Preparing for a Port Strike

Dr. Sanjaya Mayadunne, associate professor of decision sciences and management information systems at Georgia Gwinnett College (GGC), said even though the port strike only lasted 48 hours, it does offer good news for suppliers and consumers.

"At this point, consumers need to stay calm," he said. "Supply chain managers are smart and have options to minimize disruptions."

Supply chain management has two goals: efficiency and responsiveness. Efficiency is how effectively companies can minimize costs across the supply chain. Responsiveness is how well a company can deliver products to its customers at the right time and place. What has been lacking, he said, is resiliency, which relates to how quickly a company can adapt to external conditions, from market conditions to, in this case, a port strike.

"The pandemic taught us a lot of things about how supply chain management is susceptible to external effects," said Mayadunne. "Since the pandemic, companies have taken steps to improve resiliency through diversification, carrying more inventory and improved forecasting.

Mayadunne said the port strike demonstrated the depth of the impact it could have. Now that dock workers are back on the job under a temporary agreement, there is some light.

"The good news is that the new date for the dock worker's contract doesn't expire until January 15, unless they come to an agreement for a new contract before that," he said.

What that means, Mayadunne said, is that traditionally January through early March is the slowest time of the year when it comes to retail sales.

"When there's less product to move, it frees up capacity," he said. "When it comes to supply chain management, you need two things to keep things running smoothly: time and capacity. We now have both."

With that time, supply chain managers can plan for a potential disruption if a new contract is not signed by January 15. Mayadunne said that there are three things that can be done to help lessen the impacts of a supply disruption.

"First, in the short term, you look at what you need to supply and either source or produce that product within the U.S.," he said. "That means a significant investment in processing and manufacturing, which of course, takes time."

Another option is to utilize the two ports that would remain open and functioning in Los Angeles and Long Beach, California. The challenge with that, he said, is that it will have limits, add time and cost.

"For example, if you're shipping items from Europe to the U.S. and the California ports are your only option, then the container ships have to travel through the Panama Canal to the west coast," he said. "That will add 10-14 days to get there, and then cascade from there for each trip because it takes longer to return and then bring more items."

Additionally, he said, to get products to and from the southeast U.S., railway and freight would be the options.

"Again, that adds time and expense," he said.

The third option is for suppliers to build up their inventory.

"They know there could be a disruption, so they now have the time and increased capacity that they can build up their inventory," said Mayadunne. "Because perishables like fruits and vegetables have a limited shelf life, those would be among the first shortages consumers would see. Non-perishable items would have greater flexibility for longer storage times."

Dr. Sanjaya Mayadunne received his Ph.D. in information systems and operations management from the University of North Carolina - Charlotte. At GGC, Mayadunne teaches courses in supply chain management and management science. His classes focus on various optimization tools and techniques. An emphasis is placed on the application of these techniques to solve problems in business operations and logistics.

His research interests include transportation networks, warehouse optimization and spatial competition in the retail industry. His research has recently been published in the International Journal of Production Economics (IJPE) and Supply Chain Analytics and has been presented at national conferences such as INFORMS and the ICIS Workshop on E-Business. He has served as a reviewer for IJPE.

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