Severe weather is known to be one major cause of disruption in the logistical arrangement for businesses worldwide. Severe weather can occur in the way of hurricanes, floods, droughts, and blizzards. These natural occurrences hit the headlines for the deaths and devastations caused. It is however clear that the weather conditions are responsible for huge losses occurring to the business community too. The damages resulting can be categorized into two. First is the physical damage of property, plant, and equipment, and secondly, the business loss occurring from lost production during the period of bad weather. This paper discusses the effect of the recent winter conditions on businesses in the UK with a close focus on the logistical implications to a Fast Moving Consumer Goods manufacture in the UK. In this case, a bread supplier will be considered. It also outlines some of the opportunities arising from the bad weather for businesses.
Weather experts assert that the first 3 weeks of the end of December 2009 and the start of January 2010 are the coldest since the year 1963. Some reports have shown that some areas are experiencing snowfalls leading to up to 25cm layers of ice on the ground. This has persisted for more than a week now. The resulting disruptions are numerous (The Big Freeze 2010, Par4).
The one sector which always bears the greatest blow in the occurrence of such snowfall is the transport sector. It also turns out that this is the one most important sector for the business community. Flight cancellations, immobility of vehicles, and delays in shipping goods are the order of the day. It, therefore, means that the business partners who had to meet to share ideas and chat the way forward cannot meet. According to experts, losses emerging from such cancellation of business meetings can be a phenomenon. Also, the economic costs for the transport operators run into hundreds of million pounds. On the other hand, employees who have to commute via road have had a high rate of absence due to blocked roads. The estimates made on the cost of employee absenteeism are in the range of £230 million for one single day. This is in consideration of all factors in play including possibilities of the breakdown of vehicles as well as the average salaries of those employees affected. Indeed it is the employees who drive the growth of any business and not having them report to work on any day can be catastrophic (Road Transport in the Snow, 2010, Par3).
Due to the disruptions in transport networks, the retail sales have also plummeted mainly due to the fact that people are now less exposed to the products as they remain indoors. They limit purchases to the most essential goods. The multiplier effects of such disruptions continue to haunt the succeeding period. In addition, the energy sector remains in the spotlight supplies of gas are feared to be running out due to the bad weather. Some major consumers of gas have been cut off from the system leading to loss of production.
The UK Fast Moving Consumer Goods (FCMG) sector is very vulnerable. The sector is comprised of common supplies which move in large quantities giving little per unit profits but huge cumulative profits. They are mainly the daily necessities needed in different areas but more importantly the households. Products like milk, bread, sugar, sweets soap, toothpaste, soft drinks, beer, and fruits fall under this category. Some are even more complicated due to their being perishable. This means that they have to be supplied daily. Even for nonperishable, stocks run out soon and need frequent replenishing. This being the case, the transport hitches occasioned by the snowing has had catastrophic effects on the UK FCMG sector. It has become very difficult to ensure customers have adequate stocks as distribution networks have been disrupted. The effect has been even greater bearing in mind the fact that the snowing coincided with the Christmas holiday season when the rate of spending goes up for most households. Due to the nature of the sector, logistical implications are most important. At times the supply chain has to be organized in a way that the vans, lorries, and other transport means fetch goods from different locations scattered all over the city while delivering them to different locations. This is a logistical organization that requires utmost efficiency to ensure customer satisfaction. As such a transport hitch means massive losses and anger from retailers and customers.
Overcoming the logistical nightmare resulting from the transport hitch for our bread baking company requires an integrated approach to the problem with the application of even the simplest of logistical solution tools to minimize disruptions. To start with, the staff should be categorized (Cold weather causes travel disruption across the UK, 2010, Par4). The first category involves those not directly involved in production and distribution processes. This category includes the senior managers, administrators, and other support staff. It is prudent that where possible, such staff members should be allowed to work from home. The internet as well as other telecommunication channels are well developed in the UK. It is therefore not necessary for an accountant to waste hours and cause delays to some basic processes such as authorization on the road. It is possible to enact teleworking for such staff who need not be physically present in the office. In addition, some simple roles they play can be undertaken by the category of staff that must be physically available. This reduces delays resulting from the absence of a sizeable number of employees (Martin, 2009, Par 3).
The second category comprises of the employees who must attend work for production as well as distribution to happen. This includes those working in the production unit and the distribution staff such as drivers and distribution officers. For this section of staff, all should be done to ensure they are able to attend work. This includes finding nearby residences for those living far off and compensating them appropriately for days not spent at home (What do I need to plan for? 2010, par 3).
