Volcanic Eruption in Iceland Reminds Companies To Prepare for Supply Chain Disasters or Else
May 25, 2010 - Manassas, VA. – INSIGHT, Inc., a top international provider of supply chain planning solutions for the world's foremost companies, announces that in an age of lengthening supply chains serving globe-spanning operations, the recent volcanic eruption in Iceland is yet another example of why it is critical to identify supply chain vulnerabilities and develop mitigating strategies. The airlines lost $1.7B in revenues due to the volcanic eruption. Kenya's horticulture industry lost $12 million. A trade association in South Korea said the economic cost of lost exports was $112 million. Taiwan reported a loss of $6M from grounded cargo. Nearly $1 billion high-end merchandise exports from India were affected.
“When there is a major disruption of the supply chain due to natural disasters, pandemics, terrorism, or other reasons, firms need to be prepared with alternative plans,” said Jeff Karrenbauer, president of INSIGHT, Inc. “The planning process should not wait until the next emergency. Businesses that have considered the implications of this type of event and established their customer, product, and market priorities will be better able to deal with any threats to their supply chains.”
Supply chain vulnerabilities can occur all along the supply chain network: ill-advised sole source strategies, failure to monitor provider performance, lack of timely event monitoring and reporting, lack of backup manufacturing, storage, and transportation capacity, inadequate visibility of inventory, unstable governments and/or currencies, and so on. Another common mistake is misinterpreting and misapplying lean principles, thereby exacerbating the risk.
Yet Dr. Karrenbauer, who has been evangelizing for years about the need for companies to understand their supply chain vulnerabilities, believes that relatively few U.S. companies experienced delays from the volcanic eruption and will therefore shrug their shoulders once again. “Several years ago Aberdeen reported that only 13% of the companies they surveyed about this question had formally addressed supply chain vulnerabilities,” Jeff Karrenbauer added. “This is simply irresponsible management…it can place the enterprise itself at risk.”
INSIGHT performs detailed audits on supply chains to uncover vulnerabilities and offers solutions for managing and mitigating risk to enhance resiliency. A key component of the process is “war-gaming” various scenarios and developing contingency plans for each one…in advance of the possible event. The result is a strategic supply chain design that is optimally “hardened” against disruptions and serves as a cornerstone for a comprehensive business continuity plan.
About Insight, Inc.
INSIGHT provides optimization-based supply chain design software and consulting services developed specifically to meet the dynamic business challenges of globalization, disruptions, and mergers/acquisitions prevalent in today’s business environment. Founded by supply chain and logistics experts in 1978 with the goal of using world-class technology to add intelligence to decision making, INSIGHT solves the supply chain management issues of the world's foremost companies, including Abbott Laboratories, BASF, ExxonMobil, Goodyear, GE, Kellogg, Nestle, PepsiCo, Pfizer, Procter & Gamble, Toyota, and Unilever.
SAILS, INSIGHT's award-winning flagship product, can accurately represent a company's current business practices, from raw materials sourcing to capacity planning through delivery to the end customer. The X-System®, a proprietary optimization engine, powers a family of planning and scheduling solutions, from the design of a global supply chains to crew scheduling, troop deployments, and transportation procurement. In addition, INSIGHT provides optimization components, partnering with third party software providers to deliver best-of-breed solutions. Our software and services help design optimal supply chain networks that minimize costs and free up capital, streamline operations, maximize profits, and increase customer service levels. For more information, please visit us on the Web at http://www.insightoutsmart.com.
“When there is a major disruption of the supply chain due to natural disasters, pandemics, terrorism, or other reasons, firms need to be prepared with alternative plans,” said Jeff Karrenbauer, president of INSIGHT, Inc. “The planning process should not wait until the next emergency. Businesses that have considered the implications of this type of event and established their customer, product, and market priorities will be better able to deal with any threats to their supply chains.”
Supply chain vulnerabilities can occur all along the supply chain network: ill-advised sole source strategies, failure to monitor provider performance, lack of timely event monitoring and reporting, lack of backup manufacturing, storage, and transportation capacity, inadequate visibility of inventory, unstable governments and/or currencies, and so on. Another common mistake is misinterpreting and misapplying lean principles, thereby exacerbating the risk.
Yet Dr. Karrenbauer, who has been evangelizing for years about the need for companies to understand their supply chain vulnerabilities, believes that relatively few U.S. companies experienced delays from the volcanic eruption and will therefore shrug their shoulders once again. “Several years ago Aberdeen reported that only 13% of the companies they surveyed about this question had formally addressed supply chain vulnerabilities,” Jeff Karrenbauer added. “This is simply irresponsible management…it can place the enterprise itself at risk.”
INSIGHT performs detailed audits on supply chains to uncover vulnerabilities and offers solutions for managing and mitigating risk to enhance resiliency. A key component of the process is “war-gaming” various scenarios and developing contingency plans for each one…in advance of the possible event. The result is a strategic supply chain design that is optimally “hardened” against disruptions and serves as a cornerstone for a comprehensive business continuity plan.
About Insight, Inc.
INSIGHT provides optimization-based supply chain design software and consulting services developed specifically to meet the dynamic business challenges of globalization, disruptions, and mergers/acquisitions prevalent in today’s business environment. Founded by supply chain and logistics experts in 1978 with the goal of using world-class technology to add intelligence to decision making, INSIGHT solves the supply chain management issues of the world's foremost companies, including Abbott Laboratories, BASF, ExxonMobil, Goodyear, GE, Kellogg, Nestle, PepsiCo, Pfizer, Procter & Gamble, Toyota, and Unilever.
SAILS, INSIGHT's award-winning flagship product, can accurately represent a company's current business practices, from raw materials sourcing to capacity planning through delivery to the end customer. The X-System®, a proprietary optimization engine, powers a family of planning and scheduling solutions, from the design of a global supply chains to crew scheduling, troop deployments, and transportation procurement. In addition, INSIGHT provides optimization components, partnering with third party software providers to deliver best-of-breed solutions. Our software and services help design optimal supply chain networks that minimize costs and free up capital, streamline operations, maximize profits, and increase customer service levels. For more information, please visit us on the Web at http://www.insightoutsmart.com.