Supply Chain Blog

Snow: a natural disaster that plays havoc with supply chains

Posted by Dave Jordan on Mon, Feb 20, 2012

If you ask people to list disasters that have seriously affected supply chains you will probably get answers including the usual suspects, e.g. earthquake, tsunami, flood, volcanic eruption etc. Rarely would you find snow in the list of answers yet in many ways it is one of the most damaging disasters for a supply chain.

I am not talking about the 5cm of snow which brings most of the UK to a grinding, sliding halt. In relative terms that is an inconvenience and the impact is usually short lived. There may be a few delays here and there but supply chains in countries like UK are not severely affected. Conversely, the Scandinavian countries know that heavy snow will fall and they are suitably prepared with sand and grit in the right places and winter tyres and chains compulsory.

Snow fall affecting supply chain in CEEWhile countries across southern Europe/Balkans always get snow the amount that has fallen this year has paralysed large swathes of territory. This has not been a few cm of snow but metres and metres of the stuff which has covered entire houses, schools and shops. Think about that as you angrily scrape ice of your car window in the morning.  At least you can get out of your house and can actually see your car. Entire roads are blocked by solid mountains of snow and there is no way through without some seriously heavy and tracked digging equipment. This leads to a number of implications for people running supply chains:

  1. Trucks are stranded on roads and the load in transit will certainly be late and may even expire depending on the nature of the product or raw material. Will it still be needed?
  2. Consumers may not be able to get to shops to buy products; certainly those reliant on rural traditional trade will struggle. Unreplenished, shops cease to be shops.
  3. Will consumers want the product you have carefully planned, prepared and advertised on TV? Certainly, buying habits will change temporarily as relative luxuries give way to must-have staples.
  4. Warehouses may become blocked – not only with snow but with product that cannot move or nobody needs.
  5. People, yes ordinary people, may not be able to reach their supply chain workplace or may be absent due to domestic priorities.
  6. The pressure on gas and electricity supplies may restrict factory and warehouse operations.
  7. Petrol and diesel supplies may not be available.

The list really is endless but this is simply a disaster in my book and one for which we do not prepare and probably cannot.

The snow will clear of course but what then? The only way snow clears is to melt into water and at approximately 10% water equivalent there is a colossal amount of water waiting to flow. Severe flooding will follow and those at the eastern end of the Danube will be at greatest risk.

FMCG companies in particular have an opportunity now. They can help those thousands of desperate people by clearing out their warehouses and making a donation. Is it really worth keeping that soap with the mis-printed label or the toothpaste with the wrong cap colour or the soups with the “special price” artwork that never made it to market? Take the opportunity of spring cleaning your supply chain saving money on storage costs and reducing working capital AND doing something worthwhile. If you make a donation you are likely to receive some sort of tax credit and that would be preferable to complete write off at a later date that attracts VAT!

Nice, white fluffy crystalline water ice is great fun for kids but plays havoc with peoples’ lives and supply chains.

 

Image credit: Bogdan Cristel / Reuters

Tagss: FMCG, Dave Jordan, Supply Chain, CEE, Logistics Management