By APICS CEO Abe Eshkenazi, CSCP, CPA, CAE | 0 | 0 | June 01, 2012
In Canada, many goods are sitting idle, instead of making their way to manufacturers and retailers because of a Canadian Pacific Railway (CP) strike. On May 23, 4,800 locomotive engineers, conductors, and rail controllers walked off the job because of the company’s proposed pension cuts. Today the workers reported back.
While CP says rail service will be back to normal in 48 hours, it could take weeks for the backup of materials to get where they need to go, according to CBC news
Earlier this week, CBC
quoted Barry Prentice, a business professor at the University of Manitoba. “Today ‘everything is moving in containers’ that are often sent at least partway by rail. As a result, the effect of the strike is ‘much more widespread than would have been the case in the past across the economy.’”
During the strike, Lisa Raitt, Canada’s labor minister, estimated that it would cost the country $540 million per week. Prentice adds that the costs are “snowballing as supply chains for everything from agricultural goods to car parts are disrupted.” CP is responsible for almost half of Canada’s rail activity.
Because of the quantity of goods they ship, mining and forestry are the industries most affected by the strike. However, auto parts manufacturers also are feeling strained. According to a Reuters
article, Honda, which has a manufacturing facility in Toronto, had to decrease overtime work and adjust production to accommodate an increase in finished inventory.
Working without rail?
Containerization creates an efficient way to move goods across the supply chain. Consider the following container definitions from the APICS Dictionary
, 13th edition: Containerization is “a shipment method in which commodities are placed in containers, and after initial loading, the commodities per se are not rehandled in shipment until they are unloaded at the destination.” Container on a flatcar is “a specialized form of containerization in which rail, motor, and sea transport coordinate.”
The loss of rail in the containerization equation, even temporarily, creates a number of issues for supply chain and operations management professionals. First, delays will be created throughout the supply chain. For example, shipments wait at their origins for rail to become fully functional, ships linger in ports for their goods to be loaded and transported abroad, and trucking carriers and routes become overloaded as they attempt to pick up the slack left by the rail outage. Obviously, these delays and changes add expense. And, unfortunately, this problem reaches beyond Canada to upset supply chains all over the world.
As they become increasingly global, supply chains must be resilient to function effectively. Logistics is an integral part of your work, and we at APICS are excited to offer you a new resource. Due to be released in July, APICS Principles of Distribution and Logistics is part of the all-new APICS Principles of Operations Management program. The new, customizable course covers transportation, warehousing, distribution channel design, and more. It can be preordered from APICS Customer Service, email@example.com
, 1-800-444-2742, or +1-773-867-1777.
Now, you can take the APICS Operations Management Now discussion to your social networks on LinkedIn, Facebook, Twitter, and the APICS Supply Chain Channel. Be sure to use the hashtag #OMNow and include @Tweet_APICS in any tweets to have your words featured on the APICS homepage.
In other news
- What are some ways that strikes affect production, logistics, and supply chains beyond their actual durations?
- Has a strike ever occurred in your supply chain? If so, what steps did you take to mitigate risks? How effective were those strategies, and what could you have done further?
- How important is rail to your transportation and logistics strategy? What would you do if it were taken out of the equation?
Related APICS education
Risk and the Professional
By Dale Bayless, CPIM, CIRM, CSCP, C.P.M., and Curtis Brewer, CFPIM, CIRM, CSCP, C.P.M.
January/February 2009, APICS magazine
Supply Chain Risk Management Seminar
APICS is pleased to offer the Supply Chain Risk Management Seminar, which provides participants with a glimpse of the global supply chain risk landscape. Definitions of risk management and new techniques and tactics to mitigate risk will be discussed along with profiles of early adopters of risk management. This seminar is lead by Greg Schlegel, CPIM, Adjunct Professor, Supply Chain Risk Management, Lehigh University.
Thursday, June 21, 2012 from 8:00 a.m. to 4:00 p.m. CT
In partnership with the APICS Ontario Grand Valley chapter
Holiday Inn Cambridge - Hespeler Galt
200 Holiday Inn Drive
Cambridge, ON N3C 1Z4
Friday June 8, 2012 from 8:00 a.m. to 4:00 p.m. CT
In partnership with the APICS Chicago chapter
Where Register today
APICS Corporate Office
8430 West Bryn Mawr Avenue
Chicago, IL 60631