The winter of 2013-14 has been one of the harshest winters on record, how is it affecting your business?
Today’s post is by Mark Davis; Sr. Vice President and COO at SafeSourcing.
The winter of 2013-2014 will rise to new heights after the latest storm ravages the entire country. The full effects of this winter will not felt in their entirety until later this year but reports in some areas are already known and will begin to change the procurement landscape before the winter is even over.
Logistics Availability – Recent studies and statistics have reported that the availability of Third Part Logistics (3PL) companies to handle the shipping demands of their customers is already starting this year with an alarming trend. The supply of vehicles to handle shipments is grossly inadequate compared to the need. As with any situation where the demand outweighs the supply the prices will not only rise but availability to even cover some of these shipments is suspect. This affects when product arrives to a location causing a ripple affect across the supply chain. With temperatures dropping so low, the option of using dry van vehicles in the winter to keep things cool has gone away as product in extreme cold can be damaged in the same way that heat can in the summer. This has caused an increase in variable temperature equipment that has far outpaced the supply for this time of year.
Adjusting to buyer patterns – It is no secret that harsh weather not only affects when and if we are buying, but also what we buy. Studies such as the one by Vikram Somaya, have analyzed weather and consuming buying data to develop correlations between what people buy and the weather. This idea of weather changing buying patterns creates serious impacts in the business world as products with inventories reflecting normal weather go untouched while other products are in high demand and quickly out of stock (a retailer nightmare). On top of the changes in buying, many parts of the country are faced with consumers staying in not purchasing anything. Restaurants sit empty, stores void of shoppers and state and local governments missing millions of dollars in tax revenues. Looking at historical trends and missed opportunities will allow businesses to more accurately create demand forecasts and contingency plans for supply if/when the weather goes bad.
Personnel Issues – One other problem area that comes from severe weather is the affect it has on personnel, not only within a company but within the suppliers and vendors that company does business with. The world has become a much more “remote capable” place in which to operate but winter storms still affect the quality of work and availability for many people and can still result in power outages that bring work efforts to a standstill. While businesses may not be able to control power outages or employees that are physically unable to get into work from their side or their suppliers side, they can control the urgency with which they address their projects in advance of inclement weather. This means that on a Friday afternoon before a big potential storm they may stay an extra hour or two to ensure they work with everyone they can to be ready for potential bad weather instead of waiting and getting stuck with the effects of bad weather.
Severe weather is a part of the world we live and out of our control but steps can be taken to minimize the effects those storms have on a business and supply chain. For more information on how SafeSourcing can assist your team with planning for these occurrences or on our “Risk Free” trial program, please contact a SafeSourcing Customer Service Representative. We have an entire customer services team waiting to assist you today.
We look forward to your comments.