Iceland volcano should teach firms supply chain lessons

Organisations which have seen their supply chains affected by the eruption of the Eyjafjallajokull volcano in Iceland should review their applicable insurance policies; assess the personnel, operational, financial, reputational, and compliance impacts, experts advise.

"While it is unclear exactly how long these disruptions will last and if they will reoccur, companies must closely examine not only what work functions could be at risk, but their ability to source perishable or time-sensitive goods, finished products, and even component parts from suppliers," said Gary Lynch, Marsh Risk Consulting's Global Supply Chain Risk Consulting Practice leader.

"Today's extended global supply chains often do not provide the transparency needed to ensure a continuous flow of products and parts under current circumstances. While it is easy to check the inventory of products destined for the ultimate buyer, it is more difficult to assess inventories of component parts or ingredients used in intermediate production or by suppliers several steps removed."

He pointed out that, as a result of the volcano-induced disruptions, many organisations have begun implementing business contingency plans in order to maintain continuity of operations, mitigate challenges posed by staff absences, minimise supply chain breakages, contain the financial and brand fallout, and preserve stakeholder relationships.

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