Commentary: Volcano's effects prove importance of managing supply chain risk

Even in daylight, Eyjafjallajökull makes quite an impression. I saw the fiery Icelandic volcano outside my airplane window as I flew back last month from the CSCMP Europe 2010 Conference. The volcano had erupted a few days earlier, threatening to cancel my flight, but it had subsided enough to permit air travel.

Last week the volcano erupted again, spewing clouds of volcanic ash that the eastward jet stream carried across the skies of northern Europe. Because the particles in that ash can knock out a jet engine, airlines grounded flights, and airports in Great Britain, Germany, the Netherlands, and France—to name but a few—were shut down.

Not surprisingly, the cessation of air freight movements to and from Europe has disrupted the global supply chain. Automobile plants in China couldn't get parts from Germany. Diamond cutters in India were unable to ship gems to dealers Belgium. Fruits and vegetables grown in Africa and the Middle East for European markets were left on the ground.

As of this writing, European airlines have resumed a limited schedule of flights, but it will take weeks for them to get back to normal. And who knows when—or if—the volcanic eruption will stop? What we do know is that a long-term disruption could have an enormous, costly impact on world trade.

I sincerely doubt that any supply chain manager or analyst had prepared a contingency plan for air shipment disruptions by an Icelandic volcano before the first eruption. (If you did, please contact me.) What we can learn from this is that, as more supply chains are spun out around the globe, supply chain chiefs must always be mindful of the risks of disruption, even when they come from unlikely places and in unusual form.

And if you operate an international supply chain and you haven't developed such a contingency plan, then I have one word for you, even though I can't pronounce it: Eyjafjallajökull.