Global Supply Chain Performance Erosion

This is an excerpt of the original article. It was written for the November 2013 edition of Supply Chain Management Review. The full article is available to current subscribers.

November 2013

Sales & Operations Planning is both a science and an art. Like any science, it relies on principles, rules, methodology, and specific measurable outcomes. But an S&OP implementation also calls for creative, incremental thoughts to address challenges.

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Shoreline erosion does not happen overnight. The changes creep up little by little over time. They may not be apparent until you look back and realize that this year’s shoreline is different from last year’s shoreline.

A gradual erosion of performance has also occurred in global supply chains, especially in those that rely on ocean carriers to deliver the goods. We describe it as erosion creep because, like the shoreline, there is not one big, obvious change that hits a shipper between the eyes. Instead, a variety of events, such as longer shipping windows, unpredictable shipping schedules, bigger ships that can be handled in fewer ports, and new regulations, have gradually led to inconsistent and less reliable service levels.

These actions affect importers, exporters, and their supply chains. Retailers that miss a shipping window may end up with extra costs and lower margins to carry unsold inventory. Multi-national companies with global facilities and suppliers in multiple trade lanes feel the effects even more as they synchronize the flow of goods that feed production facilities, distribution pipelines, and customer distribution centers.

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