Security & Supply Chain: Supply Chain Transparency

by Sterling J. Scott, Marketing Communications Coordinator, MHI | @mhi_sterling

Supply chain transparency is critical in ensuring human security in regard to physical security and health. Whether it is the sourcing of materials, the transportation of food and beverages, or the usage of hazardous materials, it is important for companies to have a detailed overview of their supply chains to ensure public health and safety. Greater transparency is being demanded and required with greater globalization and access to information. This creates opportunities for developers of supply chain software and analytics technology.

Conflict Minerals
The controversy surrounding conflict minerals highlights the importance of supply chain transparency. Conflict minerals are minerals mined in support of violent conflicts. They are growing in importance as the minerals are more frequently used in the growing technology sectors.

The Democratic Republic of Congo (DRC) has been identified as a conflict zone as well as the adjoining countries of Angola, Burundi, the Central African Republic, Congo Republic, Rwanda, Sudan, Tanzania, Uganda, and Zambia. Columbite-tantalite, cassiterite, wolframite, and gold are the four minerals identified as conflict minerals by the Securities and Exchange Commission (SEC).

  1. Columbite-tantalite is used to make tantalum which is used in electronic components.
  2. Cassiterite is used to make tin for plating, chemicals, and metal alloys such as brass, bronze, and pewter.
  3. Wolframite is used to make tungsten which is also used in electronic components as well as metal alloys.
  4. Gold is used in jewelry, electronic components, and wiring.

The DRC countries produce 32% of the world’s columbite-tantalite, 4% of the world’s cassiterite, over 1% of the world’s wolframite, and almost 1% of the world’s gold.

Once conflict minerals pass through trading houses to smelting facilities they become harder to trace especially since very small quantities are used in products. This mainly affects electronics and automotive companies.

In 2012, the SEC outlined assessment and reporting requirements for issuers whose products contain conflict minerals. The disclosure rules require companies to disclose the country of origin of certain minerals or assist their customers in doing so.

Apple has been covered in the news in early 2014 for verifying that none of the tantalum used in its products originated from conflict zones. The company will publish lists of all its suppliers’ smelters each quarter along with their compliance with ethical sourcing guidelines.

Intel also announced that it is manufacturing and shipping conflict-free microprocessors. Intel staff vested more than 80 smelters in 21 countries to implement a smelter validation system.

Slavery in the Fishing Industry
The controversy surrounding conflict minerals was one example that highlights the importance of supply chain transparency. Slavery in Thailand’s fishing industry is another one.

In Thailand, people from Cambodia, Laos, and Myanmar are forced into slavery aboard fishing vessels, where they often remain for years. Slavery has risen in response to overfishing as fishing boats seek to reduce costs. Thailand is the third largest seafood exporter behind China and Norway with over $7 billion in exports.

Companies need to implement solutions that allow them to visualize and understand their complete supply chains. There are many powerful supply chain analytics and visualization tools. For example, there is Sourcemap, which was developed by Massachusetts Institute of Technology researchers to help companies view their complete supply chains and better plan for potential disruptions. WiseFish is another example. WiseFish is a company that has been able to find opportunity in the growing concern for fish traceability. Its software allows users to trace fish origins from vessel to customer, providing a solution in supply chain transparency.

As the importance of supply chain transparency grows, there will be more business opportunities in the supply chain industry for companies that can offer solutions and tools.