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ASCM Insights

Coping with Relentless Supply Chain Ordeals

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On Tuesday evening, a 200,000-ton tanker ran aground in the Suez Canal, and it is expected to block traffic through the weekend. One of the world’s most important waterways, 12% of global trade passes through the canal, which connects the Mediterranean Sea to the Red Sea through the Isthmus of Suez. By Wednesday afternoon, more than 100 ships were stuck waiting to transit the 120-mile channel. Eventually, they were diverted to an older conduit, but the damage had been done. 

According to The Wall Street Journal, about 30 container ships cross the canal every week, moving 380,000 containers. The expectation is that the current obstruction will cause the delay of 110,000 containers and significantly increase the risk of subsequent congestion at European ports.

The disruption comes at an already harrowing time for supply chain organizations. “Even if the blockage is cleared quickly, shipping executives expect the fallout from the incident to last for days, threatening a new pressure point in a global supply chain already under intense strain,” write Costas Paris and Jared Malsin for The Journal.

The entire shipping industry is extremely tight on capacity, with substantial port congestion globally. Additionally, experts believe this week’s additional delays will once again raise container rental prices, which have surged from $200 to $2,000 per container in the space of just three months.

Another recent Journal piece — provocatively titled “Everywhere You Look, the Global Supply Chain Is a Mess” — notes that lengthy backlogs have waned, but there are still numerous container ships lingering off coastlines. “The disruptions underscore how several forces are coming together to squeeze the world’s supply chains, from the pandemic-driven rise in consumer demand for tech goods to a backlog of imports at clogged California ports to U.S. factory outages caused by weather woes,” the article states. “They are creating cost increases and delays for numerous industries … affecting profit margins and the prices that companies and consumers ultimately pay for many goods.”

Is your supply chain ready for anything?

As economies around the world creep toward normalcy, it’s clear that our supply chains continue to be shakingly vulnerable. To ensure future success, our global community must arm itself against disruption of all kinds. There are countless lessons to be learned from our peers, which is why ASCM has sponsored the development of an exciting new tool with The Economist Intelligence Unit. The Resilient Supply Chain Benchmark assesses both the prevalence of modern supply chain resilience-building capabilities and how resilient companies have performed over time.

The tool reveals the performance of 308 publicly listed companies in three sectors — consumer electronics, pharmaceuticals and retail — across two equally important domains: operational supply chain resilience and strategic supply chain resilience. The findings show that more than half of companies lack end-to end visibility into their own supply chain. Plus, the majority of respondents say their view is based on internal data or relies on siloed or outdated datasets. This limits their ability to detect emerging threats or calculate how a disruption will unfold across supply chains and business units. On the other hand, high performers build an outside-in picture with systems that provide real-time data, as well as by integrating supply chain partners into the forecasting and demand planning processes.

There’s much more to discover from this unique tool. I encourage you to download the benchmark today. It’s an invaluable step toward gaining some much-needed control over the rising frequency and intensity of supply chain risks.

About the Author

Abe Eshkenazi, CSCP, CPA, CAE CEO, ASCM

Abe Eshkenazi is chief executive officer at ASCM, the largest nonprofit association for supply chain and the global leader in supply chain organizational transformation and innovation. Prior to this, he was the managing director for the Operations Consulting Group of American Express Tax and Business Services. His leadership roles have included project management, business process redesign, and individual and organizational alignment. Eshkenazi may be contacted through editorial@ascm.org.

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