The United States has just finished enduring the longest West Coast port slowdown in modern memory. It will take months to clear the backlog of ships. The effects will be widespread and varied. These effects include: negative impact on GDP and company sales, decreased product margins with increased mark-downs, increased inventories, increased ocean transit times, rising shipping costs (both into and out of the US), and seriously unbalanced worldwide container pools. We know the effects, but what have we learned?
Most companies grinned and bore the cost and service failures. These companies listened to the ranting’s of customers and senior executives, as their products backed up at the ports and on inbound ships. Proactive companies started shifting their volumes away from these ports in the spring of last year (2014). They had risk plans in place, and activated them early. Senior management was still not happy about the slightly increased cost, but they avoided port congestion surcharges, unpredictable lead time and did not have customer or production service failures. How did they accomplish this?
Carrier Bankruptcies, catastrophic service failures, trade embargo’s, major weather events, Management Changes, Vendor and Production problems, and product recalls are examples of events that should be anticipated and prepared for, prior to their occurrence. Leading edge companies anticipate their possibility and incorporate them Supply Chain Risk Plans. For additional information see our white paper: Risk Mitigation in the Supply Chain.