It is estimated that 70 % of the economy is weather-sensitive. Yet, if weather forecast has been used for decades in most industries, its economic potential for supply chain optimization had remained, to this day, largely underexploited.
Weather forecasting applied to supply chain management is nothing new, nor groundbreaking. In fact, demand forecasting based on weather has been around for years. However, the unprecedented level of precision achieved with AI and the rise of weather strategy is setting new standards for weather-smart supply chains.
Thanks to increasingly agile APIs and algorithms, intelligent systems are now able to aggregate variables such as temperature, sunshine duration, rainfall, or wind strength into patterns in order to feed their predictions. This smart forecasting allows them to anticipate a variety of risks such as trajectory, road adherence or decreased visibility.
These weather analytics systems also use historical weather data to highlight cycles and predict common meteorological occurrences, however, their main advancement lies in the inclusion of real-time weather updates and external sources of information such as social media or live reports to foresee unusual phenomenons, a breakthrough for industrials, considering the growing impact of climate change on seasonal patterns (see IBM’s use of weather analytics during Hurricane Patricia 2015) .
Predictive weather intelligence is another key area of development for the supply chain and recent developments and acquisitions (Climpact-Metnext / Weathernews) go to show that weather risk management is becoming a dynamic sector. International weather advisor, Weathernews has transformed the market by providing targeted reports and guidelines to BtoB companies to help them anticipate and reduce the impact of weather on their activities. These seasonal reports take into consideration the challenges faced by each industry (material constraints, means of transportation, etc...) in order to deliver detailed preventative guidelines.
Global digital Businesses have also started to show interest in investing in weather forecasting as a strategic step in their development and strategy. IBM recently became a leading player in meteorology after acquiring the Weather Company, a branch dedicated to global high-resolution forecasting.
‘Any business that doesn’t have a weather strategy is missing out on returns. Weather impacts everything. It impacts supply chains, the kind of purchasing decisions we make, when you get up in the morning, how you’re going to dress, what you’re going to eat. And being able to predict that in advance for retailers, energy companies, travel and transportation businesses is all we do.’ says Cameron Clayton, general manager of IBM’s Watson Media, Weather and special Red Hat project.
The tech giant developed cutting-edge technology GRAF (Global High Resolution Atmospheric Forecasting), a sophisticated model that combines big data use with atmospheric and computational sciences. The Weather Company is now able to provide targeted weather forecasts within a 2 mile radius, a revolution for supply chain risk management.
In the case of supply chain planning and transport, predictive analysis and demand forecasting will soon be able to schedule transport flows according to customer demand, anticipating deliveries ahead of order preparation, and even before order placement, thus optimizing costs and operations.
The implementation of weather-forecasting in predictive algorithms can also be expected to considerably minimize risk, thereby lowering the number of incidents and reducing both physical and material damage.
Predictive weather forecasting is proving to be a promising area of development for industrials of all fields, allowing for an increasingly precise ETA while drastically reducing risk and costs within the supply chain.
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