Mhlnews 1583 Dave Blanchard

Supply Chain Managers: It Really Is All About You

Jan. 17, 2012
In 2012, the Year of the Supply Chain, you’re going to need more than just good luck to survive in the chaotic global marketplace.

As we begin a new year, the pressure to not only know every single thing happening within your supply chain but to also be able to proactively manage it all will be greater than ever. 2011 ended up being one of the most challenging years ever for material handling and logistics professionals, and there’s every reason to believe things won’t get any easier in 2012. Check out the following examples:

ITEM: For those who thought 2011 was a disaster, now there are statistics to prove you were right. According to Swiss Re Group, a provider of insurance and reinsurance, natural catastrophes and man-made disasters caused $350 billion in damages, the highest such losses in history. From the earthquake in New Zealand to the tsunami/earthquake/nuclear meltdown in Japan to the flooding in Thailand to the volcano eruption in Iceland to the tornados and hurricanes in the United States, 2011 was epic in its ability to wreak havoc with global supply chains.

ITEM: The parents of a two-year-old boy are suing drugmaker Johnson & Johnson, saying that their son was killed due to defective Children’s Tylenol, one of many products that J&J has recalled over the past few years. The lawsuit goes beyond the pharmaceutical company to also include three J&J subsidiaries as well as the retailers and distributors who handled the product.

ITEM: The California Transparency in Supply Chains Act was enacted on New Year’s Day, and it directly targets medium and large manufacturers and retailers with sales over $100 million that do business in the state. These companies must now publicly disclose what they’ve done to ensure their global supply chains do not in any way support or enable slave labor or human trafficking. Among other things, companies must now comply with various audits of their vendors and suppliers, and publicize their efforts on their websites.

ITEM: The U.S. Postal Service plans to downgrade the concept of “first-class” by eliminating next-day delivery of first-class mail. About 40% of all first-class mail currently is delivered the next day. This shift to second-day delivery, which the USPS says is necessary to stave off bankruptcy, could end up costing a typical large company as much as $100 million per year, in days sales outstanding, since it’ll take longer to collect from their customers, according to estimates from REL Consulting.

ITEM: Almost before the digital ink went dry on the press release announcing new Hours of Service regulations, groups dissatisfied with the new rules strongly hinted they plan to appeal the decision by the Federal Motor Carrier Safety Administration. Shipper organizations claim the shortened work week (from 82 down to 70) will penalize businesses via lost productivity and heightened costs. Safety advocates say that leaving intact the 11-hours-per-day limit (instead of 10) for truck drivers will make the roads more deadly for everybody on the highways.

ITEM: The Arab Spring continues to roil the Mideast and Persian Gulf region, with the latest powderkeg situation centering on the possibility of Iran closing the Strait of Hormuz. According to economic projections from MAPI, an Iranian blockade could push U.S. and Eurozone economies into recession, and we could see gasoline prices as high as $5 per gallon.

Feeling optimistic yet? 2012 is the Year of the Dragon, according to the Chinese; the Year of Grace, according to the Catholic Church; and the End of Days, according to the Mayans. I would submit that 2012 will also be the Year of the Supply Chain, as the success or failure of companies near and far, large and small, will rest squarely on the shoulders of those tasked to manage their global supply chains.

Those of us in the United States have a significant opportunity in November to let our legislators know what we think about them, but you have an even bigger opportunity right now to affect real change in the operations you manage. As too many people learned in 2011, if the supply chain falls apart, everything else does, too.

Follow me on Twitter @supplychaindave.

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