A new ERP isn’t the only predictable supply chain disruption confounding distributors. Whenever a manufacturer moves a warehouse and doesn’t let its distributors know, it can become a nightmare, according to Kevin Boyle, president, Industrial Distribution Consulting LLC.
He worked with a manufacturer who not only moved a warehouse but also hired a third-party operator to run it. Once the facility went live, the entire supply chain was severed due to lack of communication and adequate system testing.
“They were unable to ship orders to distributors for two months, so basically January and February didn’t happen, which was outrageous,” he says. “They were so confident everything would run smooth they didn’t tell anybody.”
The current M&A market also is causing supply chain slowdowns as companies integrate their systems, something that can be addressed during the due diligence phase.
Regulatory issues, though not as predictable, can be planned for by keeping an eye on current policy changes and using association resources to stay current on industry news.
Inclement weather now has a degree of predictability, as companies routinely cite it as a disruption in their first-quarter earnings reports, with many planning ahead for another cold and snowy winter by adjusting inventories accordingly.
And even West Coast port congestion, once considered an unknown because it involves volatile labor issues, has become a predictable disruption with frequent work stoppages or slowdowns. To avert future disruptions, companies are shifting cargo elsewhere. The Port of Savannah has seen import and export volume rise for three consecutive months, driven in large part by response to labor strife on the West Coast, according to a recent article in The Wall Street Journal.
East Coast ports are projected to gain 10 percent share of container traffic from West Coast ports by 2020 due to next year’s opening of the expanded Panama Canal – and a lack of labor strife – according to a recent study by The Boston Consulting Group and C.H. Robinson.
“People will find ways to use the West Coast ports less,” says Paul Dittmann, executive director of the Global Supply Chain Institute at the University of Tennessee-Knoxville. “If you get burned, essentially, creative people are going to find alternatives. Our East Coast ports, no doubt, will get busier over time, especially when the Panama Canal widening is completed next year. Much larger ships can pass through the canal and go to the East Coast. So I think more and more companies will start opting for that alternative.”