Everybody has heard of the “famous” traffic delays in Los Angeles. The recent Wall Street Journal article, “A New Traffic Jam Hits L.A.”, describes a new type of delay hitting the city – shipping. This has impacted many of businesses due to the challenge of getting products in and out of the port of Long Beach. It has now stalled the delivery of goods and caused some shippers to redirect their ships to other ports. That, combined with the fact that there are few ports that can handle the larger cargo ships, can impact an organization’s bottom line by increasing its cost of doing business.
This article drives home the idea that any company must understand its supply chain risk and have a plan in place to manage it. A lack of proper understanding of this risk could lead to increased financial costs and lost revenue from not being able to realize an opportunity. The question any senior leader should then ask themselves is how their organization can recover from a delay that prevents it from meeting its supply demands.
One strategy that can allow senior management to evaluate the impact of these delays is developing a loss matrix which will identify the cost to a company’s revenues if their suppliers fail to deliver products on time and on budget. This includes the evaluation of an organization’s responses to such risk over the course of 30-60 -90 day period.
If you would like to discuss ways to manage your company’s Supply Chain Risk, please contact Albert Sica.
