Every morning, millions of people sit down to eat a bowl of cereal. The process is simple: pour cereal into a bowl, add milk, eat. What isn’t simple, however, is the process for bringing a box of Cheerio’s from the factory to the shelf in the most efficient, effective and safest way possible. It is truly a combination of art and science requiring numerous steps, logistics partners, and technology.
I recently had the pleasure of providing consulting to a CPG company who contacted me to assess the process and technology they utilize to manage their business. During a discussion with a senior executive responsible for transportation and logistics, he said something interesting to me: “I can’t believe that no one has invented a way to incorporate weather data into transportation and logistics planning.” Actually, someone did invent a way to incorporate weather data into transportation and logistics. The CPG industry is simply unaware of what’s available.
Leveraging weather data and insight within the process of getting goods or people from point A to point B is standard procedure in the aviation industry. Pilots prefer to fly on days that they refer to as being “Severe Clear” – there are no clouds in the skies and pilots can see for miles in every direction. However, due to advances in technology and the use of weather data, pilots can fly in almost any weather conditions to deliver passengers and cargo. Without weather data, planes and passengers would sit for days, and the aviation industry would be in a shambles.
The Value of Weather Data
I recently spoke Rob Christian, a long-time veteran of the CPG industry who recently converted his career over to weather intelligence in his new role at DTN. DTN is a global data, analytics and technology company that focuses on agriculture, transportation, energy and weather-sensitive industries. Rob stated that even though integrating weather intelligence with a company’s existing data streams provides deeper insights and more informed decisions, “this capability has simply has not hit the radar of major food chains and wholesalers that are placing thousands of trucks on the street every day.”
Rob went on to explain that, “What we see at DTN is five stages of awareness when it comes to leveraging weather data. Stage one is the Passive stage. Companies monitor the weather but are at the mercy of the impacts. At the other end of the spectrum is Stage 5, the Prescriptive Stage. These clients are aggressively utilizing AI and machine learning to make proactive operational decisions around the challenges brought by inclement weather. At this stage weather analytics can help prevent risks, minimize disruptions and proactively inform users before weather impacts occur. After being in the CPG industry for many years, Rob estimates the industry is generally at Stage 1 because most transportation and logistics companies do not understand how valuable weather data is.
Rob further explained, “With uncanny accuracy and granularity, DTN can provide actionable metrics 2-3 weeks out, leaving time to impact decisions around re-routing, client communication, and risk aversion. Our advanced clients have placed these decision outcomes on autopilot, relying on their own internal Transportation Management and other software to generate the operational decisions required to optimize shipments and loads.”
Impressive Results for Heartland Express
One carrier that takes the weather insight very seriously is Heartland Express, the nation’s eighth-largest fleet, with over 17,800 trailers and $1.3Billion in annual income. Sixty percent of their business is generated by CPG, with the other 40% dedicated to companies like FEDEX and Armada. As a long-time DTN client, they place a high premium on how weather insights have impacted their business from an internal cost savings and a client satisfaction facilitator. What was most fascinating to learn was that Heartland Express clients trusted their actions based on weather intelligence from DTN, to schedule or redirect their deliveries from other suppliers.
Rob shared that Todd Trimble, Heartland Express VP of Safety, stated during a discussion that, “One of the best insights we receive from DTN is wind velocity at lower speeds/heights that are simply not available anywhere else.” Tractor/trailers are susceptible to accidents when traveling empty or with lighter loads in areas with high winds. It is not uncommon for tractor/trailer rigs to be blown over. According to Trimble, “We avoid the potential of these tragic incidents because DTN provides wind speeds at levels that go as low as 25’ off the ground. We will reroute, or provide completely alternative plans, for our drivers based on this insight. In total, DTN saves us anywhere from between $1- $5M a year, based upon operational efficiency and risk avoidance costs.” When asked by DTN to project what this means in ROI, Heartland stated the ROI on what they purchase from DTN is “in the 1000X range….not hundreds, but thousands.”
A Better Way
All retailers and transportation providers should explore the use of DTN’s weather data within their operations. Grocery retailers will be able to make decisions on which products to stock up on in different regions based on future weather patterns. Incorporating the data into planning software supported by AI, triples the accuracy of planning according to customer feedback. Transportation providers can proactively route trucks to regions where demand will be highest.
Leveraging weather data is a better way to make decisions and exceed customer expectations.
