When temperatures rise, supply chains feel the heat

Australia may be in the middle of winter, but businesses should already be thinking about how their supply chains will perform when the next period of extreme heat arrives.

Events unfolding across Europe this summer offer a timely warning. Western Europe has experienced its hottest June-July period on record, with prolonged heat and drought contributing to wildfires, agricultural losses and disruption to critical infrastructure. Low water levels on major rivers, including the Rhine, have affected cargo transport, while extreme temperatures have put additional pressure on energy systems, workers and businesses.

The lesson for Australian businesses is not that European conditions will simply be replicated here. It is that extreme weather can quickly become an operational issue. Heat does not need to directly damage a warehouse or close a road to disrupt a supply chain. It can alter consumer demand, reduce workforce capacity, affect transport availability, put pressure on refrigeration and automation, and create knock-on effects that continue long after temperatures return to normal.

Australia has already had its own warning. Research published by Melbourne-based urban analytics consultancy Geografia in December 2025 found that extreme heat can significantly alter consumer behaviour. Analysing more than 200 million anonymised Westpac bank-card transactions across Sydney, Melbourne and Adelaide, the study found that spending fell sharply during the hottest afternoon hours on days when temperatures reached 35°C or above, with some activity shifting towards cooler periods. The findings highlight how changes in consumer behaviour can quickly translate into changing demand patterns for retailers and their supply chains.

For supply chain leaders, these are not simply weather stories. They are signals that preparing for extreme heat needs to become part of operational planning and resilience.

Heat creates operational challenges at every stage

The effects of extreme heat can begin well before a product reaches the warehouse.

Heatwaves can affect agricultural production, raw material availability and transport capacity. For food and beverage companies in particular, extreme temperatures can have consequences upstream, potentially affecting both the availability and quality of products entering the supply chain.

Once products reach a distribution centre, the operational challenges continue. Higher temperatures can affect employee wellbeing and productivity, requiring additional breaks, adjusted shifts or changes to workloads. These measures are essential for safe operations, but they can also affect throughput at precisely the point when demand may be changing rapidly.

Heat can also place additional pressure on equipment. Battery-powered vehicles and automated systems may operate differently in extreme temperatures, while refrigeration systems have to work harder to maintain controlled conditions.

Transport networks face similar pressures. Extreme heat can increase vehicle and equipment issues, create additional demands on refrigerated transport and contribute to delays. For businesses operating narrow delivery windows or highly synchronised supply chains, relatively small disruptions can quickly create downstream consequences.

The challenge becomes even more significant for organisations handling temperature-sensitive products such as food, pharmaceuticals and healthcare products. Maintaining controlled conditions throughout storage and transportation is essential to quality, compliance and customer safety. During extreme heat, refrigeration systems work harder, transport becomes more complex and the margin for error narrows.

Demand can change as quickly as the weather

Heatwaves do not just affect supply. They can fundamentally change demand. During periods of extreme temperatures, consumers may suddenly increase their purchases of bottled water, soft drinks, ice cream, fans, air conditioners and other heat-related products. At the same time, shopping patterns can shift as people avoid travelling or shopping during the hottest parts of the day.

The Geografia research illustrates the point. Its analysis of more than 200 million anonymised Westpac transactions found that spending declined significantly during the hottest afternoon periods when temperatures reached 35°C or above, before increasing during cooler evening hours.

For retailers and consumer-facing businesses, this creates a difficult balancing act. Inventory needs to be available where and when customers want it, but demand can be difficult to predict and may change rapidly as temperatures rise.

A supply chain optimised around historical demand patterns can struggle when those patterns suddenly change.

Visibility is only the starting point

Most supply chains today have significantly more visibility than they did a decade ago. Businesses can track shipments, monitor warehouse activity and understand inventory positions in near real time.

But visibility alone does not solve disruption. Knowing that a delivery is delayed, warehouse productivity is falling or demand for a particular product is increasing only creates value if the organisation can act on that information.

This is where Intelligent Supply Chain Execution becomes increasingly important.

Traditional supply chains have often been designed around relatively predictable operating conditions and optimised primarily for efficiency. In a more volatile environment, businesses need supply chains that can sense what is happening, determine the best response, act quickly and learn from each event.

Artificial Intelligence can accelerate this shift by analysing operational data alongside demand patterns, inventory positions, transport constraints and external factors such as weather forecasts. This can help organisations identify potential disruption earlier and make faster, better-informed decisions while keeping human teams in control.

During an extreme heat event, that could mean anticipating a surge in demand, repositioning inventory before shortages occur, adjusting warehouse priorities as productivity changes, changing labour plans or recommending alternative transport options when routes are affected.

The same capabilities can support responses to other disruptions, from floods and bushfires to infrastructure failures, geopolitical uncertainty and sudden changes in consumer demand.

The objective is not simply to collect more information. It is to turn information into coordinated action.

Preparation starts before the temperature rises

The most important lesson from Europe's summer may therefore have little to do with Europe itself.

It is that businesses cannot afford to wait until extreme weather arrives before deciding how their supply chains will respond.

Australia's Bureau of Meteorology has confirmed that the country is currently in an El Niño phase, a climate pattern that can influence Australian temperature and rainfall conditions. While El Niño does not determine individual weather events, it reinforces the need for businesses to understand the potential operating conditions ahead and incorporate weather-related scenarios into their planning.

Preparation should begin with identifying where heat could create the greatest operational exposure. Which facilities have limited cooling capacity? Which products are temperature-sensitive? Which transport routes have the fewest alternatives? How would warehouse throughput change if working conditions required additional breaks or altered shifts? And how quickly could inventory be repositioned if consumer demand changed unexpectedly?

Businesses should also consider how these factors interact. A heatwave that reduces warehouse productivity at the same time as increasing demand for certain products creates a very different challenge from either event occurring in isolation.

This is where intelligent, connected supply chain execution can make a difference. The ability to bring together information from orders, inventory, warehouses and transportation can help organisations move from reacting to individual problems towards coordinating a response across the supply chain.

Extreme weather will always be difficult to predict with precision. But the operational response does not have to be improvised.

Australian businesses have already seen what extreme heat can do. The events unfolding across Europe provide another reminder of how quickly weather can become an economic and operational issue.

The businesses that are best prepared will not necessarily be those that can predict exactly when the next heatwave will arrive. They will be those with the ability to sense disruption early, make informed decisions quickly and execute those decisions with precision.

Businesses cannot control the weather. They can control how prepared their supply chains are when it arrives.