Adverse Weather and the Supply Chain—How to Prepare
With snow overtaking much of the northeast, it’s important to take a look at how such adverse conditions can affect the supply chain. What can be done to prepare for something like this?
Adverse weather conditions can be devastating for shippers, making plans is the obvious way to prepare for such occurrences. However, it is surprising that a lot of companies still get caught in the mess.
Sub zero temperatures and unexpected blizzards can bring havoc, and have been increasingly prevalent on the United States Northeast Coast lately, bringing major disruption to shipping companies operating in and around that area.
A lot of companies who were working with tight budgets have had to reconsider their spending in the face of bad weather and the inevitable failure of services that followed. Instead of going with mode shifting options to handle the sudden shortage in capacity, shipping companies moved into the spot market to buy more capacity, and of course the rates were dramatically increased. This put higher management teams on alert, and they were curious as to why the transportation budget had shot through the roof—many operatives found it difficult to explain their bosses.
Bad weather is inevitable, and is almost an annual occurrence. Instead of leaving the fate of the business to matters that are beyond human control, here are three suggestions to be included in planning and preparation for the worst times of the year.
Do Not Attempt to Hit the Market on Time
There is no problem in trying to find the best rates, but you have as much chance of timing the stock market as you do the shipping market. Carry out a procurement exercise annually, in order to review rates and providers, allowing for better organized networks between the different parties.
Stay with the Same Service Providers
This is not to say you shouldn’t shop around—competition is key for prices. Before making a choice, calculate how much your carriers actually haul against the amount they promise. If you give too much to newly contracted haulers, it will be visible on the bottom line.
Understand What Causes Volatility in the Market
The market has a huge influence on the amount of capacity available. As in the wider economy, truckload capacity moves in cycles. Unfortunately, there is no method that will allow you to see where a shortage in capacity will occur, but there are economic indicators that will give insight into how the market is developing and allow companies to see where rates will be affected.