Problem-Solving Strategies for Supply Chain

Global trade is in a crunch, as a complex web of factors cause a container capacity crisis that’s shaking the very foundations of international commerce. The onset of peak shipping season, the need for longer transit times to circumvent the Red Sea, and adverse weather conditions in Asia have all conspired to disrupt trade on vital routes. This disruption has led to ocean carriers either skipping ports or reducing their port time, which subsequently impacts the collection of empty containers.    But businesses are not helpless in this situation. There are several strategies that can be adopted to alleviate the impact.     1. Enhance Supply Chain Visibility: By implementing advanced tracking systems like CARGOES.COM Flow offered by DP World Americas, businesses can receive real-time updates on container movements, aiding in the prediction and management of delays. 2. Diversify Supplier Base: Establishing relationships with multiple suppliers can decrease reliance on a single source and enhance the ability to source containers. 3. Optimize Inventory Management: The adoption of just-in-time inventory practices can reduce storage needs and the number of containers required. 4. Leverage Technology: Utilizing AI and machine learning can lead to more accurate demand forecasting, resulting in better container utilization. 5. Collaborate with Stakeholders: A close collaboration with shipping lines, ports, and regulators can result in more efficient container management and turnover. 6. Adjust Logistics Strategies: Considering alternative transportation methods or rerouting options can help bypass congested ports.    By proactively addressing these areas, businesses can better weather the storm of container shortages and ensure a smoother operation of their supply chains. This is not just a survival strategy, but an opportunity to innovate and thrive amidst adversity.    #GlobalTradeCrisis #SupplyChainManagement #LogisticsInnovation #ContainerShortages #DPWorldAmericas

Gross Margins Tanking Overnight. The CFO was focused. She led with systems thinking. Getting Clear on the Problem: A specialty manufacturer faced a 40% budget overrun driven by transportation and raw materials costs. The CFO set a goal to restore 10% gross margins in 6 months without compromising growth. Connecting the Dots: She brought ops, procurement, sales, and finance together to map production planning rhythms tied to stocking, orders, and distribution. Where were inflated expenses sneaking in? Zeroing In: While production materials and shipping were up across the board, steel, in particular, spiked 75%- nearly doubling estimated per unit costs. Why? Global supply chain chaos. But ops knew margin pain has further roots... The 5 Whys: If steel costs were expected to keep rising, why did they stick to fixed-price contracts? Ops feared volume losses if they adjusted pricing adaptively. Why were they concerned about a decrease in volume? Because sales commissions rewarded quantity over profitability or revenue. The Root Cause: Comp plans drove high-volume orders despite the cost. Inflexible fixed pricing left no buffer against materials inflation. The misalignment cascaded from executive suite to factory floor. Testing and Validating: The company simulated dynamic commission models rewarding margin goals. Early data showed sales still closing higher value contracts under the new model, validating operational changes wouldn't hurt business. Implementing Solution: Equipped with proof flexible pricing and profit-based commissions could control cost spikes amid growth, they realigned incentives enterprise-wide. Within one quarter, gross margins were back on track. Lessons Learned: Problem-solving helps identify root causes that may be unexpected based on surface symptoms. Rather than scrambling to implement short-term cost reductions in reaction to overages, this method empowers teams to dig deeper. It reveals underlying causes that can then be addressed for sustainable performance. Often, the most effective business solutions come from defining the right problem, not clever solutions. Learn to apply a proven system. Your competition will.

“What is the problem statement?” - Based on my experience the key to properly solving a problem is to truly understand what exactly the issue is. This could appear obvious, however, for some organizations it is very difficult to master. Using a customer quality concern as an example, by utilizing a systematic approach to problem solving the following are a few things to consider: 1. Ensure that all relevant information is available for the team to consider – this is extremely important   -  Engage your customer and if necessary the supplier in the initial phases of the investigation/data collection 2. Properly contain the issue: - Too often team members will overreact and begin taking what is believed to be an effective containment action to later discover that it was not which amplifies costs and customer dissatisfaction - It is however, very critical to work with speed during the initial phases to minimize exposure 3. Internally establish a cross functional team with a project leader. Problem solving can’t be left up to one department or person  4. Go to the “Gemba” where the work is done. Problems can’t always be solved or attempted to be solved in a conference room 5. With the right data, people, process (e.g. 8D) and facilitation of meetings the permanent corrective actions will follow. Trust the process but be relentless through it 6. Follow up, follow up, follow up – changes made from the corrective action should be inspected multiple times until confidence is established through a sustained duration Finally, this does not pertain to only customer, supplier or manufacturing process issues. TRY IT – the next time you are having an internal meeting to discuss a “problem” of any type be a demanding partner and ask “What problem are we trying to solve?” – it’s amazing the difference of opinions that will surface and align everyone to a common goal. As always thanks for the comments and IM’s to my posts and feel free to reach out. Darren