Heard & overheard: Supply chain fixes for congested ports

Consider some of the following supply chain strategies, suggests Al Delattre, a partner with consulting firm Accenture (www.accenture.com):

Ship more in less space. Hewlett-Packard was thinking inside-the-box when it set out to bring more products to the U.S. By making its shipping containers smaller, it increased cube and consequently capacity.

Be specific with suppliers. Apparel manufacturer Zara keeps close tabs on sales. By size and color, it knows exactly what products its retailers need — and are likely to sell — each week.

Be less emotional with forecasts. In some cases, if a company thinks it can sell 10,000 products, it should import 9,000 products to avoid costly returns. Returns cost computer manufacturer e-Machines $200 per product — more than the company makes on each unit ($150). Companies should look at the economics of being out of stock infrequently vs having too much product frequently.

Rethink your sourcing strategy. Some companies may have gone too far in outsourcing logistics management. For example, Sony's Playstation 2 debuted less spectacularly than Microsoft's Xbox a couple years ago. Figuring prominently in the 1:5 sales ratio were unreliable third-party logistics (3PL) and freight forwarding firms. Without Playstation 2 on store shelves, potentially loyal Sony buyers switched to the Xbox.

Pay extra (occasionally). In today's seller's market for maritime container traffic, the high cost and availability of containers and container ships may require periodic diversion to alternative forms of transportation, such as FedEx or UPS. For occasional higher priced and time-critical items, such as fashion items and key industrial parts, availability rules.

Be more strategic about pricing. Retailers that keep close tabs on what sells and why it sells (fashion, price, color, etc.) are empowered to adjust prices — even raise them — in response to supply issues. Manufacturers could do the same thing, provided that such moves have been pre-specified in contracts or sale agreements.

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