Ash should not cloud supply chain vision

This week, Stephen turns his attention to how the ash affected businesses.

Last week's unprecendented shutdown of UK airspace predictably prompted a flurry of press releases touting the virtues of video and web conferencing.

No doubt, some businesses have been able to use these technologies to good effect over the last few days. But less is being said about a potentially far bigger issue for enterprises: the impact of the disruption on the supply chain.

Even before the snow storms earlier this year, and the Icelandic volcano, companies were starting to think more about supply chain risk.

Relying heavily on remote markets, and not just China, for materials or finished goods means a business is much more exposed to weather, industrial action, terrorism or political turmoil.

For global companies, it is almost a certainty that they will experience a significant disruption somewhere in their network during the course of a trading year. Increasingly, our on-demand culture means we rely more and more on air freight, which is why supermarkets have started to run low on things like green beans and strawberries over the last few days. More seriously, car makers Nissan and BMW have both hit production problems due to a shortage of parts.

In the medium term, academics believe we are likely to see companies looking for additional manufacturing capacity nearer to home.

This "reindustrialisation" of Western economies could take a decade or more, though, and will do nothing to help solve the strawberry and green bean problem.

What could help is better visibility of into the supply chain, inventory levels and demand. With access to better information, businesses can better understand which contingency options they can take: alternative supply routes, moving stocks between markets, sourcing from alternative suppliers, increasing prices or even delaying orders to some customers.

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