The actual distribution presents a major challenge. The shelf life of fresh bread is approximately three days hence there is the need to constantly replenish stocks. First, there should be a mutual agreement between our sales team and the customers that given the circumstances, the company will be able to supply only once in two or three days depending on the conditions prevailing (Severe Winter Weather Causes Transport Disruption Across the U.K, 2010, par6). This being the case there is a need for them to scale up their working capital for the period of the crisis. This is due to the fact that they will need to maintain a higher level of inventory to avoid inconveniences. An audit of all the customers willing to cooperate should then be carried out so as to get a clearer picture of the distribution demands on a daily basis (Dell, 2009, Par3).
The second step is o establish correspondence with weather experts and the city authorities. This is so as to ensure that information on the current trends and weather patterns as well as the recently cleared roads reaches the office soonest. Such information is to guide the supply routes to be taken on a daily basis. This reduces the chances of delay and will improve the efficient use of the available vehicles for distribution. This information in conjunction with the information about the customer can be integrated to develop a very responsive distribution network that reduces chances of reneging on promises. This means that vehicles should be directed to the areas where there are lesser chances of delay and to supply customers according to top their specifications of quantities (Michael, 2010, Par6).
The incorporation of technology mainly in tracking will also ensure better delivery. All delivery vans and trucks have tracking devices. The control team at the main office should use the devices together with the information from the weather department and city authorities to guide the vehicles in the field on the routes to follow to avoid blocked roads and quicken the supply process. In addition to this, the company should have smaller vehicles than big Lorries. The reason for this is that smaller vehicles are easier to control than bigger ones (Employee absenteeism because of bad weather could cost £230, 2010, par4).
Combining all these elements will create an effective short-term response mechanism that seeks to guarantee continuity for all the activities critical to the development of the business as well as maintaining high levels of customer satisfaction. This means that should the snowing not continue for too long, the extra costs incurred in the process are significant but justified bearing in mind the prevailing circumstances. Despite the harsh situation, there are some savings which result from the lesser number of trips made to each customer in such seasons. This is due to the earlier discussed strategy of ensuring that the retailers agree to scale up their inventory to take advantage of the shelf life of bread as opposed to conducting daily deliveries as is the case under normal circumstances (Supply Chain Management, 2004, Par2).
In a case where the snowing extends for a period of more than two months, some more drastic measures should be taken to mitigate the risk of business failure due to the increased costs of operations caused by the arrangements discussed above. The first most important consideration is a change in location. This may be implemented in two ways. The first is whereby the production plant is shifted albeit temporarily to another more accessible location with improved access to retailers (For immediate release, 2010, Par3).
A simple check on the undertaking appears costly and uncertain. However, a total audit of the costs and benefits gained from the relocation over the expected duration of continued snowing according to the weather department should be accurately determined. This should be weighed against the extra costs incurred to ensure deliveries including lost sales at the current location. This is in full consideration that time is of the utmost essence in the FCMG sector. Any day which passes with empty shelves are empty at the retail shops cannot be recovered as it is permanently lost to the competitors. This means fewer returns for the business (Martin, & Helen, 2010, Par3).
The second way of implementing this is by establishing a common distribution point closer to the customers. A single distribution point means that the product has to first be transported from the production plant to one point closer to the clients and the distribution done from the place. This would drastically reduce the time taken to respond to customers’ orders (Perspective: Disaster Preparedness Planning, 2009, Par4).
Despite the extra strain the bad weather brings to businesses, there are glaring opportunities that result. First is that under the immensely cold weather, there is a greater need for heating. The extra demand for heating in households and offices presents opportunities for companies already involved in energy supply or those selling heating equipment with great opportunities to expand sales. It is true that not only do the electricity bills go up during cold seasons but also the sale of heating appliances (Anuradha, 2009, Par4).
It is also proven that people consume more food during the cold season so as to keep themselves warm. This has the potential to expand the food industry. Also, the demand for salt by the relevant authorities charged with the responsibility of grating the roads to make them passable. The quantities required in the cold season are very high presenting other opportunities for businesses (Carolyn, 2009, Par4).
As can be seen, the effect of extremely cold seasons can result in huge losses across the entire economy. It is however true that the transport sector faces the greatest challenges. This being the case the FMCG sector is clearly bound to be affected adversely prompting the need to develop reactive as well as mitigation measures to either reduce the risk of losing business and ensuring continuity. It is however also true that not all the losses incurred during the season are true as the period after such as the season offers a chance for recovery of some of the lost revenues in some sectors.
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