The financial impact was estimated at $1 billion per day when workers walked off the job at the nation’s largest commercial port, Los Angeles/Long Beach, at the start of the critical holiday shipping season. The strike lasted eight days and slowed nearly 40 percent of container traffic in the United States, rippling through everything from transportation management and warehouse management to what’s available on store shelves this Christmas.
The story is similar halfway around the world. The recent worker riot at Foxconn Technology, major supplier to Apple and other electronic giants, got lots of attention, but it was just one of many labor protests that disrupted supply chain management. Stories also emerged out of other Asian nations, including Vietnam and Cambodia.
Labor issues are but one of many threats – natural disasters, interruption in fuel supplies and volatile commodity prices are some others – not only to companies’ supply chains but also their brands’ marketplace integrity.
David Linich, a principal at Deloitte Consulting LLC, wrote recently in Supply Chain Digest that companies should do more than simply react to interruptions. Companies, he said, “should take a more active approach to the ‘point in time’ evaluation.”
“Simply shifting to a different low-cost country is no guarantee that these issues will not follow,” Linich wrote. “Leading companies have prepared themselves by understanding where they are vulnerable, and by recognizing the untapped opportunity that exists with improved visibility and collaboration with suppliers.”
He correctly points out that today’s complex global supply chains “require a higher degree of analysis than ever before.”
“Instead of shopping around for the lowest-cost suppliers and assuming they will be able deliver on their promises, companies should set clear expectations for how suppliers operate and pop the hood on their operations to understand what’s really going on,” he wrote.
In fact, a full understanding of the supply chain can turn the risk of volatile global markets into new opportunities to improve business performance. That means not only keeping supply chains flowing but also coming up with innovations that reduce costs, increase efficiency and make businesses more resilient.
The latest supply chain management solutions automate operations with end-to-end capabilities that streamline warehouse management, fixed asset management and transportation management, among other capabilities. The capability afforded by mobile devices, RFID tagging and other tools give companies 360-degree organizational transparency to detect interruptions and solve problems sooner.
As Stanford Graduate School of Business researcher Hau L. Lee wrote, companies today must do more than simply tweak their supply chains. They must evaluate everything from end-to-end, something that’s not possible without complete organizational visibility and the right tools to analyze the data.
Companies, Lee wrote, “should take a holistic approach to sustainability and pursue broader structural changes.”
“These may include sweeping innovations in production processes, the development of fundamentally different relationships with business partners that can evolve into new service models, and even collaboration with multiple companies to create new industry structures.”