Supply Chain Risk Strategies

HanjinAs a result of my recent studies for the CLTD exam I developed an interest in container shipping. As the Warehouse Guru I am well versed in all things happening inside the warehouse but gave little to no thought to how product found its way to the warehouse. In the global trading market much of getting to the warehouse is done by container shipping. Now it seems much of the news I see is about containers (this is a cognitive bias know as frequency illusion). One article was about the Hanjin Shipping bankruptcy causing turmoil in global sea freight. The article discussed the impact to supply chains when customers are unable to get product off ships when ports refuse entry for fear of not being paid.

This ties in direct to the CLTD concept of Supply Chain Risk and Risk Management.

The APICS Dictionary, 15th edition, defines supply chain risk as:

‘…the variety of possible events and their outcomes that could have a negative effect on the flow of goods, services, funds, or information resulting in some level of quantitative or qualitative loss for the supply chain.’

I recall the stories of port congestion associated to labor stoppages during contract negotiations but never consider the risk of inventory being stranded on ships due to bankruptcy. But it is a risk you should be able to plan for and plan for a response which we will discuss in the next blog.