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DG&A's Transportation Consulting Blog
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This has been a challenging month. Hurricane Harvey caused huge damage in southeast Texas and Hurricane Irma is expected to cause major damage to Florida and the east coast of the United States (as it did to several islands in the Caribbean). We should not forget the recent forest fires in British Columbia and California. Tornadoes, earthquakes, and ice storms seem to be occurring with much greater regularity and ferocity. These natural disasters have been very disruptive to the smooth flow of people, goods and services for many companies. They have also made life difficult for supply chain professionals.

Of course, disruptions to supply chains can come from factors other than weather or natural disasters. Quality control problems, piracy, export restrictions, and computer system hacking are just some of the factors that can come into play. To make matters worse, most of these disruptions are unpredictable in timing and scope. Each shipper has to make an assessment of the potential risks to their supply chains and make recovery plans.

According to Patthira Siriwan, senior project manager for supply chain development in North America for Damco, the combined logistics brand for A.P. Moller-Maersk, supply chain risks can be categorized into five groups: operational, social, natural, economy and political/legal. Damco defines supply chain risk management as “attempts to identify risks and quantify their commercial financial exposures as well as mitigate potential disruptions at each node and lane in the supply chain.” Supply chain risk models can vary from the rudimentary to the sophisticated. In the case of the latter, complex “what if” analyses can be performed. This allows the shipper and/or receiver to identify potential trouble spots and map out alternative supply chain strategies.

In an article in the Journal of Commerce, Siriwan indicated that shippers tend to focus on “factors with the biggest impact on their supply chain, such as on-time performance, supplier lead time variability and carriers by origin or trade lane.” Shippers need to perform some sort of probability analysis on the impacts of each potential disruption, with a particular focus on alternative vendors, carriers, origin points and ports and destination ports. Looking ahead to the balance of 2017, there are some major predictable (tropical storm Jose) and unpredictable risks that could drive up supply chain and transportation costs. The latter could include the impact on fuel costs as a result of unrest in Venezuela or war in the Middle East or war with North Korea.

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A Lesson from the Comey Firing

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The firing of FBI director James Comey by president Trump is the biggest story of the week. Most of the focus has been on the constantly changing rationale for the termination. The television networks have been filling the airwaves with a variety of reasons for the firing. The various spokespeople including the president, VP, and assistant communications director have stumbled badly in telling a coherent, consistent and honest story.

Director Comey has been accused of being a “showboat” and “grandstander,” that “the FBI was in turmoil,” and that he was not doing a good job. Of course, one of the major issues behind this firing was clearly that Mr. Comey was leading the investigation into the possible collusion between the Trump campaign and Russia.

The director was in the third year of a ten-year term. According to the acting FBI director, in his testimony to Congress on Thursday, Mr. McCabe stated that director Comey had been highly respected throughout the agency.

There is no question that director Comey was a controversial figure. The Hillary Clinton e-mail server situation was a huge problem to the Democrats in 2016, possibly shifting the election at the last minute in favor of Mr. Trump. Then Comey mentioned in a public briefing to Congress earlier this year that he was investigating the links between the Trump team and Russia. In other words, he was investigating his new boss. This is not a winning strategy for job security unless the incoming administration has nothing to hide.

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These are tough times. In a recent issue (February 22, 2016) of the Journal of Commerce, the headline was “Is the US in a Freight Recession?” If a freight recession is defined as two or more consecutive quarters of year/year declines in freight volumes, parts of the US and Canadian transportation economy are certainly there. While we aren’t back into the Great Recession of 2007-2008, there has been a pronounced slowdown in business activity. Trucking industry executives confide that business volumes have tapered off.

This is when leaders are put to the test. Here are some thoughts on how to lead an organization through tough times.

1. Be Visible and Communicative

Don’t hide in your office all day in closed door meetings.  This is sure to unnerve your employees. Be visible and try to maintain a “business as usual” demeanor. Employees pick up on every change in behavior by its leadership team.

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