The Suez Canal Block is the latest reminder of why companies need emergency plans

These are difficult times for supply chains and the business leaders who rely on them. Brexit. The epidemic. Density at main ports. A 1,300-foot-long carrier is now preventing hundreds of other vessels from using one of the world’s most important waterways.

If corporate officers need to be reminded of the importance of preparing or updating their emergency management plans in these uncertain times, the headlines about the serial vessel should suffice. to make their plans a top priority – whether they rely on supply chains or not.

Company officials who do not know today how to deal with a crisis tomorrow could make a bad situation worse and more difficult to deal with and overcome.

Sensitive situation

Chris Nicolson is CEO of Pathmind, a company that uses AI to help companies maximize supply chains. He noticed that the global supply chain is built “…” on the surface of ice shavings and toothbrushes. Weak points are everywhere. Suez is not the only one.

“Many companies outsource various parts of their supply chain to others, making them vulnerable consumers to the mistakes of others. They have no ability to answer. They don’t know what their other options are. ”

He said, “Manufacturers are cheap on different continents, but you pay the price in the complexity of your supply chain. It’s a hidden price until Suez happens[ed], and then it is no longer hidden. ”

Nicolson was predicting a canal blockage at the moment, “…. and other events are going to push companies to look at more alternatives such as going ahead and close- sales, which coincides with Biden’s policies to restore the U.S. supply chain in North America. ”

Sudden effect

Lukas Kinigadner is the CEO and co-founder of Anyline, a mobile data company. “Our supply chains are the articles of business, and with same-day delivery and a‘ just in time ’schedule, even a small obstacle can cause headaches and turmoil down the line,” he said.

The delay caused by the blockade of the Suez Canal, ”… is already on the rise, with oil prices already jumping, as car and computer manufacturers have warned of a shortage of more months of computer chips, ”Kinigadner said.

Paul Hong is a distinguished University Professor in global supply chain management and Asian studies at the University of Toledo College of Business and Innovation. “The Suez Canal is the gateway for the movement of goods between Europe and Asia – every year, more than 1.2 billion tonnes of cargo represent 12% of global trade. Even a temporary ban is likely to have a major impact on many sides, ”he said.

“Any delay of thousands of other major carriers will slow down [the] circulation of consumer goods. In principle, unnecessary waiting time means waste in the system.

‘The serial vessels in the Suez Canal not only slow down the entire supply chain process but also increase inefficiencies in the system. For example, many vessels cannot be turned around to carry goods waiting to be loaded and delivered. This will disrupt factory production records, ”he said.

You have options

David Paulson is global vice president of Avnet, an information technology and services company. He said, “… the visibility of all ends of your supply chain can help ensure transparency and flexibility in the event of unforeseen disruption. This – in addition to the lessons learned recently about increased demand for production, transport delays and plane shortages from the early days of the pandemic – will benefit all sailors at a time like this. ”

Make the right decisions

Brett Rose is a national sales expert and founder and CEO of United National Consumer Suppliers, an international wholesale distribution company. He said, “The Suez Canal case is just another example of how industry is not a round hole in a round hole.

“Flexibility is key to success. Leadership must rely on their team to solve the problem and find a way to get the round hole in the square peg. I have found that many organizations have more experience within walls than leadership sometimes understands. It is essential to use a team to strategize when real-time issues like this arise that require quick thinking and a quick solution. ”

Pierre Subeh is an industry expert and chief operating officer at marketing technology company X Network. He said, “Oftentimes, supply chains are planned according to demand, and financial regulators are advising what is needed to buy until the next planned shipments of goods.

“[But] a lack of investment can bring downhill for any industry, and few can survive a recession. With no investment, customers have the opportunity to reach out to competitors. Investment decisions should not be the sole responsibility of financial regulators, they are important decisions that action leaders should take more importantly, ”he said.

Ongoing impact

Ripples

Paulson of Avnet said a long ban on the canal could lead to a temporary shortage of finished products across Europe. “For the US supply chain, the long-term impact will increase the shortage of carrier vessels as these vessels will remain stuck on vessels much longer than expected.

“The fact that shipping vessels are already scarce due to the spike in demand for seafood and the more complex logistics associated with this method of shipping, makes matters worse. In addition, some of the vessels will start converting seafood to air freight as a result of the situation, which will put a strain on the already limited capacity of airmen and potentially increase costs to accommodate space, ”Said Paulson.

Snowballs and avalanches

David Macknin is the principal of ChicagoRisk risk assessment and management company. He warned that the impact of a snowball could turn into an avalanche if the Suez Canal crisis is not resolved quickly. “The snowball is coming on now, as most days pass by with the boat (and others are blocked because of it). [This] a single event will damage the long-term design of manufacturers and the short-term results of companies ’business activity, regardless of size or industry.

“Supply chains will be limited, and anyone who expects to pay will be waiting because the goods do not exist. If a company introduces or exports, you can expect an impact on margins and bottom lines. ”

Macknin asked, “Can the snowball turn into an avalanche? If a company does not have some form of trade credit insurance to protect their accounts, losses could easily result from companies going bankrupt or incurring payments. Trade credit insurance can reduce political risk due to issues such as money problems, political unrest, tariffs (and yes, a boat blocking a canal). ”