SUPPLY CHAIN RISK MANAGEMENT BLOG

Last week at a glance

Jul 31, 2014    Rolf Zimmer

 


What a week! During the last 7 days a couple of announcements have been released which should not have been unnoticed by most of Supply Chain Managers as they could have an impact of Billions of Dollars. I thought I share with you the most relevant ones:

June 26, 2014 |Contract expiration of US West Coast dockworkers
Industry officials are warning of a potential significant disruption to the U.S. economy if dockworkers at 30 West Coast ports go on strike after their contract expires Monday. Currently negotiations between unions and the Pacific Maritime Association are expected to continue past the Monday deadline with little disruption to port operations.
But as the affected ports handle more than 44% of the container cargo that comes into and out of the U.S. nearly one in three shippers surveyed by Wolf Research the past week have sent their cargo early and built up additional inventory on fears of worker stoppages or slowdowns.
In case of a five-day strike the U.S. gross domestic production would be reduced by 1.9 Billion US$ per day, disrupt 73.000 jobs and cost the average household $81 in purchasing power.http://usat.ly/1qLLgUn

June 27, 2014 | El Nino expected for Q4 2014
UN’s World Meteorological Association has stated that the appearance probability of the most famous weather phenomena “El Nino” has increased up to 80% between October and December 2014. El Nino is known to cause extreme weather events like heavy rainfall in Peru, flooding on the whole American west coast and droughts in Australia and South Africa. In total ¾ of terrestrials are expected to be affected by El Nino. http://wapo.st/1qjaMkD 

June 26, 2014 |Strike announcement from South Africa’s 
largest union

Not even one week after a settlement was found to end the strike within South Africa’s platinum mines, South Africa’s largest union NUMSA has announced the next strike. NUMSA represents almost a quarter of a million mostly skilled workers within sectors from engineering to communication. In 2013 a four-week strike of more than 30.000 NUMSA members within the automotive sector cost the industry more than 2 Billion US$ in lost output. http://reut.rs/1iTSeVi  

June 30, 2014 |Catastrophic working conditions - leading sporting goods manufacturer didn’t know its supplier
The textile industry is known to have very complex supply chains. The working conditions at each and every sub supplier are mainly a black box. During the last weeks lots of public discussions have been initiated how transparency could be increased. The most recent example could not have a worse timing: After spending a tremendous amount of marketing budget during the World Soccer Championship, Puma had to admit yesterday that they did not know about the catastrophic working conditions of a sub-contractor and didn’t even know that this factory in El Salvador was producing for Puma at all.  http://bit.ly/1mjezMz (German)

July 1, 2014 | Fine of nearly 9 Billion US$ for sanction violation
Today the biggest French bank BNP Paribas has been fined for violations of US sanctions regarding countries like Cuba, Iran and Sudan. The fine has already been accepted by BNP Paribas to avoid even bigger impact. Before that settlement was found a couple of other finance institutes including ING and Clearstream – the handling unit of Deutsche Börse - have already been fined for three digits million penalties for the same cause. The appraisals against Deutsche Banks and Commerzbank are still in progress. http://reut.rs/1omPhf1
Additionally the former French president Nicolas Sarkozy has been brought to police custody for possible bribery.

It’s hard to imagine that not even one of these events will have an impact on each of us. And please consider that a lot more of these risk events  which happened in the last week and could affect our supply chain are not in the news and may stay unknown until the supply disruption appears! 

 According to one of the recent studies from Supply Chain Insights, LLC „Can you Afford the risk?“, in 2013, 80% of companies had a material disruption and only 18% of companies have visibility to second and third-tier suppliers. Supply chain visibility is a foundational element in a risk mitigation strategy  - so can you afford the risk to having no transparency in your supply chain?


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