Enabling Supply Chain Flexibility: Two Important (But Often Overlooked) Factors

The El Niño weather pattern, which the National Oceanic and Atmospheric Administration (NOAA) predicts will be among the strongest on record, is already causing flooding and mudslides in California. And last month, we witnessed the havoc that winter storm Jonas unleashed along the east coast, dumping more than two feet of snow in Washington, DC, New York City, and other major cities, leading to thousands of flight cancellations and gridlock on the roads.

El Niño and Jonas are the latest reminders that weather and other natural events, such as earthquakes, can lead to supply chain disruptions. The same is true for labor strikes, terrorist attacks, quality issues, and other non-natural events. In light of these risks, developing a flexible supply chain is the best strategy for success, but what does that mean exactly and how can companies get there?

That was the central question Matt Castle, Director of Air Freight Services at C.H. Robinson, and I addressed in a recent episode of Talking Logistics. As you might expect, we both agreed that having timely and accurate end-to-end supply chain visibility was a critical factor in enabling flexibility. But Matt raised an important dimension of supply chain visibility that I hadn’t thought about before, and that I’m sure many shippers also overlook.

“It’s really important that you understand the geographical structure of your carrier networks,” he said. “How many times have you showed up at the airport and it’s a beautiful, sunny day only to find out that your flight has been cancelled or delayed? It’s because that airline’s hub is at a location that got hit with a thunderstorm that shut the hub airport down.”

The same thing can happen from a freight forwarding perspective:

If you’re shipping from Poland, you might not be thinking about what’s happening in Amsterdam, but if you’re using KLM as a carrier [which has a major hub in Amsterdam] and the airport in Amsterdam shuts down, your shipment from Poland could get delayed or cancelled.

So I encourage shippers not only to focus on the specific locations where they [manufacture, source, or ship products from], but also understand the broader geographical structure of their carrier networks and hubs [because they can impact your logistics operations].

Later in the conversation, Matt brought up another important factor in enabling supply chain flexibility, something that many shippers neglect to do:

Make sure you build appropriate relationships across all modes. If you’re predominantly an ocean shipper, for example, make sure you [also develop relationships with] airfreight providers…make sure you keep your pricing up to date, make sure you understand the routing and transit times involved if you were to use different modes and carriers.

If you’re looking at alternative ocean ports, such as Seattle, make sure you understand what carriers visit that port, and maybe take it a step further and file your rates for Seattle with the FMC [Federal Maritime Commission] so that if you need to make a shift very quickly, you’re not going to lose time taking extra steps that could have been done ahead of time.

Developing relationships with carriers across multiple modes, along with providing a platform for enhanced visibility, are some of the ways logistics service providers can help companies develop more flexible supply chains, as Matt discusses in this short clip:

I encourage you to watch the rest of my conversation with Matt for additional insights and advice on this topic. Then post a question or comment and share your perspective on what it takes to develop a flexible supply chain and why it matters.