Heads You Win, Tails I Lose

Stadia emptied, vuvuzelas silenced, the Netherlands team has four years to contemplate what might have been in their resurgent prominence in the world of World Cup soccer.  FIFA has a shorter time to assess the salutory effects of public hanging for sight-challenged and judgement-impaired referees.  In the meantime, we'll don our colors and pull for Ajax, the pride of Amsterdam.

Back in the real world, the good news is that our universe of supply chain management is making headlines.  That's also the bad news.  USA Today's July 8 Money section carried a top-of-the-fold feature on shipping bottlenecks and their negative impacts on cost and timeliness.  Our friend Rosalyn Wilson was cited (but CSCMP's production of her annual State of Logistics study was not mentioned - another rant for another day).

The problem was blamed on recession-driven capacity cutbacks in air cargo, ocean shipments, and truck transport.  Adding container shortages to the mix makes marine transport the most severe manifestation of the problem, with shipping volumes increasing while Chinese container manufacturing has been seriously curtailed.

But, some of the damage was self-inflicted, and some continued difficulty is a matter of choice - an investment in short-term pain in exchange for a payoff in longer-term financial pleasure.  Carriers (of all types) embraced sharp price cuts in order to keep operating - even at a loss - when times got tough.  Many shippers took advantage of a perceived desperation, and turned the screws even tighter.

Now, the carriers want to get well - and fast.  The USA Today feature reports a 150% increase in transportation costs (following the historic decline of 2009).  Significant additional increases lie ahead, with re-activated capacity lagging demand.  Some observers maintain that the ocean carriers' recent practice of "slow steaming" is a faux green maneuver to mask a cynical manipulation that reduces effective capacity - and creates unholy pressures for further upward price movement.

Despite the fine words and high concepts coming from many players in the global supply chain community, this scenario reflects a sobering reality about talking the talk versus walking the walk.

How often must we repeat these cycles of adversarial win/lose (and lose/lose) industry-wide confrontation?  At some point, the strategists among us will learn to think, like Bobby Fischer, four or five moves ahead and build long-term business relationships.  Real relationships will insulate genuine partners from the debilitating skirmishes that perpetuate the paradigm of creating immediate transactional focus, short-term one-sided gains, and long-term supply chain underperformance.

We know better; now we've got to do better.  But, doing better requires that everybody - shippers, carriers, service providers - gets in the game.  And plays to win-win.