Managing our supply chain through Covid taught us many lessons and should have prepared us for any future disruptive events such as we are likely to face with the impending strike of our longshoremen on the Gulf and East Coasts, who, as we have been advised, walked out of negotiations in June and very little progress has been made to negotiate a successful new contract. The last time this peril occurred brings us back to 1977.

Read also: Implications of Looming Labor Strikes on U.S. Container Trade and Supply Chains 

On the face of the known information flow, the two parties are wide and far apart. The carrier community does not want a strike, but the likelihood is high.

If this strike moves forward, the operational and financial consequences will be severe.  And in conjunction with the current instability in global markets, the strike will be the source of devastation, disruption and serious dilemma to thousands of supply chains serviced in the eastern part of the United States, not to mention the overall collateral residual impact to the entire global supply chain, marketplace and local economies.

Supply Chain managers were warned about this potential impact back in the spring and should have already taken steps to mitigate their potential issues by:

a.  Stocking up

b. Diverting freight to alternative ports

c. Finding alternative sources

d. Reserving and preserving the flow of assets

e. Modifying supply chain expectations

f. Creating alternative solutions

IF these steps were not taken most supply chains will struggle intensely with little relief.

Keeping the enormity of this challenge in mind, we can still take steps to mitigate our risks and limit operational/financial exposures.

We need to consider doing the following steps:

1. Create an internal committee of stakeholders, led by the logistics team, to determine what the consequences will be to their supply chain, their customers, vendors, and any collateral-impacted parties.

All these entities need to be communicated to proactively and advising what steps will be taken to mitigate and offset the disruption.

Internal stakeholders are likely to include:

a. Procurement

b. Operations

c. Manufacturing

d. Distribution

e. Sales

f. Customer Service

g. Demand Planning

h. Inventory Management

i. Legal & Finance

2. That assembled team needs to identify all the risks, vulnerabilities and exposures and rank them by severity. That ranking will determine where action will be prioritized.

A SWOT Analysis may be considered (Strengths, Weaknesses, Opportunities and Threats) which might provide input into the decision-making process.

Vulnerabilities need to be identified and prioritized for proactive mitigation actions.

3. The team will create an “action plan” outlining what steps will be taken, by whom, by when and identify the expectations of the action. Lines of responsibility and accountability need to be created and managed.

In some organizations the plan may need senior management review, input and approval before proceeding. 

4. Senior management may be brought into the discussion:

• To provide their insight and experience
• To prepare for the anticipated consequences
• To allocate resources and funding requirements
• To ensure that the Business Owners and/or the Board of Directors are communicated and informed of circumstances and potential impacts to the business.

5. Additionally, all internal and external impacted parties must be brought into the communication chain to run transparently, openly and allow an interface for action review, modification or tweaking.

6. Some specific action steps to consider:

a. Work with your service providers and carriers to coordinate potential options within their areas of expertise and scope of capability

b. Identify options within every aspect of the supply chain:  suppliers, routing and transport, distribution, sources, alternatives, demand planning, inventory structure, etc.

c. For any service providers or carriers that called on you in the last year but did not win your business, now is the time to contact them to determine what options and solutions they may have. This becomes their opportunity “to get their foot in the door.”

d. For shipping, consider air freight, but restrict it to only the necessary quantities required to minimize this expense.  Air Freight prices will likely rise and space availability will be limited; the sooner you make these arrangements, the better.)

e. Closely work with all your trading partners on very focused demand planning needs to know what specific quantities and time frames are absolutely needed so options and shipping plans can be executed as necessary.

f. Consider near-sourcing solutions in the USA, Canada & Mexico, which through Covid all have ramped up their domestic manufacturing capabilities.

g. Preserve inventory. Begin to distribute limited quantities. Be conservative but communicative in your approach to all impacted parties. 

We do not know how long the strike disruption will last. Preservation of assets is now warranted.

Disruptions can also create opportunities.  Downtime may afford the following:

a. Taking time to manage some house cleaning

b. Reorganizing inventory

c. Resetting operations

d. Experimenting and trial testing

e. Seeking alternative sourcing

f. Personnel training

g. Reallocation of assets

h. Finalizing open projects

Summary

Disruptions will always happen. To what degree and extent is always the unknown.

How we proactively and reactively prepare will impact the consequences of the disruption to our supply chain and business model.

When they occur keep in mind some additional thoughts:

a. Transparency, timely communications and responsible business acumen will go a long way in managing the impact of any disruptive event.

b. A “Team Approach” has a higher degree of success than does independent activity. As in the Navy, “All hands-on Deck!”

c. Turning over as many stones imaginable will increase the opportunities of finding solutions.

d. You may have to reduce the normal process of change management and cut some corners, expedite actions and accept more risk than usual.

e. Risk taking should include intense, well-thought-out and informed decision-making.

f. Always keep in mind that expediency in analysis, followed closely by swift action, creates the best opportunity for mitigation.

g. Continually evaluate your thought process and actions to modify, tweak and change as the circumstances warrant.

Disruptions will usually end after they run their course.  And new disruptive events yet unknown or anticipated will be in your future – as sure as death and taxes.

Mitigation strategies reduce their negative impact and bring us through a learning curve that better prepares us for the next one.

Disruptions can make us stronger, more resilient and better prepared to deal with future dire circumstances, affording the best opportunity for business sustainability – a goal most organizations strive for!