October 24, 2014
The recent strike by Los Angeles and Long Beach port clerks, with about 800 office employees involved, shut down 10 of the 14 terminals. Nearly a third of all container-packed U.S. shipments are processed between the two ports, so this strike affected everyone from small product brands to Fortune 500s.
Orders can be delayed, or even if processed, may not be delivered to you and in turn, to your customers. While his happen a few times a year for different reasons (hurricanes, postal strikes, and even volcanic eruptions like the one in Iceland), it can still be very frustrating especially if you are running a tight supply chain. However, there are steps you can take to prevent this from completely stalling your business. We've gathered 5 great tips you can use to mitigate the negative impacts of a future strike.
1. Use multiple facilities.
This is advice we give time and time again, and in cases such as the aforementioned strike, using multiple facilities to ship your products can save you money, headaches, and maybe even your business. If you are able to receive and hold inventory in multiple locations around the world, you can also fulfill from multiple locations around the world. Fulfilling from a location that is farther away may cost more, but it's certainly better than not being able to ship your products at all.
2. Go around to avoid the strike.
If your inventory is about to depart and a strike occurs, you can see if it's possible to use air freight, or simply go to a different port. In the case of LA, you could go to Oakland, which remained open during the strike. Of course, the costs involved will be different, but one way to ensure this is a viable solution is to know the costs ahead of time. Knowing the costs of alternate freight will prepare you for the next time a strike or natural disaster occurs.
3. Find more sources/suppliers.
Being able to source your products from multiple suppliers can help especially if the strike is affecting your supplier's port. Determine where you can source similar products — it's always good to have backup manufacturers that you can rely on to meet your specification just in case.
4. Hold more inventory.
Lean supply chains are great… when they work like they should. The problem with a union strike or a natural disaster is that they're often unpredictable and unavoidable. The leanest supply chain in the world can't hold up to the impact of a natural disaster, so it makes sense to hold a bit more inventory than you would otherwise would so you have a buffer during supply shortages. Knowing how flexible your supply chain is, and where it could break, is very important.
5. Alter price to meet demand and capture more margin.
If your demand remains the same but your supply is lower, you're left with two choices: 1) sell the products as you would, run out of inventory, and then sell nothing, or 2) increase the sale price of the products to capture more margin. There are also ways of doing this without actually increasing your sale price, such as no longer offering free shipping. Then when you get your supply back, you can re-introduce lower prices and start selling normally again.
Implement at least a couple of these tips and next time a strike or natural event occurs you'll be well-prepared to continue selling your products and making your customers happy.