RiskOperational RiskIceland’s Rumbling Volcano Sparks Supply Chain Worries

Iceland’s Rumbling Volcano Sparks Supply Chain Worries

Several major original equipment manufacturers (OEMs) are looking at contingency planning, as the motor industry fears a repeat of the 2010 Icelandic ash cloud that disrupted flight schedules and caused costly production line delays, reports Cision.

The Swedish software company reports that as the Bardarbunga volcano eruptions continue to increase in magnitude and lava spews 60 metres into the atmosphere, vehicle manufacturers are keen to avoid a repeat of the disruption caused by grounded flights.

Brad Brennan, managing director (MD) of emergency logistics specialist Evolution Time Critical, says that September is a traditionally busy period for automotive logistics as OEMs and suppliers work to replenish buffer stocks that have been heavily drawn on during seasonal shutdowns.

Lean supply strategy and the requirement of a diversifying range of components to meet broadening model ranges, means that 2014 buffer stocks have needed to be smaller and therefore wont stretch as far as in previous years.

The potential for flight disruption means that it is crucial for vehicle manufacturers to work harder than ever to ensure contingencies are in place where possible, continues Brennan. Inflexible lead times create an obstacle for suppliers keen to get ahead and protect against potentially disruptive flight cancellations. In these cases, strategic use of emergency logistics expertise can offer solutions to build up reserve stocks in advance, or find alternative routes during a crisis.

While current forecasts are unclear as to whether a resultant ash cloud is imminent, several OEMs are taking no risks, reports Evolution Time Critical. Brennan says that customers that are proactively looking at contingency planning to secure robust processes, as vehicle manufacturers and suppliers are increasingly aware of the cost of supply chain failure.

Related Articles

The digital fortress: fortifying your treasury

Operational Risk The digital fortress: fortifying your treasury

7m Martin Bellin
De-risking trade finance operations: A transitional approach

Bank Relationships De-risking trade finance operations: A transitional approach

7m Jacco de Jong
2017's most read: Open API: unlocking innovative new services in banking

Automation 2017's most read: Open API: unlocking innovative new services in banking

8m Lu Zurawski
BNP Paribas Cash Management University day 2: cyber attacks, predictive analytics and investing

Banking BNP Paribas Cash Management University day 2: cyber attacks, predictive analytics and investing

9m Victoria Beckett
Can you afford not to be ethical?

Compliance Can you afford not to be ethical?

12m Philippa Foster Back
A ‘wait and see’ approach won’t work: US businesses must prepare for GDPR

Bank Relationships A ‘wait and see’ approach won’t work: US businesses must prepare for GDPR

1y Patrick Lastennet
Ethnic diversity in top companies improves

Consumer/Retail Ethnic diversity in top companies improves

1y Graham Buck
Brexit confusion over MiFID II compliance: Let the preparations begin…

Compliance Brexit confusion over MiFID II compliance: Let the preparations begin…

1y Matthew Bryars