We often think about the supply chain as a system, with its many parts (hopefully) comprising a fully functional whole. These system parts are usually workers, tools and processes that enable supply chains to get rolling. Any interruption or problem in one of these system components can end up affecting the performance of the others. What we may think about less often is the fact there is another system - the earth's ecosystem - that impacts supply chains as well. Most industries deal with changes in the weather or in the environment to a certain extent, but because supply chains are so large, any strange behavior or prolonged change from the normal can be magnified in its impact.
It's now October, with another summer behind us, so it's a good time to look back at how the weather patterns and environmental occurrences over the past few months have impacted things like consumer buying decisions and product availability. These, in turn, affect order management processes and the many variables that constitute them. While not every environmental behavior specifically affects every organization or supply chain, anything unusual is a reminder of the outside forces that can affect the way supply chains operate.
No honey for you: Drought and supply chains
One of the major stories this summer was the ongoing drought in California, with the past three years representing the third-worst drought in the state in 100 years. Among the many ecological and environmental systems affected has been the honeybee population, which has lost much of the crop area that it normally pollinates. As the Associated Press reported, the drought, along with parasites, pesticides and colony collapse disorder, have kept bees from creating the normal amount of honey. It's established a shortage that has driven costs way up, with honey prices skyrocketing from $3.83 to $6.32 per pound in just eight years. Additionally, the last decade has seen California drop from its post as America's top honey producer, with North Dakota, Montana, South Dakota and Florida now accounting for more of the country's crop.
As AP reporter Terence Chea pointed out, the loss of honey production has had an impact not only on honey farmers, but food distribution companies, restaurants and others around the country. When companies face difficulties in product availability, especially if they count on goods impacted by environmental changes, they have to be able to insulate themselves from further issues. An order management software solution can help supply the necessary comprehensive insight and end-to-end visibility sufficient to help an organization react to supply changes and make cost-effective decisions based on complex data analysis. This helps an enterprise reorient its objectives as necessary, communicate any pertinent changes to other stakeholders and ensure that customer-facing stores reflect any changes in supply.
Can cool summers cool off supply chains?
Much of the rest of the country experienced relatively cool weather this summer, including the so-called "summer version" of the polar vortex that lowered temperatures significantly in mid-July. This phenomenon, as the Air Conditioning, Heating and Refrigeration News noted, tempered usually high demand for cooling equipment, HVACs and replacement parts. Because these are often large and bulky items that require a significant investment in transportation management services, a decline in demand inconsistent with year-over-year levels can deal a company a difficult hand. It also puts pressure on a company to make sure its reduced product movement goes smoothly, giving something like a piece of equipment damaged in transit more potential impact on the bottom line.
Meteorological changes can have a significant impact on the supply chain, and it can be difficult to predict something accurately with so many variables. This is why order management systems need to be able to accommodate shifts in product demand or availability that stem from environmental activities. With a next-gen order management system, a company can leverage consumer data, coupled with key performance metrics, to address any issues in consumer fulfillment or product movement. Then, supply chain leaders can make more informed decisions that leave less to chance and reduce any potential impact to the company's footprint or its bottom line.
The true value of an order management system lies in its ability to handle many variables while giving supply chain administrators the tools to succeed, no matter what might be happening outside.
If you liked this article, check out other OMS and SCM articles from Lightwell:
- Addressing retail complexities through streamlined order management
- Top ways to improve customer satisfaction through your order management system
- Getting over common hurdles in omni-channel commerce
More about how to keep our supply chain and order management systems afloat in the face of unexpected disruptions: