What Happens if the Ports Keep Closing? Desperate Need for Supply Chain Risk Mitigation

INSIGHT performs supply chain audits to uncover vulnerabilities and strategizes plans to mitigate supply chain risk

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Manassas, Va.Feb. 18, 2015INSIGHT, Inc., a provider of planning solutions that power supply chain design, is concerned what will happen to businesses around the country if the West Coast ports continue to close for multiple days each week due to the International Longshore and Warehouse Union (ILWU) strike. Many businesses aren’t prepared for the potential supply chain disruptions that can affect their bottom line if they have trouble getting raw materials or finished products through the ports. INSIGHT performs supply chain audits to uncover vulnerabilities and helps companies develop strategic plans that mitigate supply chain risks.

“Companies need to have strategic plans in place to mitigate supply chain risks caused by everything from natural disasters to socio-economic and political unrest that may cut off critical raw material suppliers, sources of manufactured goods, major transportation facilities, essential transportation modes and so on, resulting in major disruptions in supply chains,” said Dr. Jeff Karrenbauer, president and co-founder, INSIGHT, Inc.

According to the Institute for Supply Management (ISM), the West Coast ports handle 43.5 percent of containerized cargo in the U.S., which accounts for 12.5 percent of U.S. gross domestic product (GDP). Without an agreement between the Pacific Maritime Association (PMA) representing port management, and the ILWU, nearly 30 West Coast ports, which serve as the entry point of the bulk of Asia/Pac trade into and out of the U.S., could be shut down.

If this happens, said Kelly Kolb, vice president of the Retail Industry Leaders Association, “A shutdown would not only impact the hundreds of thousands of jobs working directly in America’s transportation supply chain, but the reality is the entire economy would be impacted as exports sit on docks and imports sit in the harbor waiting for manufacturers to build products and retailers to stock shelves. The slowdown is already making life difficult, but a shutdown could derail the economy completely. For retailers specifically, a shutdown will have dire consequences for those dependent on spring inventory demand.”

The last prolonged port shutdown of the West Coast ports was the 10-day lockout in 2002, which was estimated to cost the U.S. economy close to $1 billion a day. INSIGHT helps companies take a holistic look at their supply chain, including determining optimal network designs, identifying vulnerabilities, developing mitigating strategies, including alternative raw material and manufacturing sourcing plans, determining appropriate inventory policies and levels, and more to sustain companies affected by current events. INSIGHT also offers supply chain audit services to help companies uncover the vulnerabilities within their supply chains and then create plans to mitigate these risks.

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