Traffic World

..."I don't want to overstate anything … but this is the first time I've ever really seen fear," said Gary Lynch, global leader for the supply chain risk management practice at Marsh Risk Consulting, after finishing a three-week tour to discuss the fallout of the financial crisis with 250 executives at 150 companies around the world...

...The globe-spanning corporations Lynch surveyed over the past month are diligently scouting the economy for warning signs.

Executives are watching for changes in lead and delivery times that could signal a supplier or carrier in financial distress, Lynch said. They're keeping an eye out for changes in transparency to partners' operations that could indicate unwelcome operational surprises ahead.

The wrong quantity shipped to a factory or warehouse could be an honest mistake, or it could suggest a supply chain disturbance on its way to the customer. A change in product packaging could be a worthy effort to economize on materials and freight charges, or it could mean a switch of upstream suppliers caused by the failure of a distant source.

Those are big reasons the heaviest weight of responsibility for mitigating the crisis falls on procurement and logistics professionals, Lynch said. They are demanding greater transparency into partners' operations and especially finance departments to throw early-warning flags on trouble...

Earlier in the year, Marsh started marketing insurance for non-property related supply chain disruptions such as strikes and pandemics. "Within the last 60 days, the phones have been ringing off the hook," Lynch said.

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