Progressive companies are now talking active steps to understand and manage these enormous hidden costs
GLOBAL RESEARCH FINDS FIVE CRITICAL PROBLEMS LEADING TO ENORMOUS HIDDEN COSTS COMPANIES FACE IN THEIR SHIPPING MANAGEMENT
Following are the abridged findings from a recent global research:
- Accepting archaic language, out-of-date contractual practices and opaque market structures that deliberately create information asymmetry
You cannot manage what you do not understand. Days when shipping world was truly far apart from landlubbers’ world are long gone. Now the shipping industry and its facilitators rely on language two centuries old, contractual practices even older, and opaque market structures that create a mystique and impression of unintelligibility. All these efforts to create a deliberate information asymmetry lead many corporations astray in their quest to plan and control their shipping adequately.
- Insufficient and non-quantified understanding of the full impact of a lack of planning in shipping on the upstream and downstream supply chain
The key reason why many corporations do not make an attempt to get past the unintelligible language, out-of-date contractual practices or opaque market structuresis because they uner-estimate the full impact of the consequences of lack of integration of shipping into their supply chains. Very few people quantify the full impact in dollar terms. As a result millions of dollars are wastedfrom lack of co-ordination, waiting ships, trucks and personnel, expedited movements, extra shifts etc.
- Transactional mind-set to manage a strategic element of the supply chain
There is no doubt that shipping is core to supply chain strategy of any company – it is highly expensive, has tremendous flow-on impact on the costs and service levels, creates immense competitive advantage if managed properly and frequently results in operational deficiencies due to mis-management. Surprisingly, most companies still manage it on a transactional basis, missing huge opportunity.
- Over-reliance on external parties
Due to the difficulty of understanding the archaic language, unfamiliarity with contractual practices, information asymmetry, and due to the high work load created by transactional mind-set companies must rely on external market intermediaries and operators to provide crucial planning and control services related to their shipping operations. Not surprisingly these third parties are unable to do this in your best interest – they lack information, expertise, motivation and willingness that would enable them to do so.
- Ceding control of operation to the shipping company or other market movers
Complexity, high work-load, remote work locations, 24 X 7 work hours, myriad of work equipement and work practices, opaque chartering terminology, information asymmetry, unwillingness to show their ignorance – all combine to make managers cede operational control of their shipping operations partly to the shipping company, or other market movers – mostly to the detriment of their own organisation.
Shipping Supply Chain Integration Programme
To help you make sure that your Shipping Management is not foundered by any of the five critical problems, Global Supply Chain Group has created a unique service that combines the best of supply chain planning with the best of the shipping management. From the team that includes the original creators of supply chain management discipline, this is the epitome of professional supply chain planning and control as applied across the functional area of shipping.
These packages can save your company:
- Millions of dollars of supply chain and shipping costs.
- Thousands of man-hours of Shipping and Supply Chain Planning time.
- From high inventories, stock-outs, lost sales, acrimonioous shipper or consignee relationships, expediting, cost blow-outs and nasty surprises.
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