The Impact Mother Nature is Having on Global Supply Chains

Will:
All right, everybody. We are backed with another episode of Safety Stock. I’m Will Davis. This is Dan Magida. Dan, how are you doing today?

Dan:
You know what I was thinking about this morning? How many Will Davises are there in the world?

Will:
Oh my gosh. There’s a lot.

Dan:
Like there’s like three Dan Magdas I think I know in the world, but Will Davis, there has to be thousands on thousands. How deep in Linkedin are you?

Will:
That’s definitely a decent amount for sure. And I know there was one that played for like the Ravens or the Dolphins from like, he was a cornerback there’s others. So I don’t want to go to the garden state thought that there’s really nothing unique you can do. And then that, I’m just a number similar to like the matrix. I don’t wanna go down that hole, but I am willing to admit there is a lot of my brothern out there.

Dan:
Yeah. If you Google me, you’ll find me on page one. You Google. Well, you may go to page 75 or something deep.

Will:
Maybe that just means we need to get our SEO up on this on this podcast and start bumping me out the list.

Dan:
Well, I’m just saying maybe just for you in general.

Will:
No, I know I need to investing yourself, right? I mean,

Dan:
There’s, that’s, yourself’s always the best, best practice investment. No,

Will:
I I’m with you. I’m totally with you. Well, you know, other things that, you know, we need outside of me making up the Google pages, damn, we need rain.

Dan:
It is, it is dry out there.

Will:
It is dry. And you know, there are a lot of parts of the country right now, and a lot of parts of the world that are going through a drought. And some of that is attributed to seasonal patterns. Some are attributed to changing climate based off man and other things in that factor. What we’re wanting to get into is what are what’s that drought doing and affecting the supply chain and the overall aspect of things. And so, Dan, I think there are a couple things that we can share with the group overall from a global perspective that are being affected because of the drought.

Dan:
Yeah, no, exactly. And as you said, it’s global. What we’re seeing China is seeing unprecedented heat waves, factories are shutting down cause they don’t have, they need to conserve water. So not enough for these production plants to operate efficiently or as prolonged as they normally do, which is a disruption in manufacturing.

Will:
That’s right. They are a lot of hydroelectric dams. And so, you know, there’s not as much water to run through those guys. So they are asking a lot of factories in one of the main provinces at shish, one shish, one where, which is further west on the country to conserve their energy Teslas affected by it. Outside of that, we’re seeing issues in Europe because of the water levels that are low in some of the rivers, especially the Rine where a lot of barges are coming down to pass goods through that country, they were having issues. There was some concern at one point to where would they get their boat through. Now that I think that’s alleviating a little bit, but overall, if you can get your goods through the traditional routes, we’ve seen what happens from a pricing perspective in order to move it somewhere else.

Dan:
Well, it’s gonna, it’s gonna increase, but the one like the run, as you mentioned, like the water levels are so low now, that’s, they’ve been getting some rain, the forecast so that that’s helpful, but cargo ships don’t need that much real estate to get through. I think Therin is they need like little over a foot 14 inches just to cross through, but things have been held up there and that’s impacting a lot of refinery items, which has their own issues today, but oil refinery, and that’s causing some other aspects where the government’s restricting energy usage, cuz they’re just not getting big factors there in Germany, but also the us is impacted as well. And will do you know the main industry that’s seeing a big reduction as well because of drought conditions.

Will:
Is it some of the agricultural items that are happening out in the Southwest

Dan:
Hotting, for instance, farmers are expect to lose more than 40% of their cotton crop this year. And then while we’re talking about overseas, Spain is seeing their olive oil harvest the fall as much as a third. So big drought implications for agriculture, which is leading China to import corn from either the Brazil or us to, to make up for that. As well. So maybe us will have some exports will go up a little bit here.

Will:
One of the things that this is leading to and you see so many different industries touched by, you know, the situation is where are you getting? Like where are you getting your goods from? You know, if you’re turning raw materials into a finished product and if you’re making the finished product, how are you getting your goods to your customer? And I think when you talk about the first part of it, w we hear on safety stock are a big proponent of making sure you have redundancy built into your supply chain. Do you, can you get your goods from more than one location? You don’t wanna be single sourced because in the event that you are getting your goods from, for example, China, and they go through a rolling blackout and they can’t produce your goods for six to 10 days, it’s a tough situation. Same way. If you can’t move your goods through the port and UK right now, which is looking to go through a strike for eight days, where are you going to get your goods? How are you gonna get ’em through there? So the biggest thing is understanding where your goods are coming from the supply chain piece, you know, Dan as a German citizen, what are you typically ordering from Germany that you might have to get from somewhere else?

Dan:
What am I ordering from Germany currently?

Will:
Yeah. Currently, like I love sauerkraut. Are you getting like, what’s a,

Dan:
You some Laden holes in, in preparation for Octoberfest, come up soon. There

Will:
You go. Like getting some like good traditional mugs that you might put some of that beer in.

Dan:
I mean, I wonder if few, t-shirts not sure if they were manufactured in Germany over the last few days, but

Will:
Are you a big fan of snitzel?

Dan:
Yeah. You know, me, I like sausage and pretzel. Love a good love. A good, so

Will:
You’re more of a sausage and pretzel guy. Not as much

Dan:
As mustard. Good, good mustard. I will say one thing I did like from Germany tangent here is they don’t refrigerate their butter and eggs. So no ization on it. Big fan of that. It’s nice. We, we can go into a whole article or a whole episode here on why we spray everything and refrigerate everything that’s for another day. No, I mean, what’s concerning about Germany right now is, and when in the politics of this is, but they’re gonna have a little bit of a crunch this winter on their electricity, so they gotta figure that out. And them having the line shut down for a little bit doesn’t help. No.

Will:
Well, I think that’s also, you know, from a supply chain perspective, you have competing energy needs when, as the drought’s coming through. And as there’s a heat wave, obviously people are using air conditioning more where it’s available and that power usage, that energy usage is going up. And so places that are constricted or using hydroelectric means of getting energy to where they’re going, like, where do you send it? That’s the tough that’s the tough situation where certain governments are having to deal with. And to your point, you know, from the German side, they’re looking to reduce some of the nuclear power options that they’ve had in bring it on, which I think have recently been delayed. There’s a lot of interesting things that come of this. And I think the biggest thing that, you know, we can stress is that you have to be able to get your goods, your energy, et cetera, from more than one location in the event that one of the location dries up pun intended.

Dan:
Hopefully like obviously whether these conditions like alleviate soon, we know it’s it’s summer. So these right, these things do happening to year. So you can actually plan a little bit of ahead of time. I mean, the one thing that we see in the industries that we’re mostly most closely aligned with, like in Germany, Spain and France is even with these rising temps, those factories are closed mostly during the summer months. So there is some alleviation there and some manufacturing, obviously not for your day to day needs, but for your planning and like the personal care space, like glass manufacturing is those workers tend to be shut down this time. So you can plan for that accordingly. Now it’s hard to plan for weather, but you plan for seasonality already. So you can maybe factor some of that into your forecast. As you prepare for the 2023, that’s weird to say calendars season.

Will:
And it is weird to say plan a pretty picnic, but you can’t predict the weather is what you’re trying to say. Yeah. From that perspective, if you have any other outcast lines that typically do well for supply chain, please let us know at hello@anvyl.com. That’s A-N-V-Y-L.com. And we wanna hear from you. So if you have anything else, you know, that you wanna let us know about what you’re struggling through as related to the drought, reach out. And if you don’t hear from you people talk to you soon.