When I read “Predictable Surprises — The
Disasters You Should Have Seen Coming and How to Prevent Them,” current
supply-chain issues came racing to mind. The book, written by two Harvard
Business School professors, states that leaders need to confront predictable
surprises before they actually occur.
- According to the authors, the
four hallmarks of a predictable surprise are:
- A problem that will not
solve itself.
- The problem is getting worse over time.
- Fixing
the problem would cost a lot now, but the benefits are in the
future.
- Much
of the benefit of addressing the problem at the present time
lies in avoiding an uncertain future cost.
On that last point, even if it appears
reasonable that such a future cost could very well be tremendous,
many people are hesitant to budget a lesser, but still substantial
amount of money today to achieve a future benefit that is not completely
certain.
How does this relate to freight transportation?
Check the Wall Street Journal or leading industry publications and
you will read about concerns with capacity, port congestion and security.
The infrastructure supporting the supply chain is overburdened — and
in a way that fits the four points described above.
Barring an economic
depression, the problems with lack of capacity in the motor carrier
and rail sectors aren’t going to get better
anytime soon — and certainly will not solve themselves. Congestion
at ports will remain problematic, based on import-export activity
that will continue to overwhelm them, at least on a seasonal basis.
Security requirements related to commerce and trade will only continue
to get more stringent. This is all predictable.
The fact that thousands
of shippers and carriers choose to sit on the sidelines and let only
10% of their colleagues — those belonging
to major transportation trade associations — carry the water
for them on these critical issues is absolutely shameful.
The situation
is further compounded when you have thousands of high-ranking executives
completely unaware of the potential impact these issues will have
on their companies. The situation can get much worse — and
probably will.
What are the practical implications of shipper
and carrier apathy? Consider the multiyear highway-funding bill languishing
before Congress. Current versions include billions of dollars of
pork-barrel spending that have nothing to do with highway infrastructure.
For now, Congress and the White House continue their debate about
the size of the bill, further postponing the benefits of legislation
that would be experienced by carriers, shippers and the public in
years to come.
On the security front, the Transportation
Security Administration has prescribed regulations dealing with the
number of packages inspected — measures
having a profound impact on shippers once they are implemented. You
can also count on the government doing something about the fact that
fewer than 5% of the containers coming into this country’s
ports are inspected. That will have an impact on transit times and
inventory levels for companies importing products from around the
world.
There are still more examples of the impact
of shipper and carrier apathy. Look at railroad infrastructure. Either
the railroads will have to build a lot of new mainline capacity, or
shippers must figure out how to move significantly more volume over
the existing network. So when railroads impose quotas — as they
did this summer and fall — it should not be a surprise. It’s
entirely predictable.
And for those shippers that don’t care
about rail because they don’t have rail shipments, where do you
think the excess volume not moving by rail is going? It will move on
trucks, exacerbating the motor carrier industry’s capacity situation.
For
shippers and carriers sitting on the sidelines, there are two choices.
First,
step up to the plate and give your industry trade associations financial
support and even personal and corporate involvement. These associations
are great investments for you and your company. You get information
and access to a network that keeps you in the know about the critical
issues related to your industry.
The second option is for you to continue
to sit on the sidelines while the game is being played. This may appear
to be a safe strategy that will save some time and money, but it also
has risks.
When your company gets hit with “predictable
surprises,” you
will be looking for solutions and strategies to avoid these surprises
in the future.
When your company experiences delays at ports,
finds that your transportation costs have risen by 10% or more or learns
that the critical shipment you needed has been hung up due to security
issues, your customers and employees will come to you looking for answers.
What will you do then?
Here is a word of caution: Don’t think
it can’t happen
to you. I’ve lost track of the people who have told me, “I
never saw it coming.”
Consider this your wake-up call and remind
yourself: “I can be
part of the solution, or a casualty of the problem.”
You can
still be surprised, but you can’t say you weren’t
warned.
