It is confirmed that Grimsvotn volcano in Iceland has erupted sending a plume of smoke and ash several thousand feet into the air.

In the past, this has not been a major issue, and air traffic was routed around a 120 nautical mile no fly zone. However, you may recall the challenges that many fliers to and from Europe encountered last year when another Icelandic volcano belched smoke and ash that was pushed to many of the major air hubs in Europe, slowing or stopping many flights and disrupting the flow of goods through the supply chain.

Hopefully the last time served as a wake up call to develop contingency plans to assure the smooth operation of your business.

One of the benefits of hind site in unexpected natural disasters is the opportunity to create a “lessons learned” document. By looking at the “pain points” that your organization encountered during the incident, you have the ability to develop contingency plans. 

What are some  common pain points?

  • Key personnel out of position due to transit delays
  • Inventory shortage levels due to interruption of supply chain
  • Increased costs due to spike in demand
  • Delayed deliveries
  • Decreased cash flow
  • Cancelled orders

I take a rather different approach to developing contingency plans by working backwards from the pain point (impact on the company) to the triggering effect.  So rather than looking at “Volcanic Activity in Iceland” as the starting point, I look at “delayed deliveries”. 

Why are there delays?  when brainstorming the reasons, think globally before locally.  

  • Limited shipping lanes
  • Lack of containers
  • Insufficient inventory
  • Lack of key components

Then ask Why?

Lack of containers -

  • Increase in demand
  • Not located where shipments are happening
  • Not being unloaded

Why?

Not being unloaded -

  • Customer using as free “warehousing space”
  • Dock strike at key receiving port
  • Unexpected inflow at key receiving point
  • Shipments aren’t moving  out of a shipping point

The why question asked 4 - 6 times will typically  drill down to a root cause, and root causes can be addressed by either establishing an alternative, or correcting the challenge to remove the obstacle.  They key is to not drill so deep that a plan must be generated for each possible reason, after all doesn’t a solution for delayed deliveries because of a volcano in Iceland require the same process steps as a dock worker’s strike in Los Angeles?  In both instances you would look at alternative transportation routes (perhaps moving the product from Frankfort to Madrid, depending on how the wind blows, or re-directing the container to Seattle from LA to get product into the country and stores quicker), or services (moving by ocean from Europe vs. air freight, or air freight from China to LA) and measure the cost and service impact against the cost and service impact for waiting out the obstacle.

The important idea here is to have a contingency plan for those items that may have a serious impact to your business, otherwise you may just erupt like Grimsvotn.