Managing supply and demand - Come rain or shine
From salads on hot summer days to soups when it's chilly outside, the weather plays a huge role in what food we buy - and when...
At the same time, weather can influence every part of a supply chain, from sourcing and manufacturing to product delivery to stores and homes. With that in mind, the Met Office set out to examine how weather forecasts can help food suppliers and retailers plan effectively and operate efficiently.
What shoppers want
After the 2008 financial crisis, the retail landscape shifted. Increasingly, shoppers kept a close watch on food bills and their eyes peeled for bargains. Many families swapped the traditional 'big shop' for frequent, smaller, grocery trips, branching out from the 'big four' to competitors such as Lidl and Aldi - while an increase in online shopping led to round-the-clock demand. Paired with the country's notoriously changeable weather, this presented a big challenge to UK supply chains.
To thrive in this environment, today's food suppliers and retailers need to be able to anticipate what consumers will want to buy and when. More often than not, that comes down to the weather.
What supply chains need
In 2015, the Met Office launched a research project to understand the impact of the weather on food retailers and suppliers. "We spoke to over 200 UK businesses to find out who consults weather information, what they use, and how the weather influences the way their supply chains operate," says Barbara Napiorkowska-Dickson, Met Office Retail Business Manager.
A service to suit
Drawing on the research results and working closely with some of the UK's major food retailers and suppliers, has made it possible to enhance the Met Office DemandMet™ weather service.
"The research helped us to better understand the specific weather information our customers need," Barbara explains. "For example, instead of providing forecasts for uninhabited areas, like on top of mountains, we'll give a weighted calculation of weather parameters for highly populated areas that are relevant to suppliers and retailers. And we can alert individual customers when the threshold of those parameters will breach so that they can plan product quantities. For example, a temperature rise from 20 °C to 24 °C can see the sales of burgers increase by more than 40%."
Met Office forecasts are also helping companies transporting light cargo in high trucks. Gusts above 50mph can pull their vehicles off the roads, put their drivers at risk of injury and delay or even prevent their products being delivered to stores. "One day last winter, we were 100% confident that wind gusts would breach one particular customer's 50mph threshold," Barbara remembers. "Our Hazard Forecast alerted them and they actually suspended operations. Later, we heard that seven other trucks were involved in accidents due to the conditions that day."
As well as Hazard Forecast, the service includes a 14-day national forecast with detailed daily breakdowns to give a clear picture of the weather in the long- and short-term. This enables users to see how conditions will change during the course of a day, and help to plan appropriate food stocks when weather conditions change within hours.
They can compare the current temperature with the same day in a previous year, as well as running like-for-like comparisons using a 'model day' - a date in the past that had similar conditions to today. Customers also receive targeted information ahead of major trading events, such as Christmas or Easter. What's more, DemandMet™ comes with a direct line to a Met Office forecaster should any questions crop up.
Managing supply and demand is vital for retailers and suppliers. But as supply chains grow in complexity and climate change brings about seasonal weather extremes, it's a challenging balancing act. In fact, 67% of respondents to the Met Office research survey say that forecasting demand is becoming harder.
A key date in the food retailer's diary is the first hot weekend of the year, when BBQ fare is high on most people's shopping lists and product availability is crucial. Get that right and the benefits to the bottom line are clear. Get it wrong, however, and costs can spiral. "Retailers aim for 97-98% on-shelf product availability," explains Barbara. "If on-shelf product availability increased in the UK by 1%, it would create an additional £1.1 billion in revenue." At the other end of the scale, the cost of waste is similarly staggering. In fact, WRAP (Waste & Resources Action Programme) estimates waste within the UK food supply chain at approximately 6.5 million tonnes a year - equating to around £6.7 billion annually.
However, by harnessing weather data, businesses can forward plan - scheduling marketing campaigns, delivering goods efficiently, cutting waste and meeting consumer demand. In fact "by having the right levels of products available to their customers, some retailers can actually see sales uplift of around 600%" Barbara points out. For retailers in today's competitive market, keeping prices low has never been more important.
- To read the report visit: www.metoffice.gov.uk/retail
DemandMet™ is a specialist weather service that harnesses the Met Office's advanced forecasting capabilities to provide accurate, industry relevant data, including:
• National forecasts
• 14-day regional forecasts
• A clear executive summary of the weather
• Access to forecasters for advice
• Weather warnings and alerts
• Hazard Forecast
Following our Understanding role of the weather in the supply chain report, we were able to enhance and adjust our product portfolio, introducing features and parameters to suit the current needs of customers. Today, DemandMet™ helps supply chains forecast product demand, in-store footfall and likely online traffic - as well as to transport goods safely. In doing so, businesses can streamline their operations, boost customer satisfaction, maximise profits and minimise waste.