BCG - US Supply Chain Crisis

The candidate should understand that it is important to identify the root causes of the supply chain crisis before proposing solutions. Ask the candidate to brainstorm what might be causing the crisis.

A strong candidate will use an external-internal framework or a people-processes-tools framework to organize their brainstorming.

 The candidate might brainstorm the following:

• There is a shortage of shipping containers due to a surge in demand caused by the pandemic and the resulting trade imbalances
• Port workers are facing labor shortages and COVID-19 restrictions, which have led to longer wait times for unloading cargo
• Logistical challenges in transporting goods from the port to distribution centers, such as truck driver shortages and highway congestion
• Increasing demand for imports and a lack of warehouse space to store goods, leading to congestion at the ports.

Once comfortable with their brainstorming, you may provide them with the below exhibit (Source: CNBC).

The candidate should notice that East Coast ports are suffering from long Anchorage to Berth times, while the West coast ports are suffering from long Time in Port times.

• Increasing shipping container availability by enhancing production, repurposing idle containers, and optimizing container tracking systems for better utilization.
• Boosting the port workforce through hiring incentives, higher wages, improved working conditions, and implementing technology solutions like automation and remote monitoring to reduce reliance on manual labor.
• Addressing logistical challenges by upgrading transportation infrastructure, developing new routes or transportation modes such as rail or barge, and tackling bottlenecks in the highway system.
• Expanding warehouse capacity by incentivizing new warehouse construction, implementing warehouse sharing programs, and promoting efficient use of existing warehouse space.
• Streamlining container handling with more efficient processes and technologies for managing and moving shipping containers.
• Resolving labor issues by addressing disputes and reaching consensus on automation usage to create a more efficient workforce.
• Implementing infrastructure improvements, such as expanding port capacity and upgrading equipment, to handle increased cargo volumes and reduce bottlenecks.
• Enacting policy changes that encourage efficient port operations and resolve labor disputes.

Cost: The cost of each option should be carefully evaluated to determine if it is financially feasible for the government or the private sector to implement. This might include not only the upfront costs but also ongoing costs, such as the cost of maintenance and repair of container tracking systems.

Benefits: The benefits of each option in mitigating the risks posed by the supply chain crisis should be evaluated. This might include considering the likelihood of the option to reduce wait times and congestion at the ports, as well as the level of impact on the supply chain's overall operations.

Feasibility: Whether the proposed solution can actually be done, particularly in the timeframe needed without other negative ramifications.

Tell the candidate that the following four options have been proposed:

1. Increasing shipping container availability
2. Boosting the port workforce
3. Addressing logistical challenges
4. Expanding warehouse capacity

The port has provided you with the following data:

Option 1: Increasing container availability would cost $10 million and is estimated to reduce Time in Port by 20%.

Option 2: Boosting the port workforce would cost $15 million and is estimated to reduce Time in Port by 25%.

Option 3: Addressing logistical challenges would cost $20 million and is estimated to reduce Time in Port by 30%.

Option 4: Expanding warehouse capacity would cost $8 million and is estimated to reduce Time in Port by 15%.

The candidate should ask if we can only pick one option. Explain that we can indeed only do one of these at a time. 

The candidate should also ask if cost matters. Ask them what they think. They should understand that, while we are government, we do still care about costs. Cost represents efficiency and therefore we do want the highest Time in Port reduction per million $.

Based on the calculations, Option 1: Increasing shipping container availability provides the highest impact for the investment, with the lowest cost per percentage point reduction in Time in Port ($0.5 million per percentage point)

Recommendations

Based on the case math problem analysis, the final recommendation is to increasing shipping container availability at the selected port. This option provides the highest impact for the investment, with the lowest cost per percentage point reduction in Time in Port.

Risks

However, it is important to acknowledge the risks and limitations of this recommendation. By focusing on only one issue in this port, the issues may not be resolved. Additionally, by focusing on just a single port the overall crisis in the US port system may not be effectively resolved.

Next Steps

To address these risks and limitations, consider the following next steps:

1. Conduct a comprehensive risk analysis of the proposed solution for the selected port, identifying potential threats and their consequences.
2. Assess the feasibility of implementing multiple solutions at other ports, taking into account each port's unique challenges and circumstances. This can help create a more robust and comprehensive plan to address the crisis across the entire US port system.
3. Develop risk mitigation strategies for the implementation of the recommended solution and any additional solutions that may be pursued. This could include strategies such as assuming and accepting risks, transferring risks, or mitigating risks through preventive measures.
4. Monitor the implementation and effectiveness of the recommended solution at the selected port, as well as any additional solutions applied to other ports. Regularly review and adjust the risk management strategy as needed to respond to changing conditions and new information.
5. Engage stakeholders across the port system, including port authorities, shipping companies, labor unions, and government agencies, to ensure a collaborative approach to resolving the crisis and addressing any risks that may arise during the implementation of the chosen solutions.