The story of the tanker stuck in the Suez Canal has already cost the business a pretty penny. The administration of the canal estimated the damage from the accident at $ 1 billion. Against the background of the incident, oil prices increased by 2%, and the cost of transporting a sea container from China to Europe by an alternative route reached almost $ 8,000, which is four times more than a year ago. The largest traffic jam in the world was also followed by the participants of the Russian market.
Maria Barabanova, PR manager of ABBYY Russia, found out the opinions of representatives of Severstal, Yandex.Routing, KPMG, MTS, and ABBYY on how such bottlenecks arise in various business processes, is it possible to protect yourself and calculate such risks, and what conclusions they made, reading the news about the unlucky container ship.
Ever Given. What business has learned from the history of the Suez Canal
The first lesson of Ever Given is how important it is to develop alternative ways of solving business problems. It is no coincidence that toll roads are prohibited from building where there are no free ones. Lack of choice is always a risk. We are talking not only about transport arteries, but also about service channels, suppliers, technologies.
The second lesson is the need to better analyze the actual situation and the resources available. The Ever Given case is a classic bottleneck, although force majeure has occurred in the Suez Canal. Such problems arise from market changes, lack of planning, or poor automation.
For example, in March 2020, Russian retailers experienced a surge in demand for online delivery. Those who started developing this service well before the pandemic did the best. Amazon recently introduced “overly efficient” robots to warehouses. They delivered goods so quickly that people could not keep up with them, and this led to an increase in industrial injuries.
It is impossible to know about all the risks, but it is easier to see and predict them in advance if you deeply study the company’s processes.
Analysis of this data can be automated using Process Intelligence technologies. Such platforms study digital traces and accumulate information about what is happening in accounting, logistics, call center, delivery. They allow you to see possible problems, anticipate risks and think over an action plan before a crisis occurs.
Similar situations periodically occur in Europe, where, due to the drying up of the Rhine, navigation stops for German and Austrian metallurgical plants. In the USA, due to the freezing of the Great Lakes, the logistics of metal rises. In general, the entire last year, the metallurgical industry, like many others, was in a state of “bottleneck” due to the action of lockdowns.
In Europe, movement between borders was stopped, which also affected the transportation of metal products and scrap. For metal consumers, it is important to insure the business through the creation of stocks. The same European metallurgists, due to the drying up of rivers, may find themselves without raw materials for steel production, which requires them to maintain certain reserves.
For a supplier, however, such situations can often be considered as force majeure, so his risks are not so great.
In this situation, as, indeed, always, effective decisions are required from the leader. The main conclusion is one – you need to be prepared for any surprises, for this it is important for the company to regularly monitor the situation in the external environment and quickly respond to changes.
In logistics, every third company faces a bottleneck of various scales. As a rule, the cause of its occurrence is the incorrect planning of resources in conjunction with the human factor. For example, a business plans to deliver goods without taking into account courier resources or restrictions from customers.
The result is delays, which accumulate in line, like ships in the Suez Canal. This leads to economic and reputational losses, the scale of which depends on the type of business and the neglect of the problems.
A similar situation arises when working with a warehouse. Many companies collect all shipping orders first, and then the entire volume is sent to the warehouse for assembly. This leads to the fact that the warehouse operates in an emergency mode – the load on the collectors increases, and the probability of errors increases. The correct process for working with a warehouse is to transfer incoming orders in portions throughout the day.
The solution to the problems will be the use of automation algorithms for solving various logistics problems. Automation is able not only to speed up the information processing process several times and reduce costs, but also to simulate in advance the possible occurrence of “bottlenecks” before their actual occurrence.
Therefore, the best option for the business owner is to take action to prevent and prevent the consequences, not to eliminate the consequences.
This story is worth learning – it demonstrates the importance of risk management. First, as the English say, “don’t put all your eggs in one basket.” In the case of a business, this can mean – “do not store all the data on one single server.” As you know, the southern part of the Suez Canal has no backup.
We recommend that you adhere to the “3-2-1” rule when working with data. To do this, you need to have at least three copies of the data – the main one and two backup ones. Store backups on at least two different media, one of which must be located outside the company’s office. The most reliable and affordable option is to use the clouds of Russian providers for this.
Secondly, the bottleneck will sooner or later make itself felt. In our practice, there are many examples when a business has predicted and eliminated possible risks in advance. For example, online shopping.
Before sales or holidays, retailers are rapidly expanding their IT resources in the cloud. The use of cloud technologies makes the business more flexible and allows you to insure against various risks. For example, from overloading IT equipment and even cyber threats.
Now is the time of “black swans”, the further, the more events occur that we could not expect and anticipate. None of the logisticians ever thought that the Suez Canal could stop for a while.
And this once again confirms that it is necessary to diversify as much as possible and take into account those risks that you cannot anticipate and expect. Therefore, we are actively developing tools for our own import and connect not only sea, but also rail and road transportation.
The situation with Ever Given is not so much a risk as a force majeure. The difference is that risk is the probability of a threat, including force majeure, multiplied by the magnitude of that threat. In the same case, the event has already occurred and you have to work with it, that is, you should not be engaged in preventing the occurrence of a dangerous situation and managing this risk, but to manage the problem that has already happened.
These are fundamentally different types of activities. For a business, this means understanding what it does when a problem occurs. Any. How he reacts, how he communicates, what corrective actions he takes.
In such a situation, managers must first of all calm down their emotions and transfer their work to the “headquarters” mode – a mode in which there is flexible management of the situation under constantly changing external conditions, a cross-functional team and constant open external communications.
As a result of resolving such situations, many useful conclusions can be drawn for the future. The main thing is how rhythmically the team worked, and how this rhythm can be improved. Rhythmically in this case means that everyone in the headquarters understands their function and performs it accordingly.
Cover photo: pixabay.com