“Can you show me how weather events impact my shipments?”

Our team hears this ask several times a month from prospective customers & partners.

This ask has always been interesting. 

My thought process: “Your network has routine delays and temperature deviations happening on a weekly basis due to sub-optimization around everyday parameters -- packaging, route selection, SOP modifications, poor partner selections – and you’re worried about the thing you can control the least -- weather?” 

“Why is weather of particular interest?” 

“So that I know when my shipment is at risk and how I can re-route.”

Fair enough. Contingency planning is always a good reason.

Except there’s one flaw with that logic: according to PAXAFE data, there’s actually little consistent correlation between adverse weather events and impact to OTIF (on-time, in-full) deliveries.

This includes considerations towards intervention being taken, as well as no intervention being taken.

Further, while taking reactive intervention steps does reduce the severity of OTIF impact, it actually does little to impact frequency of said impact.

In short — adverse weather plays a smaller role in impacting OTIF performance than otherwise perceived.

Lane Performance vs. External Event Risk

At PAXAFE, we categorize lane performance separately from external risk. Both are important, but answer different questions.

PAXAFE performs dynamic Lane Risk Assessments by capturing both Lane / Route Performance and External Event Impact

Lane performance is a lane health indicator based on internal parameters within the enterprise's full control—parameters like Lane / Shipping / Packaging SOPs, vendor selection and SLA agreements, routing selection and validation, contracted lead time (CLT) with a 3PL, which IoT device is tracking the shipment, etc.

External risks are typically external forces beyond an enterprise’s internal control – major weather events, geopolitical events, airline flight cancellations, etc. 

PAXAFE’s External Risk dashboard provides an overview of which events are relevant to your routes / shipments

Conventional wisdom says we should consider external risks as a part of lane performance. 

But why do we separate them?

• It’s difficult [and can sacrifice accuracy] when attempting to fuse quantitative and qualitative data 

• While we do pick up some particular correlations across specific lanes and regions, the truth is that the majority of external event risk is independent of lane performance

• This means there are many instances where lanes are performing flawlessly, but weather, geopolitical and scheduling disruptions still occur; and vice versa -- lane parameters are sub-optimal, but weather, geopolitical and scheduling disruptions are not impacting that lane’s performance
  
  

Why are external events important?

There is no one-size-fits-all strategy for reacting to external risk events.

The first two questions your organization needs to ask itself: 

1. Are external events, in practice, actually impacting my OTIF?
   1. Make sure you have a proper baseline to understand:
      1. impact where an intervention process has been enacted
      2. impact where no intervention steps were taken
   2. Consider both frequency and severity as a part of the impact calculus
      
      
2. If there is no consistent impact on your lane’s OTIF, ask your teams why they need this information.
   1. In some cases, the qualitative data adds context to your current operations, and even though it may not drive performance improvement, it may assist with root cause or other upstream / downstream endeavor
   2. It could also be a useful complement to mapping supplier risk and exposure points, knowing whether external events have the ability to impact your Tier 1 / 2 raw suppliers and raw material value chain
      
      

Reacting to external events

As with lane performance, external event risk serves both an operational and a strategic purpose. 

Operationally, you’ll want to understand which actions and levers are available across live shipments to minimize any negative impact on OTIF.

Geopolitical risk might include looking at re-routing options, or even setting up new permanent routes on a particular lane. Geopolitical events could span significantly longer than weather events, and they are much less predictable.

Weather risk could include re-routing, but might also include increasing/decreasing packaging thermal life or changing packaging between active vs. passive shippers, shipping earlier / later than planned, changing mode of transport, or adding a stop to re-package.

In any scenario, you’ll need a tool that can immediately tell you which routes and waypoints are already impacted and which ones will become impacted soon. 

PAXAFE contextualizes external event risk by tying it to impacted routes on a lane, and other impacted lanes 

Strategically, you will want to understand what usable patterns you can extract in the aggregate to apply to future planning. 

• Seasonality/cyclicality – Are specific weather events, geopolitical developments, or other factors consistently leading to delays or quality issues?
• Mapping of routes and waypoints – based on the frequency and severity of external event risk.
• Identify lanes where external events have a high correlation of impact towards OTIF delivery. Create tight intervention SOPs with high-touch / white-glove monitoring around these lanes.
• Context: What do patterns tell us about the underlying causes of disruptions? Are there any hidden trends or correlations that we might be missing? Are certain types of products or shipping lanes more susceptible to specific external events? How does this data fit into the broader context of our supply chain operations and overall business goals? 
  
  

Aggregated map view to understand external event impact on your lanes and routes

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