2014 Summer Outlook: Heat, high winds and hurricanes
By Kevin Smith, VP of onshore corporate services for ImpactWeather
According to Forrester Research, weather is the leading cause of business disruptions1. From commodity demands and supply chain interruptions to community assistance, retailers know the power that severe weather has over their economic profits and losses.
Surprisingly, many retailers do not have a business continuity plan in place to combat these threats. Business Continuity Institute reports that 70% of businesses that experience a disruption of more than three days will fail, but only 48% of businesses have a business continuity program in place. As Tropical Storm Arthur picks up speed along the East Coast, it reminds us that now is the time for retailers to implement a severe weather response plan.
Monitoring Mother Nature
During the summer, a southern fast food chain needs external temperature readings to establish proper bun baking procedures. A national home improvements chain monitors tropical developments closely to order extra supplies for its coastal stores, such as generators and plywood. A popular American retailer tracks wind speeds to protect its locations from lawsuits due to loose carts bumping into vehicles. These are just a few examples of how weather affects retailers nationwide.
A different type of summer weather threat will present itself this year as El Niño builds momentum in the Pacific Ocean, which could dump heavy rain on the Pacific Northwest and suppress the Atlantic Ocean’s hurricane development. There are reports that El Niño will peak in late fall or early winter, however, it continues to gain strength through the summer months. While hurricanes may not be as intense, they will develop closer to the coast, threatening stores in their path.
In addition to tropical storms, retailers will also feel the heat with temperatures up to three degrees above normal along the West Coast and southeastern United States. These types of extreme temperatures strain power grids, in turn causing rolling blackouts and shutting down commerce for any locations without back-up generators.
Wet weather will challenge businesses in the Midwest, with a higher than normal risk for severe storms producing large hail, tornadoes and flash floods. Even though a location may not be directly impacted by the storm, its supply chain or vendors could be affected. If a thunderstorm wipes out a manufacturing facility or crop field, this reduces the supply to retailers, thus increasing prices for consumers. This recently happened when the U.S. suffered a major lime shortage due to heavy rains damaging much of Mexico’s lime crop. At the peak of the shortage, a 40-pound box of limes increased by $100.
Timing is Everything
Retailers ultimately want to be the last to close and the first to open, but this type of strategic timing is challenging. To accomplish this goal and keep employees safe this hurricane season, retailers can implement the following three timed-phases.
Phase One: (Four to five days out)
• Determine a shut down timeline: Many times businesses decide on evacuation plans based on when a hurricane makes landfall. This can be dangerous as damaging winds may arrive up to 12 hours before the storm. Recently, many stores have determined shut down based on wind strength. For example, if a location cannot safely operate with winds in excess of 48 mph, they will lock up the store.
• Identify resource needs: Identifying the store’s resources is an opportunity to see what employees, products, equipment and supplies the location has available or needs to address prior to shutdown.
• Inventory supplies and products – Will customers need generators, water or canned food? The sooner a store can order additional supplies, the more likely customers will buy from them instead of their competitors.
• Communicate with key stake holders: Key stake holders are employees, vendors, corporate executives and customers who will be affected by the facility’s delays and/or closures.
Phase Two: (Two to three days out)
• Confirm contact information: Store managers should have each of their employee’s personal contact information to communicate critical updates following a storm.
• Review corporate policies: The management staff should review the corporate policies for paying full-time employees, medical and disability leave and the protocol for storm damage recovery.
• Continue monitoring the storm: This is the time to review a store’s worst-case-scenario to maintain the safety of customers and personnel.
Phase Three: (Less than 48 hours out)
• Facilitate a walkthrough: This is the last chance to board up store fronts, sell important materials to customers and finally cease operations.
• Place vendors on standby: Storm surge, high winds and hurricane-producing tornadoes could damage a facility. Managers should place their clean-up vendors on standby. The sooner a facility returns to full operations, the faster a community can bounce back.
• Evacuate: Remaining personnel and management should evacuate and monitor storm conditions.
Every dollar spent on business preparedness saves $7 in disaster-related economic losses, according to the Houston Area Research Center. Instead of waiting for the next major threat, retailers should be proactive in protecting their locations now. Hurricane Arthur will be out to sea by next week, but Hurricane Bertha could be a menace.
Kevin Smith is VP of onshore corporate services for ImpactWeather, a StormGeo Company, where he directs meteorological operations team. ImpactWeather is a full-time weather department for hundreds of corporations globally, providing site-specific forecasting, monitoring, alerting and business continuity tools that empower clients to make the smartest business decisions when faced with weather-related challenges. Email ImpactWeather at [email protected].
1: Forrester Research, Inc. (Q4, 2011). [151 Global Business Continuity Decision-Makers and Influencers Who Have Had to Invoke a Business Continuity Plan]. Disaster Recovery Journal Business Continuity Preparedness Survey.