Supply chain survives weather-related calamities
Planning, cooperation helped West Michigan’s logistics firms survive the onslaught.
When the polar vortex settled over the Midwest, it made many morning commutes nearly impossible.
Those icy roads are the same ones that allow supply chain companies to ensure day-to-day functions carry on, and many freight and warehousing companies felt the same pinch from the weather conditions as the rest of the country.
Early January saw record low temperatures, huge amounts of snowfall, unprecedented school closings, massive amounts of traffic accidents and delays, and even closed roads.
Fortunately, the cold, ice and snow didn’t continue into a second week. Had the bad weather kept up, consumers would have started to see lag effects in the supply chain.
“Longer-term delays, you start to see them,” said Les Brand, CEO of Supply Chain Solutions, who was recently tapped by Gov. Rick Snyder to help with the state’s supply chain and logistics strategy.
“If it starts to get over a week, then you start seeing the issues. We were darn near it — and there were some grocery store issues.”
Brand said everything is time related, and many companies have a supply of products ready to go in case of a delay. Stores may manage to replenish stock so consumers never notice.
However, Brand said, Michigan manufacturers have developed an inventory lead time reduction system and carry only what is needed to produce the products currently being made. A few days of delay in the supply chain can wreak havoc on a lean manufacturer’s production line.
“Shipments were arriving ‘just in time,’” Brand said. “Since things are moved by trucks, disruptions in traffic slow everything down.”
Because of travel conditions, Classic Transportation & Warehousing in Grand Rapids shut down its runs to Chicago on Jan. 6 and 7 during the worst of the weather. Classic makes 40 daily trips to Chicago to pick up containers from the rail yard. The company did continue its West Michigan deliveries.
Traffic was down to one lane to and from Chicago, said Donna Randall, Classic’s director of business development.
“We shut down for basic safety reasons,” Randall said. “We have a lot of owner-operator (truck drivers) and we can’t force dispatch.”
Because of the shutdown, Classic had a backlog of 120 containers to get to West Michigan. “We can’t snap our fingers and have them all here,” she said.
When containers are left at a yard or in storage, the freight company has a certain amount of time to pick them up before a per-diem is charged. Randall said this time around, most places were understanding about the delays caused by the weather and worked with Classic to find a solution.
Still, that was two days of revenue the company lost, she said.
“We did have to pull a few containers to a drop lot and pay storage,” Randall said. “That’s not something you can pass on to customers. But I’ve never had so many calls about moving freight.”
Classic was still catching up on its backlog early last week with volunteer runs by its drivers, Randall said.
The supply chain industry is an interconnected, winding path of freight with many possibilities for delays. “It’s like a snake eating a pig,” Brand said. “You get stuck at different points.”
He said just as passenger planes were canceled, so too were freight planes, and most boats were unable to make it to ports on time.
But slow — or even stopped — traffic and containers backed up in storage weren’t the only issues the supply chain was dealing with. There were utility disruptions across the state that could have been a huge issue, Brand said. Had the power outages been in the summer and not in subzero weather, refrigerated warehouses would have been in a world of hurt. At one point, state utilities estimated that approximately 666,000 customers were without power for at least some portion of the storm.
Shipments didn’t come to a full standstill, however. Aside from some highway closings, Brand said travel just took extra time. He said the infrastructure is in place to keep roads clear — except in some cases where communities, such as Allegan, stopped plowing for financial reasons. He added that some communities, such as Grand Rapids, must now find the money to make sure the roads are put back in suitable condition, with many potholes and cracks to repair.
“Traffic was still moving,” he said. “Companies did a great job of getting shipments where they needed to be.”
As Randall mentioned, should a shipment be lost or late, the costs can’t be passed on to customers or consumers. Classic maintains insurance on all its shipments, and most contracts have clauses allowing for delays due to “acts of God.”
“It’s understood that you can’t do anything about it,” Brand said.
If those contracts weren’t in place, he said, it’s likely lawsuits would have sprung up along the supply chain. Where there may be some legal activity as a result of the weather is with the utility companies, he added.
“Companies are looking at the utility providers and asking, ‘Why did it take so long to get it fixed?’” Brand said.
There was a huge sigh of relief from online retailers that the storm happened after the holidays. Shipments already were delayed following all-time record highs in online commerce, and many packages from websites such as Amazon.com didn’t make it to the doorstep on time as guaranteed. Those shipments should be back to normal now, Brand said.
“The online websites weren’t prepared and couldn’t catch up to the orders,” he said. “That was a major issue. Next year, they’ll be better prepared, no question.”
The supply chain industry is well prepared for instances such as this month’s storm. Issues still arise, but each storm brings more preparedness, Brand said.
“Weather stuff, if you plan for it, isn’t too bad,” he said. “If you start to plan for it before it hits, then it’s not so bad.”