MetalMiner welcomes guest commentator Trevor Stansbury, founder and president of Supply Dynamics. (For a more complete bio of Trevor, click here.) Supply Dynamics is a provider of raw material forecasting and fulfillment solutions, commonly used to manage “Material Demand Aggregation” programs across an extended supply chain.
These three simple steps (which I covered in Part Two):
- Carefully documenting the raw material attributes of parts;
- Translating finished part demand into an accurate, timely forecast of raw materials; and
- Leveraging what they know to rationalize supply and secure preferential pricing and service levels from fewer sources
serve to eliminate what typically amounts to millions of dollars in costly speculation at the mill or distributor, and enables the OEM and its contract manufacturers to standardize common raw materials by form, size and specification, further reducing waste, obsolescence and cost.
All of this shortens raw material lead times and improves communication and continuity of supply.
The decision to do all of this had less to do with government regulation and compliance, and more to do with common sense. Now that the SEC has blessed industry with Section 1502 of the Dodd-Frank Act, these OEMs are in an enviable position.
One click of the mouse tells them whether a part is produced from raw material that contains a conflict mineral. Another click divulges the sites and/or contract manufacturers that make those parts and the quantity of raw material that will be required over time based on the OEMs’ finished part schedules (then-in-effect). A third click discloses mills and distributors and their conflict minerals declarations.
It’s really not as complicated as most people think, even though some would argue the point. Reasonable country of origin inquiry becomes a cinch, and there are no complex spreadsheets involved. With a fairly modest investment, probably the equivalent cost of a few of the lawyers mentioned at the beginning of this series of posts, it is entirely conceivable that more OEMs will follow suit.
I look at it this way: if companies are going to have to invest in conflict minerals compliance anyway, they might as well invest in something that will allow them to correct some of the sourcing sins from the past, like loss of raw material visibility.
If they do, their downstream supply chains (inclusive of contract manufacturers, mills and distributors) will thank them for it and it may even save them enough money to comply with all the new government regulations being introduced.
If the new SEC rule turns more OEMs to this way of thinking, Section 1502 of the Dodd-Frank Act may actually end up being a blessing in disguise.
Previous parts in the series:
*Keep an eye out on a forthcoming white-paper by MetalMiner, where we outline how manufacturers should be approaching conflict minerals compliance.