- Centre for Operations and Supply Chain Research
Like many work places around the country, the Research and Innovation office runs on strong cups of tea and dunkable biscuits. Our tin of Hobnobs and Ginger Nut biscuits is always full – that is until last month when we started to notice that no one had been able to get hold of any Ginger Nuts for a while. We laughed about a biscuit shortage and headed to Twitter to see if anyone was having the same problem. To our surprise, there were numerous tweets from Brits lamenting the “biscuit crisis.”
It turns out that production of McVitie’s Ginger Nuts was halted back in December due to flooding at the factory in Caldewgate Carlisle, causing a number of supermarkets to be without stock for weeks. United Biscuits (owner of McVitie’s, Carr’s and Jacob’s) has now re-started full production at its factory and its biscuits are starting to appear back on shelves.
Although there has been some humorous press coverage about the biscuit shortage, last year’s flooding has had a serious and devastating effect on a number of businesses.
David Whiteley, member of the University of Leeds Supply Chain Council and the Business Growth Manager for the Manufacturing Advisory Service (MAS) has been helping local manufacturing businesses who have been affected by the recent floods.
“I worked in Sheffield during the 2007 floods and experienced first-hand the disastrous effect it had on businesses. When I saw that Kirkstall had been hit by the floods on Boxing Day, affecting both the shops and also the industrial estates, I went down to see what the damage was and what support companies would need.
I contacted the Council, Leeds City Region Enterprise Partnership (LEP) and the Department for Business Innovation and Skills (BIS) to see what we could do to help the businesses affected. A meeting was organised with Tom Bridges, Chief Economic Development Officer Leeds, City Council; Greg Clark, Secretary of State for the Department for Communities and Local Government; Tom Riordan, Chief Executive Leeds City Council, and Councillor Judith Blake to walk around the industrial estate and meet with the companies based there.
Greg Clark announced that £50 million extra funding would be available to local authorities to help them support households and businesses in the North affected by the floods. The money distributed through the Council from the Government is offered as a three stage support:
- £2,500 grant for clean-up
- Rates relief for three months
- £5,000 towards flood resilience
MAS worked with the Council and the LEP to secure additional capital for manufacturing companies, not just in Kirkstall, but extending to other affected areas in Leeds City Region. We had a list of 40 manufacturing businesses affected by the floods and looked at various factors including how many jobs were at the business, how many were employing sub-contractors, what had happened to the machines, and were they insured. We found a few companies had been unable to get insurance due to their proximity of the river.
Natural disasters cause a lot of issues other than just having to clear-up after the physical mess. Flooding can ruin machines and cause some of them to never work again. Companies can be out of business for months because of machines being out of use.
When an industrial estate is flooded, there is a risk of disinvestment in the area, businesses collapsing or jobs being affected. Already we know of a couple of companies that have closed and others that are moving away from the Kirkstall and Hunslet area. Some want to move but are trapped in leases which will be a problem when it’s time for their insurance renewal and are likely to be charged a premium.
There is a massive knock-on effect that causes problems not just for the companies located at the flood sites, but for landlords and suppliers. There is a risk in the whole supply chain for larger companies.
Using the information we gathered, the Council and the LEP have worked together to provide £5 million funding for SMEs in the area affected by the floods, with up to £100,000 available to businesses for costs relating to premises or machinery.”
Within the Business School, postgraduate researcher Raveekarn Aiemwongnukul has analysed 30 interviews with natural disaster experts, academic researchers and supply chain companies, with a focus on identifying the capabilities required to mitigate against natural disaster threats. The interviews show that many companies have started to question the ways they developed their business continuity plan and recognised the need to take natural disaster into account in the future.
The interviews also highlight that most companies lack the capability to sense natural disaster threats and they have limited knowledge about the different possible solutions. With higher “sensing” capabilities other companies were able to reduce damages when the disaster occurred and recover quickly after being disrupted by natural disaster. It is also crucial for companies to implement appropriate systems and processes at the right time while building in the ability to re-configure them as they learn more about new threats and opportunities.
Raveekarn and her PhD supervisor Professor Chee Yew Wong will be presenting their findings at the European Operations Management Association (EurOMA) conferences this summer. More case studies highlighting “best-practice” companies will be created from the research.
Also at the University of Leeds, members of the Centre for Decision Research and the Sustainability Research Institute have been conducting research related to public perceptions of floods. Findings from their previous studies suggest that heavy rainfall and flooding influence UK residents’ perception of the risks associated with climate change more than heat-related weather events.
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The views expressed in this article are those of the author and may not reflect the views of Leeds University Business School or the University of Leeds.