I have a quick question for you. When it comes to managing your company’s supply chain, how many times do you want to be “surprised” by things you did not expect or anticipate?
I ask this because over the past two months I have fielded an increasing number of calls from executives who are “surprised” to see their container rates go up by as much as $2,000 - $3,000 per container in light of what is happening in the Red Sea.
For example, a President and friend of mine called me and, in an exasperated tone told me: "It’s happening again! Our container rates have gone up by $3-4k in the span of six weeks!" Then I told him: "Get ready for another surprise because your container rates could go up another $3-4k if the situation in the Red Sea doesn’t get resolved in the next 8 to 12 weeks."
Practically speaking we're witnessing a major challenge to ocean shipping that could get much worse, which is why shippers could see their container rates go way up if the situation in the Red Sea gets worse. And that is why I encouraged to get his team together and have them join us for a special Red Sea webcast we will be hosting with our friends from CSCMP and the NIT League, on February 7 at 4pm CST.
Before ending the conversation though I offered some candid advice: These types of surprises will continue to put his company at risk until his company got serious about managing its supply chain.
When he said his company was serious about managing their supply chain, I shared questions that I have asked other Presidents who thought the same thing.
- How often does your company monitor events to determine risks that could affect your supply chain?
- Has your company done any other supply chain scenario planning exercises that address the “What if” questions that could potentially hurt your supply chain?
- As part of a supply chain assessment, has your company stress tested your supply chain and identified which inventory items could shut your business down?
He got the picture and acknowledged that perhaps his company needed to “up its game” and be more proactive in managing their supply chain.
If you’re reading this and thinking “maybe we ought to look at upping our supply chain game” TranzAct has a wealth or experience and resources that can help you out.
Simply send me an email or schedule a brief meeting to get in touch. Let’s talk about our Rapid Assessment supply chain evaluation and the logistics tools we have to help you become proactive rather than reactive.
BY MIKE REGAN, CO-FOUNDER OF TRANZACT
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