In recent years, we’ve seen plenty of examples of extreme weather disruptions and this, unfortunately, impacts on the supply chain management with production delays, shipping disruptions, and more. While we attempt to plan ahead, it’s almost impossible to eradicate this issue completely and extreme weather on the other side of the world can still impact every company.
For Japan, Asia, the UK, the US, and several other areas, extreme weather causes issues and this has a direct impact on global economies and supply chains. As a result, we’ve introduced various pieces of software as a means of improving visibility.
Even for the consumers, their buying behaviors are impacted by the weather so this is something supply chain managers need to consider when forecasting. If they’re forgotten, the business loses time, money, and ground to competitors.
In areas where extreme weather disruptions are frequent, producers are forced to plan a calendar that takes into account the weather disruptions at certain points in the year.
Considering some products only have a short lifespan, weather disruptions can be detrimental to supply chain value. For example, heavy boots are seasonal along with beach items, gardening tools, and sun lotion. If extreme weather causes transportation delays, the products hit the stores much later and a chunk of sales are missed. While countries tend to export to the US, EU, and other countries, the receipt of these products is reliant upon smooth shipping which isn’t always the case.
Forecasting – With the likes of Accuweather and WeatherData, big companies now have a better idea of weather patterns. These days, Sears, Wal-Mart, and many others utilize these forecasting tools so their products hit the shelves at the right times. For spring products, forecasting will tell the company where issues could arise in the lead up to this season all around the world.
As industries become more competitive, the value of these tools is increasing and this is allowing the forecasting niche to develop. Whenever a company lacks access to forecasting, they’re left hoping rather than being able to systematically plan.
Cost and Visibility – In truth, extreme weather has a two-pronged attack because it increases costs within the supply chain and it also decreases visibility. With Hurricane Katrina, this is now considered one of the most expensive events ever to impact trade in the United States. To keep visibility, supply chains could potentially use Visio and other software. If somebody in the supply chain has access to this software, they can alert everybody else when a severe weather warning comes in.
Extreme Weather – With global warming and the greenhouse effect, there’s no denying that extreme weather events are becoming more common. Below, we’ve listed some examples;
- 2011 – Large floods in Thailand almost destroyed the automobile industry; many Japanese technology companies were hit too.
- 2011/12 – Unusual rainfall affected Australia’s greatest coal extraction points; in fact, they’re also some of the world’s most lucrative coal mines.
- 2013 – Hurricane Haiyan washed containers and a ship to beaches impacting global trade and the relevant supply chain.
- 2013/14 – Various winter weather events caused delays and disruptions right across North America.
- 2016/17 – Both the UK and US have been hit by more severe weather events than at any other time on record. Whether through a hurricane, storms, or extended periods of rain, they all impact the global supply chain.
Whenever severe weather strikes, there’s somewhat of a domino effect which is why supply chain managers need to be alert. If one transportation option is shut down, utilizing another type could limit the losses and keep products shipping to the right locations. With the right back-up strategy, supply chains can continue operating through certain weather events.
Carriers – When inclement weather is experienced in the US, shipping carriers have problems to resolve. Just recently, an alert system was set up by FedEx Corp for all severe weather in Midwestern and Southwestern states. For the rest of the country, extreme weather causes problems with online shopping orders, canceled flights, and shipping delays with UPS. For FedEx, they’re still affected but have plans to continue thanks to the knowledge of the weather well in advance.
Contemporary Issues – Every year, businesses are disrupted in several different ways but bad weather now sits at number five in Business Continuity Institute’s top 10 disruption index. Nowadays, we must assess the success of the UK and China on a global scale because it means their economies and supply chains are more susceptible to weather delays than previously.
In these countries, brands are having to develop their own strategies to avoid disruption including Zara who uses RFID technology and Fast-Fashion policies. Compared to Australian Apparel, who lost four chains in under two weeks due to weather, they’re able to cope with the damaging weather.
Elsewhere, IBM has been helping supply chain managers recently with the advancements in machine learning capabilities and artificial intelligence. What’s more, sensory technology and ‘Internet of Things’ (IoT) are both seeing advancements thanks to Understory. With state-of-the-art weather stations, data can be analyzed including to assess the impact of weather on shipping. Every year, supply chain managers are being supported by weather-related courses and bigger and better software.
Worldwide Weather – In terms of the weather changes, they’re occurring all around the globe and this is leading to adjustments in consumer behavior. In the UK, the whole system changes from transport to a logistic network when the weather takes a turn with trains, planes, and container ships all affected.
In other locations, the problems are more severe and we saw this recently with Hurricane Harvey and its effect on Texas. Right across the US, this had a dramatic impact on supply chain management with 33% of all chemicals affected in their journey to the end user.
Unfortunately, climate change is continuing its path too and Russia suffered a wheat shortage in 2010 as a result; this was caused by man-made restriction and a drought. Meanwhile, the automobile industry in Japan crashed because of an earthquake in 2011. Considering this earthquake sent economic waves as far as the US, this perhaps shows that a recovery strategy is more important than making a supply chain earthquake-proof.
John McDonnell, a British politician, has recently suggested that all climate change issues should demand greater attention. With the weather disruptions becoming more common, he believes the impact on the global economy will get greater as time passes. As well as planning shipping, companies are also now having to plan demand too.
Business Infrastructure – Sadly, there’s also a physical aspect to weather as opposed to a collapse in the financial market which is easily repairable. After extreme weather disruptions, many companies are forced to relocate within a State suffering from communication issues, a lack of water, and damaged structures; all while trying to deal with damaged homes too.
Currently, a significant percentage of the business world remains uninsured in the key areas which is why it’s always beneficial to communicate with insurers; they can point out the areas that aren’t covered so measures can be taken to prevent huge losses in supply chain value. After this, businesses will also need emergency communication methods, an ability to retrieve data and to also make employees feel safe. When the right risk prevention steps are taken, it’s easier to stay ahead of the competition (who may lose everything with no steps to get back into position).
Finding Resolutions – In Louisiana, they recently saw excessive amounts of rainfall which caused disruptions to the supply chain due to road closures. However, some companies knew of the rainfall and had alternative plans in place whether it was distributing more in the week before or making other plans for distribution. Using weather reports from third parties, forecasting can help with early recovery.
Within the supply chain, visibility will always be a key feature but it will never be more important than during a crisis. Often, logistics providers and shippers can assist in moving cargo from problem areas. With the right software in place, you can communicate with all partners clearly and other plans can be made. If a carrier isn’t able to perform their duty, companies should have backup options.
Summary – Every year, extreme weather disruptions causes billions of dollars of damage to the supply chain right across the world. For some businesses, the damage spells the end of the road and the end of a dream. Therefore, weather-related issues MUST be considered during supply chain management and planning. As soon as visibility is increased on this front, businesses will be in a better position to 1) make other plans and deal with the extreme weather when it comes and 2) take steps to ensure quick recovery after the event.
Furthermore, weather-proofing products and their packaging will always be a good idea so it remains valuable to the consumer. Once the logistics are taken care of, it’s then about the safety of all management and employees. If the weather is extreme and the relevant agencies are placing out health warnings, work takes a back seat and survival is the priority.
With the right help and the right strategy, there’s no reason why your business can’t survive extreme weather and even excel on the other side!