Focus Supply Chain Vulnerability
Weathering the storm
Following a time of extreme weather in the UK, Bill Goodwin of Briggs Equipment looks at why we need to take action to adapt our supply chain operations and logistics to cope with such events.
C
ompetence in supply chain and logistics is a global competitive advantage for the UK, and disruption is costly. UPS recently
reported an almost 6% drop in earnings per share, attributing this largely to the bad weather in the run-up to Christmas. Supply chains, logistics and transport networks form the backbone of our UK economy, and whilst key priorities in managing supply chains are reducing costs and meeting customers’ requirements(1), over 80% of companies surveyed in research conducted by Accenture(2) were concerned about their resilience. Disruptions to supply chains can cut the share price of impacted companies by up to 7%. Adverse weather, such as the high tides,
56 March 2014
storm surges and significant rainfall at the end of 2013, is the single biggest cause of supply chain disruption to UK businesses(3) (see Figure 1). And it is only going to get worse. Supply chains are getting leaner and distances are growing longer as the weather pattern becomes increasingly unpredictable – it’s the perfect storm. A study by Hofstra University in New
York put the risk probability of weather disruption on global transport supply chains as high as 30%, and that is from a country that is arguably better prepared and better equipped to respond than the UK and many parts of Europe. According to Sir David King, the government’s special envoy on climate change, we need to be prepared for a
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radical change in weather patterns as storms and severe conditions that might have only occurred once in every 100 years in the past, may now happen more frequently. The resulting travel disruption, port and airport closures, railway line shutdowns, factory and warehouse closures and loss of power, cause billions of pounds of economic damage and massive disruption to our logistics and transport network.
IMPLICATIONS
Not least because of the emphasis on JIT production and supply chain efficiency, our supply chains are tight and vulnerable to such disruption. It’s understood that operations at the Honda factory in Swindon were affected recently due to the delay of containers after running out of vital components as weather
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