Interesting new research into how the weather impacts the supply chain has recently been published by the Met Office in their report, ‘Understanding the role of weather in the supply chain’.
This is the first time that research of this kind into the use of weather data in the supply chain has ever been done. The research focuses on how retailers and suppliers are currently using weather data to plan and how their businesses are impacted by the weather.
The Met Office conducted the research through an online survey of supply chain professionals in the retail industry, seeking the views of retailers, suppliers and 3PLs, mainly from the food and grocery sector. The survey was responded to by over 240 supply chain managers and executives. Of those who responded, there was representation from across the functions, although for the most part respondents were involved in planning.
The report shows beyond doubt that weather has a profound effect on the industry. The Met Office found that nearly half of all respondents (47%) rank weather in their top 3 external factors driving consumer demand. However, this is not reflected in the level of investment allocated to weather forecasting. In fact, the research found that a significant number of respondents (35%) are not using weather forecasting at all in their business. Free weather forecasts are accessed online by 19%, with only 16% of respondents investing in commercial weather forecasting.
The research highlights the differences in the way retailers and suppliers are using weather data. The top 3 uses of weather data for retailers are currently: sales forecasting in the short term (62% of respondents); planning of stock availability (43% of respondents); planning of deliveries from depot to store (also 43% of respondents). Suppliers also cited short term sales forecasting in their top 3 uses of weather data (58% of respondents), followed, however, by long term sales forecasting (43% of respondents) and promotional planning (33% of respondents).
The report breaks down in detail which weather factors businesses are taking account of during their planning processes. The most popular weather factors, amongst all the respondents, are maximum, average and minimum temperature. However, those respondents who only access free weather data are more dependent on temperature range than those who pay for their weather data. The report shows that commercial weather forecasting increases the numbers of factors that can be taken into account and therefore provides more accurate planning.
There are many benefits to using weather data which have been identified by this research. The most obvious benefit, identified by 81% of respondents who use weather data in their planning strategy, is improved on-shelf availability. Followed closely by improvements in sales forecasts, reduction of waste and enhanced customer service, which were also identified by respondents as key benefits. The report highlights that those who pay for weather forecasting products identify more benefits than those who use free data.
This report confirms that the variable weather of Great Britain is impacting on our retailers and suppliers and that weather data is increasingly being used in demand planning processes. For those who use weather data the benefits are clear, particularly for those businesses who have invested in commercial weather forecasting. The research published in this report shows that there is an important opportunity for retailers and suppliers to use weather data to provide at least some of the supply chain efficiencies they are striving for.