Todays post is by Mark Davis; Vice President of Operations and CTO at SafeSourcing. Mark asks "What affect does severe weather have on the business world, specifically that involving procurement"?
Last week more than one third of the United States was hammered by a winter storm that left hundreds of people stranded in airports, without power and without the means to conduct their normal lives. This storm comes on the heels of what has already been an extremely bad winter for much of the northern and eastern part of the country.
The question lies, what type of impact do storms like this really have on the business world and the activity surrounding the sourcing of goods and services.
Any time retailers have to go more than 2 or 3 days with no or very limited sales the impact is enormous. That is lost revenue that cannot be retrieved; not to mention the waste involved for perishable products that were not sold. Loss of this nature must be recouped somehow and often that is in the form of an increase in prices.
The service industry is also affected as poor travel conditions and canceled flights lead to lost revenue in many sectors while some sectors such as snow removal, roof repairs and maintenance companies can barely handle the increases they see. Companies without a good procurement process and or have negotiated strong contracts are left waiting or paying extreme premiums to get attention.
Lost man hours due to driving conditions and increased illness are also a major impact of a storm like last week that certainly affects the areas being hit, but it also affects companies in other parts of the country as they suffer the pains of canceled meetings and delayed activity in the aftermath of the storm. All of this ends up meaning one thing, lost revenue and time that usually leads to increased prices and shorter supply levels.
Whether this storm dramatically affects the slight economic upturn being displayed before it hit remains to be seen but one thing is sure; the ripple effect of the storm will be felt for weeks to come.
We look forward to and appreciate your comments.