Category Archives: Supply Chains

It’s the Supply Chain Process, Stupid

This interesting viewpoint comes via Huffington Post.  Not too much substance, but there is a germ of truth.  Firms are so hung up on security and privacy that they refuse to share information that would make supply chains work much better for all.  It’s possible they could be engines for growth. This has been true for 20 years now, and computer scientists have done little to facilitate sharing of data easily. The spectre of security and privacy violations and the media attention on companies when there’s a breakmeans no one will take a chance

Image result for Huffpost Business

It’s the Supply Chain Process, Stupid | Ho-Hyung Lee.

There is an opportunity for governments to require data sharing. We are starting to see it in trucking, where the driver incident data is coming online. Rails have been providing STB waybill data to the US government for years, though it is often incomplete and inaccurate and there’s no enforcement of accuracy.  And private firms like PIERS have been acquiring some data, like ocean container moves,  and making it available for a price.  But to have generally available and public movement data would greatly improve the joint planning of supply chain activity across chains.  That’s what is needed.  Sort of Google Maps traffic with details.

It’s politically so unlikely in the current US environment that this call is whistling in the wind.   The US is all about security, privacy, and individual or corporate control of any asset.

 

How to Hedge Against a Greece-Like Crisis

Some great ideas from Yossi Sheffi at MIT. I’ve been teaching about these since the 1990s, inspired by the classic book below, which has a wonderful chapter and case on the subject.

  Global Operations and Logistics by Dornier, Ernst, Fender, and Kouvelis.  Amazon Link

The concepts are similar to what Yossi is saying. You can hedge various ways:

  • financially with options, futures, and contracts— (derivatives; we are always quoting the Southwest Airlines jet fuel example of a few years ago, but this kind of hedging needs to be part of every company’s portfolio of skills);
  • operationally, by locating production in several areas and being able to scale it up or down according to where you have the best total return after expenses, including currency conversions for procurement and sales (drug companies are expert at this);
  • sustainably, by shifting away from or replacing inputs that are scarce or penalized by currency or political issues (eg. ‘conflict minerals’).

What would you do in the case of the Greek crisis of today, the crisis that isn’t a disaster yet?

How to Hedge Against a Greece-Like Crisis.

 

Recently the airlines have not been so successful hedging fuel prices with derivative contracts.  It’s gambling pure and simple, and markets for commodities are remarkably likely to shift without telling us.   So operational and sustainable hedges are more likely to yield guaranteed results. But they are costly, involving product or process re-engineering, or multiple facilities operating at less than full capacity in different enough locations to produce anti-correlation with other markets.

 

Panama Canal Expansion Redrawing the Logistics Map

Boston Consulting Group (BCG) has issued a report speculating on how ocean freight will move to ports in the US.  It is based on significant analysis, but is still speculation.  But those in the business should be aware of the possible consequences and be ready to take action.

bcg.perspectives – How the Panama Canal Expansion Is Redrawing the Logistics Map.

It’s a multi-part web page, and this is just the first page, so keep clicking to read the whole thing.  The report was jointly prepared with CH Robinson.