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Thursday, 12 February 2015 12:25

What Happens if the West Coast Ports Shut Down?

According to the Institute for Supply Management (ISM), the US West Coast ports handle 43.5% of containerized cargo, which accounts for 12.5% of the US GDP.  Recently talks between the Pacific Maritime Association (PMA) representing port management, and the International Longshore and Warehouse Union (ILWU) have broken down over talks about wages, among other things. It is said that without an agreement, nearly 30 West Coast ports could be shut down within a week. What does this mean for my supply chain? “A west coast port shutdown would be an economic disaster," said Kelly Kolb, vice president of government affairs for the Retail Industry Leaders Association. “A shutdown would not only impact the hundreds of thousands of jobs working directly in America’s transportation supply chain, but the reality is the entire economy would be impacted as exports sit on docks and imports sit in the harbor waiting for manufacturers to…
Thursday, 18 September 2014 15:04

Getting the Most Out of Optimization Technology

Strategic supply chain design optimization technology is a powerful tool for improving supply chain performance. However, if you don’t use it properly and regularly you will not realize its full potential and will leave lots of money on the table. Getting the most from the technology requires that a company spend time gathering, massaging and cleansing the right data, establishing a cost/flow baseline, conducting as many optimization exercises as time permits, and analyzing, implementing and measuring results. It is worth the time investment as your efforts are likely to lead to  significant cost savings, a superior supply chain strategy and a competitive advantage. Not bad for a single tool. However, even before you begin the process you must align yourself with corporate strategic objectives and establish suitable goals and metrics.  Is the focus the traditional one of cost minimization? How about the much more advanced idea of finding the maximally…
According to a survey of 300 senior executives commissioned by the Chubb Group of Insurance Companies, the top global business threat that companies face is a supply chain failure, yet only 56 percent of the companies have a business continuity plan. Even more disturbing is that 60 percent of respondents don’t require their overseas suppliers and vendors to have a business continuity plan. Without plans in place to continue operating your supply chain after a natural disaster, terrorist threat, political and socio-economic crisis, loss of a supplier or facility, or other unknown threat, companies can experience serious business interruptions that can undermine their financial results and stability. It is equally important for companies to assess whether their overseas suppliers and vendors also have up-to-date, well-tested business continuity plans. In another survey in 2013 by Deloitte of 600 manufacturing and retail executives, 71 percent viewed supply chain risk as “an important…
INSIGHT has been managing network design projects for over 30 years. We gather historical data, create the network model, perform "what-if" analysis, make optimization runs, and then generate various results for an optimized supply chain network model. So how do you know which is the right supply chain network model to use for your operation? It is important to run the optimization with as much quantifiable information as needed. You will want to run a variety of scenarios with different input data. This will then give you a range of potential solutions. You will then want to apply the consideration of non-measurable aspects. For example, if closing existing facilities and opening new ones in new locations increases your political risk, you want to know whether that new configuration saves you $500,000 or $50 million. You will then be able to judge whether the extra risk is worth it. So what…
Everyone knows that measurements are only as accurate as the equipment that took the measurement. Does this mean we can round up numbers, such as using 7.4 when the real numbers were 7.39682? Is the more precise data always better? The adage about bad data leading to bad results, “garbage in equals garbage out,” can sometimes just confuse. This adage does not mean that data needs to be precisely measured to a certain number of significant digits. It just means that the data has to be good enough for the decisions we are making. We can spend too much time trying to understand the data and miss opportunities to take much-needed action. In network modeling, the time horizon for making decisions can be days, weeks, or years, but the data is also much more complex. Does this mean that is we use the complex data that we have gathered from…

 

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