INSIGHT - Supply Chain Problems Will Occur If Conflict Breaks Out in Strait of Hormuz

by Press Release on 2012-01-09 23:26:36


Supply Chain Vulnerability Analysis Helps Companies Mitigate Risk  

MANASSAS, VA, Jan 09, 2012 (Global Logistics Media) -- INSIGHT, Inc., a top international provider of supply chain planning solutions for the world's foremost companies, believes that substantial supply chain problems will result if conflict breaks out in the Strait of Hormuz, through which 20% - 30% of the world's oil supply passes on a daily basis. Of more immediate concern to supply chain managers is the impact on global oil markets. While the consequences of military action in the Strait would be severe, even the threat of conflict has resulted in significant crude oil price increases in the past few weeks.

Iran threatened last week to stop the flow of oil through the Strait of Hormuz if foreign sanctions were imposed on its crude exports because of its nuclear ambitions, a move that would almost certainly trigger military conflict. Many analysts believe that such threats are baseless, and that closing the Strait would be economically and politically damaging, not only to relations with the West, but also with such powerful neighbors as Saudi Arabia and the UAE. Nevertheless, recent Iranian military activity in the area, a test of a new missile, and warnings to the US Navy that its carriers must stay out of the Gulf, have ratcheted up tensions significantly.

"The last thing that the world's fragile economy needs is a new confrontation in the Middle East," said Dr. Jeff Karrenbauer, president of INSIGHT. "In the last week, we have seen tensions increase dramatically between Iran and the West. Open conflict in the Strait of Hormuz would be a nightmare for supply chains throughout the world, raising the cost of raw materials, manufacturing, transportation, warehousing, inventory... essentially every component of a supply chain."

Karrenbauer goes on to note the significant disruptions caused by the Japanese earthquake and tsunami and, more recently, the severe flooding in Thailand. Industries such as automobile and electronics have yet to recover. "The evidence is overwhelming that disruption, whether random acts of nature or pre-meditated actions by intelligent adversaries, can have severe economic consequences. In some instances the enterprise itself can be at risk. Nevertheless, we still find that the majority of companies have spent little or no time planning for such contingencies. That is astounding, troubling and frankly, a significant management failure."

INSIGHT's powerful supply chain vulnerability/hardening analytical solution facilitates the identification of vulnerable components of the supply chain. Equally important, it then identifies the optimal design(s) and associated costs best able to mitigate possible disruptions. Every CEO/COO/CFO should be demanding a comprehensive supply chain risk audit and a corresponding set of mitigation strategies immediately, not waiting to see what happens next. Token committee meetings are no substitute for rigorous planning supported by advanced analytical tools.

About INSIGHT, Inc.
INSIGHT provides optimization-based supply chain analytics and consulting services to meet the dynamic business challenges prevalent today. Founded by supply chain and operations research experts in 1978 with the goal of using world-class technology to add intelligence to decision making, INSIGHT solves the supply chain management issues of the world's foremost companies, including Abbott Laboratories, BASF, Clorox, ExxonMobil, Goodyear, GE, Kellogg, Nestle, PepsiCo, Pfizer, Procter & Gamble, Toyota, Unilever, and many others.

ISCO, INSIGHT's award-winning flagship product, can accurately represent a company's current supply chain business practices, from raw materials sourcing to capacity planning through delivery to the end customer. Insight Enterprise Optimizer (IEO) is the first and only product which combines full supply chain design capabilities with the cost and demand impact of marketing initiatives, thereby generating profit-maximized corporate strategies. The X-System(R), a proprietary optimization engine, powers a family of powerful analytical tools, including the design of global supply chains, shipment planning and dispatching, production planning and scheduling and transportation procurement. In addition, INSIGHT provides optimization components, partnering with third party software providers to deliver best-of-breed solutions. Our software and services help firms minimize costs, maximize profits, free up capital, streamline operations, and increase customer service levels.

For more information, please visit us on the Web at http://www.insightoutsmart.com .