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Author's profile photo Richard Howells

Fifty Shades of White is Putting Businesses in the Red

When asked how long I have lived in New England, my standard answer is “21 WINTERS”. We learn to live with and accept snow as an expected “pleasure”, but this year, as I look out of my kitchen windows and see a snow drift that goes over my window I think enough is enough and we are truly blanketed in fifty shades (and at least 50 inches) of the white stuff.

In late January, the 1st major storm (Juno), brought snow and gale force winds and caused severe disruption due to two or more feet of snow. In February, we had broken all records for the most snow by the 8th of the month, with more in the forecast. The snow has caused considerable logistics challenges for schools, individuals and businesses alike, as airports and ports have closed, trains services suspended and even the famous Boston Trolley had to admit defeat earlier this week and suspended service for a day (or more).

The cost of a major snow storm is astronomical and a 2014 study by research firm IHS Global Insight estimated the cost of a major one day snowstorm in Massachusetts to be $265-million. This takes into account lost wages, lost sales and lost taxes as well as the snow removal costs for local governments, residents and businesses.

Businesses large and small are feeling the effects both in a negative and positive way. Airlines are cancelling thousands of flights, car dealers have been closed for days and shopping malls simply have nowhere for customers to park. On the other hand, the lines in my local supermarket were ridicules as the shelves were cleared of bread, water, milk and other necessities. It’s always surprises me to hear that some of the top selling items in supermarkets as a storm looms are beer, pizza and (of all things) toothbrushes. And if you were in the market for salt, shovels or snow rakes, you would have been out of luck in many hardware stores as demand far exceeded supply in the North East.

So how can businesses prepare for the enviable?

The challenge is not IF we get a major snowstorm, it is WHEN it will arrive and WHAT business processes are in place to mitigate the risk or maximize the opportunity? Here are a few suggestions:

  • Plan for the weather forecast as well as the sales forecast is key. Most companies have a long term plan that is based on historical seasonal trends, but it’s what happens in the short term planning horizon (the next week or 2) that makes the difference when weather patterns disrupt your “perfect plan”. My town has already run out of salt and if we believe the groundhog, we still have about 5 weeks of winter to go.
  • Respond and orchestrate supply by sensing and capturing real-time environmental as well as demand and supply data to ensure that you can profitably respond in a timely manner. According to the Adobe  Digital Index, the Juno storm on January 27 cost retailers an estimated $35 million in sales.
  • Monitor the location of all “planes, trains and automobiles” that are carrying your goods, and track and trace inventory so that you can reroute shipments and redistribute products and supplies to the most needy locations in response to short term surges in demand.
  • Deliver integrated logistics and order fulfillment processes that can identify blockages and disruptions in the distribution network and suggest alternate routes or modes of transport to deliver the right product at the right place at the right time. The importance of this was highlighted in the Boston area last week, when UPS cancelled all deliveries in the city and warned of significant delays across the region
  • Operate and manage all assets to lower risk, improve safety and quality, and improve return on assets. My snow blower broke down in the middle of the last blizzard, and what would I have given for a preventative maintenance alert the week before to get it serviced. I can only imagine the operational planning required to keep the roads, rail and air services functioning this winter.

As we approach Valentine’s Day tomorrow, the forecast is again bleak and the Boston area is expecting another foot of snow. Let’s hope businesses and individuals alike are ready for the next winter blast.

Stay warm.

Follow me on twitter @howellsrichard

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