Home » SCMAP Perspective » Supply Chain: The Unlisted Victim of “Habagat”

Today, a few days before SCMAP’s Annual Supply Chain Conference, on September 13-14, we again have a guest columnist. Most appropriately, he is Ike Castillo, the president of SCMAP. He has been our guest columnist on at least two other occasions. – Ed Sanchez

By Ike Castillo, President-SCMAP; Fast Logistics

On September 13-14, 2012, the Supply Chain Management Association of the Philippines will hold its annual supply chain conference with the theme: “Navigating through Supply Chain’s Perfect Storm: Supply Chain Philippines.” SCMAP crafted this theme months before “habagat” (southwest monsoon) struck the country with its under-rated might. What a way therefore to witness an aspect of this theme barely a few weeks before the conference. With 80% of the metro under water, we’ve seen how physical logistics capability had been crippled by just one of the hundred variables affecting any supply chain: the weather.

 

This year’s conference focuses on these aspects that continue to challenge the stability of an industry’s supply chain. In general terms, these challenges are the supply chain “variability” and “complexity” that continue to rock predictability or stability. As described in this year’s SCMAP conference primer:

 

“The perfect storm is magnified even more as we look at supply chain from the backdrop of Philippine archipelago: inter-island distribution, lead time variability, unstable demand patterns, increasing retail complexity, fragmented service providers, conventional supplier-customer relationships, and many more.

 

It is with such challenging landscape that Supply Chain in the Philippines is viewed by many as THE Supply Chain – complex, variable, needing imagination and non-conventional, creative solutions.”

 

The recent “habagat” experience highlighted once again a few of the supply chain challenges, as follows:

 

Impact of Inventory Management. With reduced inventory stock cover at the trade level, the challenge is passed on to the logistics providers and their principals in instituting frequent but smaller deliveries. In the past years, we have also seen deliveries diverted directly to stores rather than to central distribution centers, thus magnifying this delivery challenge. As “habagat” closed down access roads, limiting deliveries, the demand for deliveries especially after “habagat” from all customers at the same time was a logistics nightmare – a consequence of an otherwise sound inventory management practice.

 

Un-even Skewing of Orders. With deliveries heavily skewed towards the last fifteen days of the month, there is actually “habagat” in logistics operations every month. Capacity is so much the first fifteen days and so little the next fifteen. Among truckers this is their fifteen days of “famine” and fifteen days of “harvest”. But if we are to account for lost capacities, excluding those contributed by the usual suspects – traffic situation, physical condition of roads, and more, the need to correct skewing is actually a “habagat” of opportunity to save hundreds of millions of pesos.

 

The Need for Rain or Shine Logistics. But “habagat” was also a costly reminder as well to have a working business continuity plan at the logistics front, or acquire the right insurance protection. While the affected area was primarily Metro Manila, shipments even from VisMin waiting at the port were also affected as hundreds of containers went literally under water. Weeks after “habagat”, as these containers were delivered to the consignees, only then the extent of the damage was known. In just one shipment alone, a logistics company had to pay no less than two million pesos when, upon opening of the container van that came from the shipping lines’ container yard, all contents were declared water-damaged and unfit for sale.

 

Indeed challenging times, even during the non-storm “habagat” would call for non-conventional, creative or different approaches. For this reason, SCMAP has put together a conference package to hear from resource speakers who would provide such relevant thoughts that could help every practitioner manage his respective “habagat”.

 

Logistics and supply chain practitioners look forward to attending this premier event not only to update their knowledge but to network as well with their co-practitioners. Thus, it is this time of the year when stacks of business cards come surging like “habagat”.

 

Address inquiries and comments to Ed Sanchez at tel. 671-8670, fax 671-4793, cell 0918-914-1689, or email scmap.org@gmail.com. Those interested in DMAP training and other activities are requested to send their e-mail addresses.

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