Ship Stuck in Suez Canal – Rethink Supply Crisis Management

Along with the global trade, the companies have begun to focus on access to emerging markets and strategies for potential customers by concentrating on supply chain management. The companies attach importance to technology and agility, which play an important role in the supply chain management in order to create the most accurate solutions to the market and customer needs and also to keep their costs in balance.

The mammoth cargo ship blocking the Suez Canal was wrenched from the shoreline and finally set free on Monday, raising hopes that one of the world’s most vital maritime routes would quickly rebound and limit the fallout of a disruption that had paralyzed billions of dollars in global trade. It was a turning point in one of the largest and most intense salvage operations in modern history, with the smooth functioning of the global trading system hanging in the balance.

The problems in the delivery periods, sudden changes in the supply and demand and variations in the product life cycles have led companies to adapt and keep up with these determinants in order to meet the developing, changing and increasing customer demands in the current world with the accurate solutions within a short time. The blockage of the Suez Canal by a grounded container vessel threatens to deepen a supply chain crisis that has left global companies, port operators and shipping lines battling soaring costs and product shortages for more than a year.

The supply chain is a chain that not only consists of manufacturers and suppliers but also consists of providers of warehousing service, retailers, forwarders, customers and other partners involved in the all entire system in order to meet customer demands directly and indirectly.

Along with the globalization, the companies have attached importance to the supply chains and increased their investments in this area in order to respond quickly to the customer demands and shorten product presentation time in the global markets where competition rises to the top.

However, this incident had forced companies to rethink their supply chains. "Even when the canal gets reopened, the ripple effects on global capacity and equipment are significant and the blockage has already triggered a series of further disruptions and backlogs in global shipping that could take weeks, possibly months, to unravel," Maersk.

Many companies are depended on "agile" supply chains, whereby items were transported to factories only as they were needed for manufacturing. Now, it is inevitable them to hold more material to avoid shortages when disruptions occur. Safety stock or buffers needs to be redesign for Just-in-Case scenario as well. Cost saving would be drained in these situations and directly impacted the profitability and customer service.

Supply Chain must redesign their strategies for single source to multiple source or reduce dependence on single suppliers. Lastly, it is advisable that companies must develop Crisis Plans for their critical supplies and take “Blocked Suez Canal” as an example.

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