Business leaders need to keep a pulse on current events

Manufacturing and Supply Chain Consultant Lisa Anderson, MBA, CSCP, CLTD, known as the Strongest Link in Your Supply Chain and President of LMA Consulting Group Inc.,  emphasizes the critical importance for owners and business leaders to understand how current events can significantly impact their supply chains. LMA Consulting Group works with manufacturers and distributors on strategy and end-to-end supply chain transformation to maximize the customer experience and enable profitable, scalable, dramatic business growth.

As the Panama Canal grapples with drought conditions causing serious delays in goods transportation, the ripple effect is being felt worldwide. “The Panama Canal’s crisis underscores just how vulnerable global supply chains are to current events,” Anderson comments. “With a 40% market share in containers moving goods from Northeast Asia to the U.S. East Coast, these disruptions reverberate worldwide.”
Due to inadequate rainfall, the Panama Canal authorities have reduced daily container ship passage by 20%, from 40 to 32 ships. The maximum allowable ship draft has also been restricted to 44ft, compared to around 50ft before the drought conditions. This situation has led to a backlog of 130-160 ships, creating substantial supply chain delays. An alternate route would add 8,000 miles to the journey.

While many companies have diversified their supply chain strategies in light of the pandemic, switching from just-in-time (JIT) to just-in-case inventory models, this latest disruption has far-reaching consequences. Costs are surging with $300 - $500 per container becoming increasingly common.

“The shift from JIT to just-in-case inventory has buffered the impact to some extent, but we’re still facing an escalating issue that is driving up costs. A comprehensive understanding of the factors impacting the supply chain can equip companies to respond more effectively to disruptions, minimizing risks and costs. As the Panama Canal issue shows, a lack of awareness is not an option. In today’s connected world, staying informed is not just good practice – it’s a business necessity,” Anderson concluded.

Learn more from Anderson when you register for the free webinar, taking place Dec. 6, 2023 at 12PM ET.