As the winter storm continues to intensify in Texas and other U.S. states, supply chains brace themselves to stay afloat for a while. Let’s understand the impact of the storm on supply chain operations.
Food supply chain managers had witnessed a storm no less than a year ago when people went berserk with panic-buying, anticipating the consequences of COVID-19. A similar scenario is circling some U.S. states as harsh winter storms hit the region last week.Â
Texas agriculture commissioner Sid Miller raised a red flagOpens a new window about the food supply chain last week. Miller said that grocery retailers are unable to get dairy product shipments, but farmers are dumping milk because milk plants don’t have power due to electricity interruptions. “We’re looking at a food supply chain problem like we’ve never seen before, even with COVID-19,†Miller said.
Last week, H-E-B, the grocery retailer, notedOpens a new window “severe disruption in the food supply chain.†H-E-B is witnessing temporary impacts to manufacturing, warehousing, and store operations. Hence, the retailer placed limits on some items and halted curbside pickup and home delivery. As winter storms crippled the states, power shortage and boil-water advisories sprung to light. Governor Greg Abbott saidOpens a new window that the stocks were running down at grocery stores across Texas. Besides, the storm is acting as a blockade in cross-border shipments.
Referring to stock levels at grocery stores, Abbott said, “One thing that will aid in replenishing those stocks is the fact that the roads are more passable.†However, logistics managers may face challenges that encounter capacity and delayed shipments despite the improving road conditions.
National Weather Service Forecasts Recovery, Apple Shows Support
As the industry struggled with driver shortage coupled with rising ecommerce freight demand, trucking capacity was in disarray with limited operations. In addition to this, when the storms hit, transport firms idled trucks and shuttered service centers as roads were closed and driving conditions became unsafe.
In anticipation of the storm last week, the demand rose. According to DATOpens a new window , load-to-truck ratios were up 29% over the previous week for vans and 28% for reefer. The timing of the storm contributed majorly to these capacity challenges as the storm hit just after the Lunar New Year and Presidents Day weekend.
Until Friday last week, much of southern Texas and Louisiana were under a hard freeze. However, the National Weather Service forecastedOpens a new window that the ice at the central and southern plains will begin to clear over the weekend.
Johnathan Foster, principal consultant at Proxima, opines that the supply chain disruptions will continue for at least a couple of weeks. He expects consumers to return to grocery stores once snow and ice clear to procure items they could not get during the storm’s peak. And that could very well create another significant surge in the carrier market, thereby straining capacity and spiking rates. “As a rule of thumb, it will take three times the rate of the shutdown to recover fully or three days for every one day,†Foster said.
Our hearts are with everyone across Texas and around the US, including many of our team members, as they endure the impact of the harsh winter storms. Apple will be making a financial contribution to local, community-based organizations to support their relief efforts.
— Tim Cook (@tim_cook) February 19, 2021Opens a new window
While the storm-inflicted havoc was visibly evident, Apple CEO Tim Cook took to Twitter to announce Apple’s planned donation to support the winter storm relief efforts in Texas and other U.S. states. Though he did not explain the specifics of the plan, the company generally provides donations in the range of $1 million to $2 million in disaster aid, depending on the severity of the event. Apple is slated to contribute to local community organizations in Texas and beyond as a part of the restoration work amid the harsh winter storm.
5 Lessons for Supply Chains
Texas and the Southeastern U.S. are no strangers to storms with tropical storms and hurricanes in the summer and fall. However, ice storms in February are rare. Let’s look at some of the potential supply chain solutions that could have benefited the logistics networks amid harsh conditions.
1. Â Stock up enough products with no lean inventories
Grocers typically maintain lean inventories and just-in-time supply chains, making the industry prone to stock issues when the demand suddenly changes. Hence, if grocers maintain enough stocks depending on the time-sensitive nature of the products, then stock-outs may not affect end consumers in dire situations such as storms.
2. Â Prepare ahead of time and monitor the weather
When planning or tracking shipments, closely monitoring the weather in the areas along the route, and most importantly, the final destination is critical. Winter storms are often unpredictable, so supply chain teams should always be in a position to find an alternate shipping route if needed.
3. Â Emergency inventory organization with inventory repositioning
The intensity of storms or other disasters can vary, but companies should always be prepared for these situations — they should assess risk factors and reposition products out of the line of fire. Especially, businesses in the manufacturing sector need to move their entire supply chains to another location to avoid losing inventory. This is an important tactic used in ‘emergency inventory organization’.
4. Â Ramp-up preventive maintenance with contingency plans
Contingency planning involves back-up suppliers, redundant inventory elsewhere, or delivering large shipments ahead of an unpredictable storm season. This ensures that customers have an emergency supply based on accurate forecasting.
5. Â Ensure visibility and clear communication
Establishing clear communication channels within the supply chain is essential to ensure visibility into the chain’s operations. This will allow parts of the network to respond accordingly when severe weather conditions like winter storms may impact other parts of the network.
In conclusion
Winter is not a favorable time of the year for businesses that involve supply chains. Unpredictable storms, heavy snow, rain, and other hazardous weather make it difficult for shipments to make it to their destinations on time. The current winter storm is a wake-up call for shippers that haven’t built flexible supply chains during the COVID-19 pandemic. Going forward, it remains to be seen how supply chains learn, adapt, and develop a more resilient chain that can withstand such natural disasters and stay unperturbed along the way.Â
Do you think new-age supply chains will take away some important lessons from the ongoing winter storm? Comment below or let us know on LinkedInOpens a new window , TwitterOpens a new window , or FacebookOpens a new window . We’d love to hear from you!