From what you wear to the activities you engage in, weather affects every facet of life. In fact, every year, about 30 percent of America’s GDP is impacted by weather. As you can see, the impact of weather on the supply chain and thus, the economy, is high. As a business owner, weather conditions are outside of your control. However, there are strategies and systems that you can implement in order to keep tabs on possible supply chain disruptions and implement tactics to address them. How does the weather impact the global supply chain? Let’s take a look…
How does Weather Affect Supply Chain?
Demand
Weather can cause fluctuations in consumer demand for products. Some sectors do their best when outdoor conditions are just right. For example, sectors such as outdoor recreation equipment, pool installation and care companies, and garden centers all thrive when weather conditions are good. There are also sectors that see spikes in demand when the forecast calls for extreme weather events. For instance, grocery stores usually see surges in demand when a blizzard is in the forecast, as this type of extreme weather event can drive consumers indoors for extended periods of time.
Production
Weather also impacts the production of a wide variety of products; most notably, items in the agriculture industry. For example, late- or early-season cold temperatures can freeze and kill crops that were just planted or that were near ready to harvest. Droughts can reduce the yields of a variety of essential crops, such as corn and wheat. When the weather has a negative impact on crops, it can also have a huge impact on the global food supply, resulting in food scarcity and famines.
Delivery
Poor weather conditions can also cause delivery issues. For instance, during inclement weather, such as blizzards or floods, conditions can become too hazardous for trucks and other vehicles. As a result, they can be forced to delay their deliveries. Conversely, if a forecast calls for a prolonged period of pleasant weather, delivery can be impacted. During this time, consumer demand can surge, making it difficult for suppliers to deliver products fast enough to refill store shelves.
Forecasting
The good news is that some supply chain issues that are a direct result of the weather conditions can be alleviated and managed with reliable forecasting. To illustrate, when the weather is accurately forecasted – say, a big storm is predicted far enough in advance and arrives within the predicted timeframe – companies can make accommodations to subvert the supply chain challenges.
That said, however, if forecasting is inaccurate, the supply chain can actually be further impeded. For example, companies could order excess inventory if a forecasted storm doesn’t arrive. In other instances, ordering too much of one product can prevent other, more important, products from getting to where they need to be ahead of time.
Additional Information: Best practices of inventory management and visibility
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