By Melissa Cantu & Ana León
We found this amazing article regarding logistics in Alaska! it basically talks about pretty much EVERYTHING we’ve seen in class and it is very interesting. Managing logistics in Alaska is probably one of the biggest challenges, if not the biggest, for any company that imports/exports there. Here are the reasons why, related to what we’ve learned in class:
Geography/supply chain management
Supply chains are really long and complex, mainly due to environmental conditions. It is a very big state and has a small population, thus leaving a large area of land unused. This is a problem because many roads aren’t paved, some destinations aren’t even connected by roads at all and require air transportation. In other words, distances are too long, and infrastructure conditions aren’t the best. Some companies don’t have the logistics expertise and prefer to hire someone who manages transportation for them, this involves adding extra levels to the supply chain.
Because transporting goods takes a long time here, demand forecasts have to be done really carefully and have to take into account the product conditions, for example, if they are perishable goods (seafood, which is one of the main sources of income in Alaska (exports)), then you can’t have too many, but you need to have enough to meet demand: you need very exact estimations and to consider lead time, calculate ROP, etc.
In some cases, choosing one mode of transportation is not an option. Many areas in Alaska are rural and have no roads, or roads with too much ice (dangerous, speed regulated). Most of the transportation is done by air (high costs, not possible all the year because of extreme weather). i.e. using the gravity center method wouldn’t be an option in some cases because maybe the optimal location has no highway. It is being difficult to find qualified drivers, because they need drivers with experience who can drive in those uncertain roads; many areas are inhabited and its also hard to find places for drivers to sleep, and drivers willing to take the dangerous risks involved. Another disadvantage is how carefully packaging has to be done, because many roads aren’t paved (only 31% are paved) it is more likely for products to get damaged. Many goods are delivered to/from Alaska in ships, and an emerging project by next year is to fuel this ships with liquefied natural gas, which will significantly lower emissions.
Despite these many challenges Alaska is actually getting better at moving goods, this is because transportation services are being adjusted to fit its specific needs. There is almost no manufacturing here, but there is a constant flow of goods in and out and it’s a great distribution center. There are a lot of natural resources, thus huge business opportunities in Alaska.