How Does Weather Affect the Supply Chain?
Thirty percent of the US gross domestic product is affected by weather conditions, according to the Atmospheric and Environmental Research Center. This high level of weather-related impact on the economy persists despite the fact that the American economy increasingly relies less on physical products and more on information-based technologies. Although weather conditions cannot be controlled, businesses do have systems and strategies for tracking potential disruptions and preemptively addressing them.
Consumer demand can fluctuate with the weather. Some industries, such as outdoor recreation equipment, thrive when the weather is good and customers flock outdoors. Other sectors, such as the grocery industry, experience surges in demand when inclement weather strikes and consumers prepare to hole up indoors. Increased product demand due to weather conditions affects the supply chain by depleting existing inventory and creating challenges as retailers scramble to meet consumer needs.
Weather conditions can make it hazardous and even impossible for delivery trucks to transport products to distributors and retailers. Snow, ice and heavy rain can slow and stop transportation, making products such as groceries unavailable when they are most needed. Delivery issues often reinforce weather-related surges in demand as retailers are unable to restock their shelves at precisely the times when consumers are likely to buy in quantity. This convergence of difficulties is especially challenging with perishable staples, such as milk, eggs and fresh produce.
Weather affects production of a broad range of products, especially agricultural items. Frosts that kill lettuce crops create short term interruptions in the supply of these foods. Droughts that diminish yields of less perishable commodity crops such as wheat and corn can have longer-term impacts on stocks of grain that are stored and used over time. Crop damage due to weather can impact the availability of food products throughout the food chain, as livestock such as chickens may be impacted by shortages of grains that are used for feed.
Accurate weather forecasting can alleviate some weather-based supply chain difficulties. When forecasts successfully predict a major storm, distributors can proactively deliver, and retailers can be provisioned well enough to meet the surge in customer demand. However, accurate weather forecasting can also interfere with delivery of supplies if distributors learn with plenty of advance warning that it would be prudent to keep their trucks off the road.