Can supply chains avoid global meltdown?

Counting down to Iceland's next volcanic eruption

Before April 2010, few Icelanders gave Eyjafjallajökull much thought. Buried under an ice cap in the south of the country, it was one of Iceland's smaller volcanoes — almost as hard to see as it was for non-Icelandic speakers to pronounce. But then Eyjafjallajökull emerged from the ice, blackening the island's moss-covered landscape and lofting a column of ash 29,000 feet into the atmosphere. As it drifted across Europe, the cloud grounded planes and forced ports to close, freezing supply chains that spanned the globe. It was an impact felt far beyond the tiny island nation.

Today, four more of Iceland's 130 volcanoes — Katla, its largest, as well as Hekla, Bárðarbunga and Grímsvötn — are poised to erupt. Geophysicists warn that if and when Katla erupts, damage could easily exceed that seen in 2010.

Eyjafjallajökull sent economic shock waves throughout global supply chains when much of Europe's airspace was closed for six days, cancelling 100,000 flights and causing sporadic disruptions that lasted for weeks. The daily flow of $41 billion worth of products moving through the global economy was interrupted. "The chain for fresh seafood was broken," says Hörður Sævaldsson, assistant professor at the University of Akureyri in Iceland.

In today's global marketplace, a disruption in one area can create ripple effects on every continent.

And the world's 1,500 active volcanoes represent only a fraction of the potential threats. For years, supply chain professionals have also been wrestling with severe weather, financially strapped suppliers, product quality and safety challenges, and regulatory and environmental compliance. But now there's a greater availability of data and new tools to respond to major disruptions in real time while also optimizing supply chains that face minor, day-to-day challenges.

"There's a tremendous risk-mitigation opportunity to use digital supply chains and cognitive analytics to be better prepared when a unique disaster hits," says J. Paul Dittmann, executive director of the Global Supply Chain Institute, who worked for 30 years as a supply chain manager. "They can also help streamline, strengthen, and create less risky supply chains when there isn't a natural disaster."