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Report Tracks Efforts to Curb Conflict Minerals

by APICS Staff | N/A 2012 | 12 | 16

A new study reveals that companies such as Intel, Motorola, Hewlett-Packard, and Apple are trailblazers in ceasing the use of conflict minerals in their supply chains, Reuters reports. These include materials such as tantalum, tin, and tungsten found mainly in eastern provinces of the Democratic Republic of the Congo. These materials tend to be obtained using slave labor, and the profits finance wars not only in the Congo but in other parts of Africa.

The report comes from the Enough Project, the human rights arm of the Center for American Progress, a nongovernmental public policy think tank. The group rates companies based on efforts to trace the sources of their materials, the presence or absence of supply chain audits, and steps toward developing an international conflict-free certification. Intel, Motorola, Hewlett-Packard, and Apple are highlighted for moving forward on developing solutions in spite of legislative hurdles, as well as supporting programs to enable a clean minerals trade. Meanwhile, the report notes SanDisk, Philips, Sony, Panasonic, RIM, and AMD have made improvements by engaging in supplier surveys, joining a smelter audit program, and practicing due diligence.

The report also criticizes certain companies for falling behind industry leaders in solving the problems of conflict minerals. For example, it singles out Nintendo as making no efforts to audit its supply chain or to take conflict minerals out of its consumer electronics.

"One Ford" Initiative Hindered by Global Variability

Ford is on a mission to standardize the way it makes cars in all parts of the globe with the goal of improving efficiency and reducing costs, the Detroit Free Press reports. However, regional differences are unlikely to ever disappear, and this means higher costs. For example, in Canada, there are ongoing negotiations for a new labor agreement, and in Europe, factors such as overcapacity and political inertia have led to more than $1 billion in losses.

Still, Ford is embarking on a strategy it calls “One Ford,” which is expected by 2015 to lower manufacturing investment costs by 8 percent annually, as well as boosting the number and types of vehicles produced per facility by 25 percent. It is intended to support Ford’s largest expansion in 50 years, which includes nine facilities in Asia.

The company is challenged because it cannot equalize all costs, especially in Europe and Canada. “Canada is, unfortunately, one of the most expensive places in the world to manufacture vehicles,” says John Fleming, head of global manufacturing. He says the situation, in part, is due to higher wage bases in Canada. The Canadian Auto Workers union disagrees with some of Ford’s wage assumptions, however, and says a strong Canadian dollar makes many of Ford’s fixed costs appear greater.  

Despite its current labor issues, Ford still sees robust profits in Canada. By contrast, in Europe, where the car industry has a greater surplus in capacity than any other part of the world, Ford’s year-to-date sales are the worst in 17 years. Analysts advise the carmaker to close at least one facility. Fleming says the company is examining solutions that don’t involve shutting down a factory.

Ultimately, Ford’s goal is that all of its facilities can make different types of vehicles, retool quickly, and adjust to demand.

Losses Blamed on New Supply Chain Management Software 

Just days after the iconic black taxicabs made by Manganese Bronze were featured in the closing ceremonies of the London Olympics, the company has displayed major losses and a significant drop in share price, reports a Wall Street Journal blog. According to Manganese Bronze spokespeople, the culprit is the supply chain management software system adopted in 2010, when Manganese began moving some production to China. It seems the system misrepresented inventory, underestimating losses by $6.1 million.

The company began using the software system in August 2010 “to manage its increasingly global supply chain,” says a company statement. At the same time, the automaker shifted some parts manufacturing to a Chinese facility. The move was part of an effort to stem losses and declining sales.

Manganese says that old data, including transaction and ledger histories, were not processed correctly in the new software system, and the errors were not detected for two years. “The fact that they are blaming a system they implemented two years ago is troubling,” says Gartner analyst Mike Uskert. It means Manganese has issues with data government and improper testing. Adopting new technology while maintaining data integrity is a familiar problem to most industry leaders, but two years is an exceptionally long time to resolve those challenges, Uskert says.

Properly testing new applications should involve a comparison of automated reports with a manual count of inventory items. Physical audits should continue beyond integration to ensure the new system stays accurate as the complexity of the supply chain grows. “When you expand into a global scale, the complexities are significantly larger,” Uskert says. 

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