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Is Your Supply Chain Prepared?

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Today’s supply chains seem to be full of challenges. From issues overseas with worker safety at factories to those impacting operations at U.S. ports to the ever-changing regulatory environment, retailers’ supply chains need to be prepared for whatever challenge they face. This can only be accomplished by working in true partnership with everyone in your supply chain — and it’s a partnership that can turn those challenges into opportunities.

We have seen numerous issues arise impacting the workforce with key trading partners. Most significant have been workplace safety issues in Bangladesh. After the Rana Plaza factory collapse in 2013, retailers and brands recognized the need to make changes when it came to social compliance programs and factory safety. North American retailers and brands came together to form the Alliance for Bangladesh Worker Safety, focused on improving worker safety at the factories used by Alliance members.

This includes unprecedented collaboration among Alliance members focusing on transparency to ensure that factories are safe and that workers and management are properly trained in fire and building safety. This is a shared responsibility among not only brands and retailers, but also labor, government and non-government organizations. This challenge cannot be left to retailers and brands alone to handle. The Bangladesh government must finalize its new government and new labor laws to support these initiatives. We continue to see labor issues arise in other countries as well, most recently in Cambodia.

In addition to overseas issues, there have been many challenges in the first few months of this year in ensuring that retailers’ cargo is processed in a timely manner at U.S. ports. The extreme weather in early 2014 resulted in numerous closures at Northeast ports, and every time a port closes, backups and delays occur. The ports have also seen lack of labor and equipment, especially chassis needed to carry intermodal containers. Retailers have experienced significant delays as a result, and are seeing similar equipment-related issues at other ports. The weather also impacted rail shipments through the Midwest.

The port issues will continue to be a problem as trade volumes rise. In addition, retailers and other shippers could be challenged with upcoming labor negotiations covering longshoremen at all West Coast ports. The current contract expires on June 30, and management won’t begin negotiations until mid-May. Retailers and other shippers are already working on contingency plans to ensure their cargo won’t be impacted by potential work disruptions. Retailers do not want to be stuck as they were during the 10-day lockout that impacted all West Coast ports in 2002.

The ever-changing U.S. regulatory environment has had an impact beyond the supply chain. While implementation of the Affordable Care Act is touching companies of all sizes, the new drivers’ Hours of Service regulation continues to impact the delivery of goods to retail stores. The changes to the “restart” provision requiring consecutive nights off did not take into account nighttime driving, which reduces congestion by taking trucks off the road during the day. Retailers have been forced to work with their providers to make these mandated changes.

As the challenges continue, retailers must work with their supply chain partners to find creative solutions and ensure their supply chain is prepared and primed for the future.