Weatherwise

Companies analyze realtime climate data for supply chain intelligence

Everybody talks about the weather, but now business intelligence (BI) vendors are finding ways to add realtime climate data to supply chain planning tools to optimize sales and product tactics. Companies like Ford Motor Co., FedEx Corp., and Sears, Roebuck, and Co. have started exploring how to use weather data to devise better inventory, distribution, and merchandising strategies.

Demantra Ltd. recently formed a partnership with Planalytics Inc., a company specializing in weather intelligence for the life sciences, energy, and retail industries. The new alliance will combine Planalytic's Impact LR application with Demantra's Collaborative Demand Management suite. Impact LR provides retailers and manufacturers with knowledge of how climatic factors, such as temperature, precipitation, and storms, affect their business.

"Through our partnership with Planalytics ... we are providing our customers [with] an Internet-based application that measures the specific effects of future weather on consumer demand by product, location, and time," said Yoni Cheifetz, Demantra's CEO.

Ford recently joined a pilot project to use Planalytics to forecast weather-driven changes in supply, demand, and prices for auto parts and services.

"Volatile demand for many auto parts disrupts supply chain planning, especially when weather hits certain temperature thresholds that cause older components to fail," said Planalytics' president and CEO Frederic Fox.

Visual Numerics Inc. (VNI) approaches weather BI by providing tools to visualize complex environmental data for decision support. VNI applied its JWAVE 3.5 product in one scenario to correlate beverage sales at coffee and juice retailers with factors such as time of day, temperature, and season. JWAVE disclosed complementary sales cycles for the two refreshments, indicating that a merger would be beneficial, because the coffee and juice sides of the business would not be competing for customers.

Weather BI has proven to be useful even for retailers accustomed to adjusting their supply chains to reflect seasonal demand. Sears deployed Planalytics's tools during 1999 and 2000 outerwear sales cycles and was able to redirect midweight outerwear stock to western U.S. stores to take advantage of favorable weather conditions. Without the weather BI, Sears would have kept the outerwear at East Coast stores, where it would have stayed on the shelves because of unseasonably warm weather.

According to Business Objects SA, the realtime Internet query capabilities in BusinessObjects 5i can also help retailers correlate weather data with product sales and use weather forecasts to adjust stock levels for products that sell best during specific weather conditions.

The ability to use realtime weather BI is characteristic of a smart enterprise, according to Curt Hall, senior consultant with Cutter Consortium's BI Advisory Services. Hall wrote in a May report that companies "should consider applying realtime data warehousing and BI techniques to applications other than online selling." Hall pointed to FedEx as a prime example, noting that the company uses "active data warehousing to make such key decisions as how airplanes are routed in inclement weather."

By using weather BI to determine when plane shipments will be late and will delay delivery trucks waiting for the airborne loads, FedEx can provide better automated customer service to notify customers about late package arrivals. Hall concluded by observing this trend: "The division between data warehousing and operational systems is blurring, with the data warehouse literally being used to make a logistical decision on a current transaction."

— Claudia Willen

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