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Global Supply Chain Performance Erosion

As trade has grown into a global business, ocean transport has grown in importance. At the same time, the shipping landscape has continued to change. The result is that performance and service levels are inconsistent, unpredictable, and eroding. Despite this, there are corrective actions shippers can take to ensure smoother sailing and a more consistent delivery of their product.
By Tom Craig
Tom Craig is the CEO of LTD Management, a supply chain management and logistics consulting firm. He can be reached at .(JavaScript must be enabled to view this email address). For more information, visit http://www.ltdmgmt.com.
November 1, 2013

Shoreline erosion does not happen overnight. The changes creep up little by little over time. They may not be apparent until you look back and realize that this year’s shoreline is different from last year’s shoreline.

A gradual erosion of performance has also occurred in global supply chains, especially in those that rely on ocean carriers to deliver the goods. We describe it as erosion creep because, like the shoreline, there is not one big, obvious change that hits a shipper between the eyes. Instead, a variety of events, such as longer shipping windows, unpredictable shipping schedules, bigger ships that can be handled in fewer ports, and new regulations, have gradually led to inconsistent and less reliable service levels.

These actions affect importers, exporters, and their supply chains. Retailers that miss a shipping window may end up with extra costs and lower margins to carry unsold inventory. Multi-national companies with global facilities and suppliers in multiple trade lanes feel the effects even more as they synchronize the flow of goods that feed production facilities, distribution pipelines, and customer distribution centers.

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Shoreline erosion does not happen overnight. The changes creep up little by little over time. They may not be apparent until you look back and realize that this year’s shoreline is different from last year’s shoreline.

A gradual erosion of performance has also occurred in global supply chains, especially in those that rely on ocean carriers to deliver the goods. We describe it as erosion creep because, like the shoreline, there is not one big, obvious change that hits a shipper between the eyes. Instead, a variety of events, such as longer shipping windows, unpredictable shipping schedules, bigger ships that can be handled in fewer ports, and new regulations, have gradually led to inconsistent and less reliable service levels.

These actions affect importers, exporters, and their supply chains. Retailers that miss a shipping window may end up with extra costs and lower margins to carry unsold inventory. Multi-national companies with global facilities and suppliers in multiple trade lanes feel the effects even more as they synchronize the flow of goods that feed production facilities, distribution pipelines, and customer distribution centers.

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