Procurement feels the heat as UK suffers “extreme” weather

Jason Busch, founder of Spend Matters US, and his wife Lisa (who runs the excellent Metal Miner website) were over last week, and they found the British obsession with complaining about the weather rather humorous.  They live in Chicago, so are well used to very hot summers and very cold winters, so our hysteria about temperatures of 80F or 27C seemed somewhat quaint!

So are there any procurement implications if we have an extended heat wave? Well, whether it matters to the organisation and to supply chains very much depends what industry you are in. I worked for Mars Confectionery early in my career and we hated hot weather – not surprisingly, sales of chocolate products in particular drop substantially.  And there is the reputational risk of retail outlets selling product that is in a poor condition – nothing worse than buying a Kit Kat that has melted and then re-hardened overnight, perhaps several times!

As a buyer I would therefore be cancelling or delaying orders for raw materials in extended periods of hot weather. And there are logistical issues in the food business too – handling fresh materials (liquid milk, fruit and vegetables, meat) needs even more care. You can’t leave perishable materials sitting in an unrefrigerated place for long when it is so hot, so tight control of efficient handling in the supply chain is key.

The effect is not all in a negative direction – I’m sure the buyers involved in manufacturing of ice-cream, soft drinks and lager are busy sourcing additional materials to keep super-busy production lines going. And if your firm makes air-conditioning units, picnic hampers or sun-tan lotion, then again the issue will be increasing supply not cutting back!

Retailers also see large swings in demand of course. Working out ordering and stock levels in many sectors is tough when sales can vary day to day by huge amounts when the sun shines (or doesn’t shine). Sales of produce, meat, drinks, snacks... all variable based on a few more degrees on the thermometer.

In the slightly longer term , we are also likely to see some effect on future food prices. Much of our domestic fruit and vegetable crops are grown under well-irrigated facilities now, so it is already a bumper year for strawberries, and I predict a glut of tomatoes and courgettes in August! But field crops that occupy more space and may not be watered so easily (cereals and vegetables such as potatoes and root crops) are already beginning to suffer in the heat. My courgettes are very happy; my potatoes and onions are looking somewhat tired.

I guess this is one of the things that makes procurement and supply chain such an endlessly interesting area – there’s always something external that has an impact on our internal activities. And as soon as the thunderstorms start this coming week, look out for the risk assessment based on extensive flooding in the UK!

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