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Risk management in logistics 21/07/2011

Eyjafjallajökull, the Icelandic volcano has proved risk management is present only in theory.
Not more than a month ago, the air transportation was paralyzed in all Europe due to the eruption of the volcano from Iceland. Romania nevertheless felt the negative effects of this critical moment but the media spotlighted more the drastic consequences of this event on the people transportation.
Far less was presented the situation of losses suffered by the freight forwarding companies. If talking about the persons transport, they had the option of switching with a land vehicle, in what involves the freight forwarders the alternative was not that easy. The reason is that the goods transported by air are mostly high value goods, fragile or perishable goods that would suffer damages transported by truck, rail or sea.
The mentioned event has demonstrated that in a crisis situation just a few of the forwarders have a back up strategy for managing such situations.  
The companies that were hit hardest by the closure of European airspace were the ones that had built up particularly slender value added chains and had not defined any emergency plans or rooted them in the business.
In light of recent events, it hardly needs mentioning how quickly such an emergency plan can become acute necessary. Furthermore the bad management of a crises and the delay of a shipment can lead to a stock split for the client.  
The question behind this issue is not only how such disasters can be avoided but also what extent corporate processes or value added chains can be optimized without becoming a business risk in the event of a critical situation.
For many years the main goal was to make processes as streamlined as possible and very few of the forwarding businesses have also developed risk prevention strategies to be applied in the event of an emergency.
Only facing the problem directly the logistic operators have realized the importance of a strategy responsible with analyzing, controlling and forecasting risks and hence to consider the perspective across the entire supply chain.
I would be delighted if, in the case of a similar event, the focus would be not on losses and lost revenue but on how successfully business operate even when the supply chain is interrupted.

The source of the article is: http://www.esupplychain.eu/en/

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