Preparing the Supply Chain for Severe Weather Events

by

Devin Partida

Supply chain and logistics professionals must increasingly prepare for the impact of severe weather events on operations as many scientists agree that climate change will only worsen dangerous weather. Semiconductor companies are still recovering from snowstorms in Texas, and Germany is reeling from devastating floods.

Here are five practical ways to minimize the impact of natural disasters.

1. Consider moving inventory to lower-risk areas

It’s not always possible to predict severe weather. However, many regions deal with it seasonally. For example, people along the East Coast brace for hurricanes while those on the opposite side of the country anticipate wildfires. Meteorologists can often predict long stretches of adverse weather such as heatwaves, too, giving residents some warning.

A 2020 study measured the financial ramifications of California’s 2018 wildfires, which researchers estimated at $150 billion. They also found that 59 percent of those costs are indirectly related to supply chain disruptions.

When supply chain leaders know there is a high risk of a severe or prolonged weather event — California had more than 8,500 separate fires in 2018 alone — they should think about temporarily shifting some of their highest-value inventory to less-affected parts of the country. That takes time and resources, but it could reduce problems in the long run.

2. Equip truckers to deal with weather-related difficulties

Trucking professionals are critical partners in supply chains, ensuring that goods reach their destinations safely and in sale-ready condition. They also frequently face the most immediate impacts of severe weather by encountering it while behind the wheel.

That’s why many logistics companies specifically train their drivers to respond correctly to severe weather. Others use in-cab communication systems to spread information about bad weather in the area.

Giving truck drivers the information they need as conditions change improves overall safety. It also may allow enough time for route changes or other alterations that mitigate weather-related effects while keeping vehicle operators and cargo safe.

3. Have a generator for power outages

Power outages often accompany severe weather. Supply chain professionals know that even a brief loss of electricity could compromise operations. Fortunately, having a generator on-site can address those challenges by providing a backup source of power.

A standby generator can give near-continuous power to whole buildings or pieces of equipment. It’s the best choice for large facilities such as warehouses. However, when logistics professionals research generators to safeguard against power outages, they should also take fuel into account.

Propane is easy to get during power outages, whereas gasoline requires electricity to pump. No matter what kind of fuel a generator requires, that piece of equipment needs proper maintenance to ensure it will function during a weather emergency.

For example, the coolant, oil, and fuel must get changed at regular intervals, and people should inspect the generator for issues like leaks and worn belts.

4. Diversify the supply chain when possible

A diverse supply chain is more resilient against shocks — and even events that are hard or impossible to anticipate. Those are among the findings of a recent study that involved scientists taking inspiration from biodiversity.

The team focused on a food supply chain but said their approach applied to other kinds, too. They concluded that supply chain diversification caused up to a 15 percent improvement in the network’s ability to withstand mild to moderate disruptions. They looked at data from 2012 to 2015, when much of the United States experienced severe droughts.

Another finding was that diversity accounted for more than 90 percent of the frequency, intensity, and duration of issues with food supply chains. Thus, taking proactive steps towards more diversity when possible could prevent future problems.

5. Use modeling to predict severe weather’s effects

Supply chain professionals often use advanced machine learning algorithms to accelerate delivery speeds and assess how factors such as traffic could influence timelines. They can take similar approaches to gain a richer understanding of how severe weather could impact the supply chain.

For example, during a heatwave, the demand for products such as inflatable children’s pools and portable air conditioners will likely rise. Additionally, events like hurricanes and wildfires force people to stay indoors, possibly causing declines in sales for garden furniture.

An emerging trend in weather-related predictions for supply chains involves using digital twins to model possible events and gauge their outcomes. For example, a tool called Seaport Simulator provides probabilities for a vast number of climate events and relevant cargo effects. It does not decide courses of action but rather presents people with the likeliest scenarios and estimated margins of error.

Another modeling option concerns assessing how past weather events affected supply chains and applying those trends to a current situation. What lessons could logistics professionals learn? Did mistakes happen that companies should avoid as they move forward?

Being proactive minimizes risks

It’s impossible to plan for all weather-related supply chain obstacles. However, these five tips will get professionals off to a good start in identifying and reducing the potential threats.