, which helps businesses develop robust supply networks capable of withstanding climate disruptions. This emerging application of digital twin technology allows manufacturers to simulate and respond to potential supply chain vulnerabilities in real-time, building on lessons learned during the COVID-19 pandemic when companies first confronted the fragility of their global sourcing networks.

The big picture: Climate change has joined pandemics as a major disruptor of global supply chains, pushing manufacturers to adopt AI solutions that can predict and mitigate environmental risks.

• As clothing manufacturer Katty Fashion demonstrates, companies are developing digital twins—virtual replicas of their supply chains—to identify vulnerable sourcing regions and adapt production in real-time.
• These systems integrate weather data, news reports, and supplier information to create responsive manufacturing models that can quickly adjust to disruptions.

How it works: Katty Fashion’s approach combines detailed supply chain mapping with AI analysis to create adaptable production capabilities.

• The company first conducted a forensic analysis of its textile and accessory sourcing, revealing potential weak points in climate-vulnerable regions like Spain and Portugal, which may face increasing heat waves and drought.
• Using this data alongside current news and weather information, they’re developing a digital twin that continuously analyzes supply chain vulnerabilities.
• If disruptions occur, companion models suggest factory reconfigurations, including production line changes and worker shift adjustments.

Historical context: The COVID-19 pandemic exposed fundamental weaknesses in global supply networks that climate change is now exacerbating.

• The logistics challenges of 2020-2022 prompted many companies to adopt “reshoring” strategies, preferring suppliers closer to home to reduce delays.
• Some manufacturers demonstrated extreme adaptability by completely changing their product offerings, such as distilleries that pivoted to producing hand sanitizer.

Where we go from here: Climate disruptions are already affecting critical manufacturing inputs, creating urgent demand for predictive AI solutions.

• Taiwan’s semiconductor industry, crucial to global technology supply chains, has already experienced production challenges due to climate-intensified drought conditions.
• As extreme weather events become more common, manufacturers that deploy AI-powered digital twins may gain significant competitive advantages through enhanced resilience.