summer solstice, supply chain management, supply chain planning, winter solstice, seasonality

In the Northern Hemisphere, we recently celebrated the Summer Solstice, which means the start of calendar summer and the longest day of the year. I always chuckle on the day after the solstice as I think of a fond childhood memory.

On the 22nd of June (typically the day after the solstice), my father would come in after work dressed like he was ready for a blizzard. He had on a hat, cap, heavy gloves, a winter parka and boots, etc. We’d look at each other and say, “The poor guy has gone mad. It is 85 degrees outside and dad is dressed like an Eskimo.” Then we heard the words, “Days are getting shorter, winter’s coming!” It was a ritual he did every year, and we loved it. What was even funnier was when he’d do the reverse at Winter Solstice and come in wearing shorts saying, “summer is coming, days are getting longer.”

So now you might say, great story, Steve, but, what is the point?

The point is that for those now in summer, the furthest thing from most people’s minds is winter, the holidays, elves and Santa Clause. However, if you manufacture or transport goods, especially those that have any seasonal value in the winter, you better start preparing now because the days are now getting shorter and the disruptions that are impacting the market today will extend into the future. Winter is coming and it might not be much fun for the supply chain.

Welcome to Year Round Seasonality

Many retail store shelves are empty or at least thin on product. This is happening globally. It is similar to what we saw at the beginning of the pandemic. Problems that were simply starting before Covid have festered and now exploded. The pandemic masked the issues. Some of the hardest hit product categories are the summer seasonal items due to supplier, manufacturing and supply chain problems. There is no indication of a letup for the upcoming Autumn and Winter periods. So, as we sit here in the Northern summer basking in the sun, make sure you know where those boots are, Winter is coming. With the expanding value chain, dramatic changes in consumer behavior and on-line buying, many seasonal items can now be purchased year round. The changes to all types of product sales during the two plus years of the pandemic have rendered historical forecasts useless. 

3 Supply Chain Seasonality Trends and Issues

So what are the trends and issues that might just give the supply chain (and Santa) more headaches than the usual winter problems? Here are three hot buttons of today:

  • The Global Economy and Covid-19
  • Transportation Issues
  • Packaging Materials

We have been wondering since the start of the pandemic when the proverbial shoe was going to drop in terms of the economy. It is actually shocking that a recession had not started sooner. But here we are on the brink of serious economic turmoil. Like many of the supply chain issues that took time to explode since the pandemic, the economy is now following suit. Fuel prices are insane and the impact is being felt in more areas than at the gas pump. Industries relying on oil are also feeling the sting.

In the United States, many states joke about having two seasons; Winter and Road Construction. Well, the Construction season is being interrupted as the oil issues are impacting the asphalt market. The war in the Ukraine has impacted multiple markets like grain and basic agricultural commodities. The effects are rippling through the economies of manufacturers. Pandemic labor struggles were starting to improve with workforces ramping up to pre-pandemic levels and are now in jeopardy again as economic layoffs loom. This has impacted the summer seasonal items that have not been delivered on time. These issues are forecasted to continue. To make matters worse, weather issues such as drought will impact food markets and other goods reliant on raw materials in future months. Winter is coming.

Transportation issues have been a cause of many supply chain issues but has been a victim of disruptions as well. There is a global shortage of trucks and drivers that is causing delays in the transport of products up and downstream of the manufacturing supply chain. Some of the same trucks that are used to move finished goods are used to move raw materials and work in process items between manufacturing facilities. This has caused delays across the supply chain. Another major transportation problem is that there are more Less Than Full Loads on the road today because of the immediate delivery of purchased goods spurred by on line buying. 

One interesting factor here is not simply to get consumers products the next day but the need to redeploy inventories from different warehouses and DC’s to match the source location. Waiting to fill a truck would cause late orders. The issue is even further complicated when talking about refrigerated trucks which are in short supply when they are full, never mind when they are not. The surge in fuel prices have wreaked havoc on the industry to where carriers prices have soared putting a strain on manufacturers and suppliers to have to raise costs. The primary recipient of the brunt of these increases is typically the consumer and that causes a change in purchasing habits. With no real end in sight to the transportation issues, the outlook for the holiday season a mere few months away is not looking good. Winter is coming.

Are You Prepared for Winter?

So how does a manufacturer ensure that amidst all that has happened, continues to happen and hasn’t happened yet, make sure they are prepared for winter. To be honest, the planning for the holiday season of 2022 should have been in the works prior to the solstice. So walking in on the 22nd of June with your boots on would most likely have been too late. However, the future is still ahead.

The good news is that up and down the supply chain these problems are being dealt with and you are not alone. What you need to do is start working on tomorrow’s problems today. Even though we do not know what they may be. You do this by being adaptive and nimble. Analyzing your supply chain network and modifying the pieces to be adaptable to the surprises. Ensure that co-packers, 3PL locations are in the areas where your value chains are expanding. If you are not using Digital Twinning to model your supply chains, start now. Promotions, deals, store brands are all ways to combat economic uncertainty, make sure you have the processes and tools to plan and manage your promotions and trade spend. But most importantly, do not turn your back on Sales and Operations Planning.

The concept of S&OP has been around now for close to 20 years but it has evolved and still needs to evolve. Inventory needs to be a critical piece of the S&OP mindset. And, it needs to become a mindset not just a process or thing. Today’s S&OP or even Sales and Inventory Operations Planning (SIOP) needs to include your entire ecosystem, not just all functions within your walls. S&OP broke down the silos internally. Today’s S&OP with SIOP, will break the walls down throughout your entire network and enable you to be adaptable and nimble. Your new found nimbleness will let you change from boots to shorts and back to boots in no time. Winter is coming. No problem.

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