In this Supply Chain Matters blog commentary we share perspectives on the ongoing post Suez Canal disruption impacting multiple-industries, and how today’s Cloud based logistics and WMS technology capabilities can aide in mitigation. We include highlights of a conversation with an Oracle technology executive.
In multiple prior Supply Chain Matters blog commentaries published thus far in 2021, we have analyzed the different challenges related to the series of ongoing cascading disruptive factors that are impacting so many different industry demand and supply networks. We address our analysis and insight from both a business process and technology enablement perspective.
One disruption that remains a top-of-mind concern are the ongoing ripple effects of recent Suez Canal blockage by the massive container ship Ever Given that occurred in March. In a specific prior blog, The Post Suez Canal Scenario- Be Prepared for the Worst and Plan for the Best, we observed that the global-wide imbalance of ocean shipping containers that was already serious will now exacerbate with logjams of inland logistics adding to the fundamental problem. Even if ordered goods are complete and ready to ship from Asian or European nations, there may be considerable challenges in securing available containers to ship these goods until some balance is restored.
In this particular blog commentary, we explore the business process and decision-making challenges related to this situation and where today’s technology can aide in added visibility and risk mitigation.
Supply Chain Business Process and Technology Perspectives
To help in this perspective, we held an interactive discussion with Diego Pantoya-Navajas who serves as Vice President, WMS Cloud Development for Oracle. Diego was the former Founder, Chairman and CEO of Cloud WMS Start-up Logfire which Oracle acquired in 2016. Diego manifests a fresh perspective in a technology area that sometimes has traditional thinking.
The theme of our discussion was that the ongoing wave of Post-Suez events centered on global shipping and transportation will lead to more cascading demand and supply imbalances. That would include the ability of various major country specific ports to be able to process a tide of late arriving ships, and at the same time deal with the needs to move empty containers back on to vessels to travel back to where needed. Added port congestion leads to added disruption and delay for truck pick-ups and deliveries at ports, along with the ability of inter-modal rail networks to be able to move goods along in a timely manner.
In a recent webinar held, Weathering the Supply Chain Storm, sponsored by supply chain visibility technology provider project44, one of the panelists was Gene Seroka, Executive Director of the Port of Los Angeles, the busiest container port in North America. Seroka indicated that this year, the port is experiencing more inbound cargo ever experienced in the U.S. and at the same time, is preparing for an added surge from the post-Suez effect. While vessels at anchor awaiting port processing have reportedly been cut in half, the numbers remain in the 10-20 range.
Pre-pandemic, the LA port processed on average 10 vessels per day. In late April, that number has moved to 15 per day but there remain challenges to increase the rate further. In order to increase the thruput of the facility, Seroka indicated that the goal has to be the ability to turnaround 60,000 trucks per week, but that strains existing hours-of-service restrictions for available drivers. Inter-modal rail dwell times now stand at an average of 11 days, with plans to cut that by half over the coming weeks.
U.S. East Coast ports likely have similar or different challenges right now and they all point to the cascading disruptions that will continue to occur. Logistics and supply chain management teams will need to anticipate where added bottlenecks occur and what the specific customer and business process impacts will be.
Navajas initial observation regarding this ongoing global based disruption is that companies do not necessarily realize the risk that they have with the legacy software applications they might have installed. Today’s more Omni-channel online commerce business models demand a more rapid cycle of business where siloes of various business process data need to be overcome.
In his discussions with businesses, he noted that many are not measuring the right metrics, especially legacy KPI’s that tend to be more inside-out vs. outside-in focused. Questions as to what product sales or inventory is a risk as a result of Suez require a lot of added analysis and time, often manually collected with existing legacy WMS systems. Leveraging Oracle’s built-in artificial intelligence and machine learning capabilities (AI/ML), logistics teams can gain more timely visibility to anomalies that may be occurring, beyond what can be seen on the warehouse floor.
To demonstrate, Navajas shared a graph that depicted year-over-year container loads that have been recorded by Oracle’s Cloud based WMS applications over a four-year timeframe (2017-2020). The graph clearly visualizes double-digit increases in required new storage, exploding growth of container shipping as well as mixed load materials composition within such containers. Such data helps managers to determine options as to how capacity needs are to be likely planned, for instance temporary flex storage vs. the needs to modify or expand bottleneck facilities. Having such data provides warehouse managers with added intelligence to plan for flex or permanent changes in warehouse or fulfillment center labor needs. Other data that is available is the line-item contents of individual containers which can be matched to the most-timely in-transit information from container shipping lines. All of this integrated data becomes the basis of subsequent what-if scenario decision models. As an example, if a container is delayed an additional two weeks, how many specific customer orders will be impacted.
Indeed, the post pandemic new normal requires supply chain business process and technology enablement capabilities that can help companies to sense and respond to disruptions more quickly, determine specific impact areas, and proactively take measures to mitigate their impacts.
The post Suez Canal disruption provides yet another visible example of how quickly and how extensively such disruptions occur and cascade.
Technology has an important role to play in assisting in the response and mitigation.
© Copyright 2021, The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.