Providing strategic advice and market insights for optimizing manufacturing relationships and achieving profitable environmental strategies to clients in the Americas, EMEA, and Asia since 1987.I was impressed with of one of our electronic-systems (OEM) clients last week. Immediately upon hearing the magnitude of the Japan earthquake-and-tsunami catastrophe, the supply-chain team conferred on an emergency basis with their ODMs to rapidly identify electronic components from Japan at risk of short supply, then made some strategic advance buys to avoid disruption of production. (The consultants and analysts at TFI wish our clients and colleagues in Japan the very best during this difficult time.)
Imagine not even having to hold that emergency supplier meeting, but instead quickly consulting a database listing the material composition and origin for each part of your product. This semiconductor is from Japan and that from The Netherlands. Tantalum for these capacitors is from Australia and for those from the Democratic Republic of Congo. These parts comprise rare-earth minerals sourced from China. This metal enclosure contains a proposed substance of very high concern and that cable no longer does.
This is the level of supply-chain knowledge necessary today if electronics executives are committed to mitigate disruptions of supply even in the face of natural and industrial disasters, geo-political conflicts, international regulations, and economic/political shortages of rare-earth minerals. It seems like it’s too much work, and the case can be made that the world’s supply chains are not yet readily able to disclose full substances and origins. But companies interested in avoiding revenue delays need to be on the path to populating these data now, not tomorrow.
We recommend these steps: (1) Gain executive agreement that the need for substance and origin data is tantamount to on-time shipment of products during uncertainty. (2) Train product designers and purchasing professionals in the dynamics and implications of changing global regulations, rare-earth-mineral shortages, conflict minerals, design-for-environment principles, and supply-chain risk reduction. (3) Choose and continue to work only with those suppliers sophisticated enough to rapidly provide–with a high level of confidence–the substance and origin information you need. (This will necessitate rationalization of suppliers, which is healthy for business anyway.) (4) Continue until your database of product substances and origins is fully populated. Side effects of these steps are smarter designs, better supply-chain control, and increased logistics efficiencies.
Has your company committed to full knowledge of the origin and composition of materials in your products? If so, how did you convince executives to do so? If not, what are you trying?
Thanks Pam. I keep thinking that somehow our industry has to get to the stage where this data is just there and provided when we buy the parts. Right now it is like pulling teeth to get it and every time a new directive comes out, it back to starting from scratch almost. Wouldn’t it be great if, one day, we all got our act together and just agreed that material substance declarations are provided with every part and custom material manufactured. Our lives would be so much easier.
Hi Pam,
This is on target and very timely. With the reporting requirments of the “Conflict Minerals Act” starting soon and the number of geo-political issues we are seeing, prudent companies will start collecting origin information along with their chemical content data. Of course, this is a huge burden upon the already strained supply chain resources of most companies so it begs the industry to pay attention to Deborah Gillies’s challenge to make this data easily available. The other issue for which I am unaware of a good solution is a cost – effetive tool that can store and manage BOTH content and origin data and produce product level reports upon demand. Also, a caveat regarding “country of origin” information that is available today can be misleading. It is more for tariff purposes than traceability. A semiconductor for example may be comprised of elements that come from several countries but will list only one country of origin.
I agree that improved knowledge of supply chain origins and materials is important. However, I suspect that RoHS created more environmental problems than it solved, and I suspect that REACH will be worse than RoHS. I believe it is time to push back and ask the regulators to justify their actions and prove that the results of their regulations will be a better world — environmentally and economically.
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