Friday, September 2, 2016

Supply Chain Disruption

To the heart and mind 
Ignorance is kind
There's no comfort in the truth 
Pain is all you'll find

Two good examples of supply chain disruption in the news this week. One is the fire at Gap's distribution center (DC) in New York. The DC represents about 10% of the company's nationwide warehouse capacity that supplies Gap and Banana Republic merchandise to online and store customers primarily in the northeast. Disruption from the fire creates a bottleneck for replenishing store inventories and filling online business during the back-to-school and upcoming holiday seasons. It appears that Gap supply chain managers are looking at company DCs in Tennessee and Ohio to pick up the slack.

The other example involves Korean shipping giant Hanjin which filed for bankruptcy protection on Wednesday. Hanjin, a major shipping container carrier, stopped taking new cargo and US ports have begun turning away Hanjin ships. It is estimated that nearly 500,000 containers full of goods could be stuck in the mud while supply chains sort this disruption out. Moreover, many expect shipping rates to go up as Hanjin's capacity leaves the market.

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