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West Coast Ports Race to Adapt to Widening Panama Canal

By APICS staff | 14 | 13 | July 01, 2014

As construction is underway on a project to widen the Panama Canal, which would enable large cargo vessels to pass through to the East Coast, many ports along the West Coast are scrambling to adapt, the New York Times reports. Washington’s port cities, for example, are determined to maintain their import business. Billions are being spent to accommodate the larger fleets of cargo ships expected to operate in the new environment.

“The ships continue to get bigger, the cranes need to get bigger, and the docks need to be able to handle them,” says Trevor Thornsley, senior project manager for the Port of Tacoma. Traditionally, West Coast ports are the gateway to the rest of the United States for goods flowing from Asia. However, a wider canal may mean that avoiding these cities can lower logistics costs for shippers and bypass a web of road and rail infrastructure.

“Everybody in the supply chain from the manufacturer to the end consumer—that entire supply chain is changing,” says Tay Yoshitani, chief executive of the Port of Seattle. “The port industry is trying to make adjustments.”

Supply Chain Risk Leaders Look for Reward

Even while a majority of senior managers recognize that supply chain risk management is a priority, a much smaller set of companies actually practice effective risk management that brings about a positive return on investment, an Accenture research study finds. More than 1,000 executives were surveyed from a group of primarily large global organizations. Though about half of companies are increasing supply chain risk investment by at least 20 percent, only a small set of leading companies report a return on investment that exceeds 100 percent. The Accenture Global Megatrends Study also reveals the following about these risk leaders.

Supply chain risk management is a priority. About 61 percent of leading executives consider supply chain risk management a strategic imperative compared to 37 percent of other organizations. Leaders gain visibility and can better anticipate changes in their supply chains.

Centralization is key. A high-level senior manager leads a centralized risk management function at 43 percent of leading organizations. The report indicates that a centralized risk management function enables leaders to plan and react to risks with greater coordination and efficiency.

The end-to-end supply chain is rising in importance. Compared to other companies, leading companies are about three times more likely to plan to boost risk management investment. Investments primarily focus on developing risk management capabilities to increase end-to-end supply chain visibility and analytics.

Samsung Seeks to Improve Worker Conditions at Chinese Suppliers

In its annual sustainability report, Samsung cites 59 of its Chinese suppliers as failing to provide adequate safety equipment for its workers, Bloomberg News reports. While no instances of underage labor were found, a majority of suppliers are not complying with legal overtime hours. Samsung is scheduling training sessions for these suppliers to help improve standards and prevent injuries.

“Labor costs are rising in China, so it’s becoming more difficult for companies operating there,” says Lee Moon Hyung, director at the Korea Institute for Industrial Economics and Trade. “They also have to meet their social responsibility standards. That’s not optional.”

In the sustainability report, Samsung acknowledges that 40 suppliers did not run evacuation drills and that 50 lack adequate emergency responses. The high-tech manufacturer has faced criticism for its supplier conditions in recent years and has promised to eliminate hiring discrimination and provide adequate safety equipment and training. The company seeks to expand supply chain monitoring to areas outside of China.

US Reshoring Hits Tipping Point

The United States has reached a point where it is bringing back as many jobs from overseas as it is losing to offshoring, the Wall Street Journal reports. This assessment comes from the Reshoring Initiative, a nonprofit group that promotes the movement of production and labor back domestically, a system known as reshoring. The turning point was reached in 2013, when 40,000 jobs returned to the United States as the same number moved abroad. In comparison, in 2003, 150,000 manufacturing jobs left the country as only 2,000 returned.

“We say the bleeding has stopped,” says Harry Moser, president of the Reshoring Initiative. However he says that about 1 million US jobs still remain overseas.

Bringing back domestic production creates some difficulties, the Journal reports. One crib manufacturer, facing higher raw material costs, discovered that Americans weren’t very willing to pay a premium price for US-made goods. A candle manufacturer also has struggled to find assembly workers locally. In the United States, “the really good skilled workers—the tool builders, those with computer skills—are already employed,” Moser says. “That can make it difficult to recruit staff, even in areas with high unemployment.”

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