Supply chains, weather and forecasting
Thanks to Nav for this idea.
It is May, and the last few days have been warm, dry and cloudless. Today, Saturday, in the UK, we have been marking the wedding of Prince Harry to Meghan - the newly created Duke and Duchess of Sussex. In Exeter, we have been celebrating the Devon County Show and many thousands have watched Exeter Chiefs beat Newcastle 36-5. And IKEA is open in the city. So plenty of reasons for a party. And in good weather, a party can mean a barbecue. Which may mean a gas-fired barbecue.
Unfortunately, the whole city has run out of refills of bottled gas. So Nav asked me about the supply chain and how it is affected by demand and the weather forecast. Let's start with the weather forecast. For the last few days, the forecast for Exeter and much of southern England has been for warm, dry weather. So - if you are in an industry that is affected by weather - you might have expected some effects on your business. So supermarkets have been stocking extra and selling more ice-cream, barbecue food, and salads and pharmacies have sold extra sun lotion. Should the bottled gas suppliers be included in the list of industries affected by weather?
According to the website of the major supplier (and I am not going to name the business) there are 10,000 outlets for their bottled gas in the UK. However, the website notes that many of these are campsites and caravan sites. These are businesses for which stocking bottled gas is incidental and which are unlikely to have a very sophisticated stock control system. If there is one, it is probably a reorder point system, i.e. when stock falls to a certain level, order new stock. The reorder point is set at a value which means that with average demand, new stock will arrive before the stock is exhausted. That is OK ... until the rate of demand increases sharply because of the good weather, and the delay on that stock arriving increases because demand has increased across the region. Good weather thwarts the reorder point system twice over.
Higher up the supply chain are the depots and wholesalers who probably do use more sophisticated stock control systems. But, I suspect, because of the unusual weather and unusual combination of events, those stock systems couldn't cope.
Hence Nav couldn't have his barbecue.
But maybe he should have done a stock check on his barbecue gas cylinder when he was thinking about what to do this weekend.
It is May, and the last few days have been warm, dry and cloudless. Today, Saturday, in the UK, we have been marking the wedding of Prince Harry to Meghan - the newly created Duke and Duchess of Sussex. In Exeter, we have been celebrating the Devon County Show and many thousands have watched Exeter Chiefs beat Newcastle 36-5. And IKEA is open in the city. So plenty of reasons for a party. And in good weather, a party can mean a barbecue. Which may mean a gas-fired barbecue.
According to the website of the major supplier (and I am not going to name the business) there are 10,000 outlets for their bottled gas in the UK. However, the website notes that many of these are campsites and caravan sites. These are businesses for which stocking bottled gas is incidental and which are unlikely to have a very sophisticated stock control system. If there is one, it is probably a reorder point system, i.e. when stock falls to a certain level, order new stock. The reorder point is set at a value which means that with average demand, new stock will arrive before the stock is exhausted. That is OK ... until the rate of demand increases sharply because of the good weather, and the delay on that stock arriving increases because demand has increased across the region. Good weather thwarts the reorder point system twice over.
Higher up the supply chain are the depots and wholesalers who probably do use more sophisticated stock control systems. But, I suspect, because of the unusual weather and unusual combination of events, those stock systems couldn't cope.
Hence Nav couldn't have his barbecue.
But maybe he should have done a stock check on his barbecue gas cylinder when he was thinking about what to do this weekend.
Great. Thanks David! But I did have a BBQ after all..the fifth store I went to had three cylinders remaining :)
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