‘Blood Minerals’ in the Supply Chain

(Supply Demand Chain Executive – Andrew K. Reese)

Compliance to the new financial reform bill will pose unique challenges

The 848-page financial reform bill signed into law in the U.S. on July 21 (the “Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010”) contains a six-page section, starting on page 838, that addresses the issue of “Conflict Minerals” coming into the supply chain from the Democratic Republic of the Congo (DRC). The goal of Section 1502 is to ensure that certain minerals coming from the DRC are “conflict-free” – that is, not fueling the ongoing violence that has left more than 5 million people dead, and not funding the armed parties that have employed forced labor, child slavery and sexual terror as standard practice to control the minerals trade.

The minerals covered in the law – coltan (columbite-tantalite, a source of tantalum), cassiterite (tin), wolframite (tungsten) and gold – are used extensively in a variety of industrial, consumer and electronics products. Tin is used as a solder on circuit boards. Tantalum capacitors are used widely in the technology supply chain. Tungsten is used as tungsten carbide in applications like turning tools and milling, but it’s also used in cell phones to make them vibrate. Gold is used in jewelry, of course, but also used for the gold plating, printed circuit boards, connectors, switches and other electronic components. Collectively the minerals are referred to as the “3Ts, plus gold.” Read more here.

Couriers Shift from Packages to Freight

(Air Cargo World)

A survey by the Messenger Courier Association of America (MCAA) said its members are changing from delivering letters and packages to becoming “key players in the global supply chain, a dramatic shift from their previous role”.

The MCAA members have migrated towards handling larger freight with 71% of respondents offering expedited freight delivery. Some 42% of members reported an increase in larger freight deliveries.

“This survey verifies what we’ve been hearing from our members – participating in the growing need for global deliveries has kept them viable and successful,” said Chris MacKrell, president of MCAA. “The majority of our members (53%) say their businesses are doing better than a year ago.

“An important component of that success is the industry’s shifting role as a key player in the global supply chain. That contrasts with the old-fashioned view of our industry as one consisting of mom and pop companies delivering letters.”

The shift is supported by increasingly sophisticated technology noted Mackrell: “Seventy-five percent of respondents told us that their communications’ systems were integrated into their business systems and 93% accept orders via the internet. An increasing number (24%) are able to capture data directly from customers’ websites.”

Key industry sectors served by MCAA members are medical, banking, pharmaceutical, high-tech, 3PLs and government. The survey indicated that most of his members have over 20 years’ industry experience.

Emerging Economies Make Their Presence Felt

(International Freighting Weekly – Kizzi Nkwocha)

Shift in global economic power could impact supply chains

The rapid growth of emerging economies may lead to a long-term shift in global economic power – and that could affect how freight flows around the world, according to a new report.

Perspectives on Global Development: Shifting Wealth, published by the Organisation for Economic Co-Operation and Development (OECD), says the aggregate economic weight of developing and emerging economies should surpass that of the countries that currently make up the advanced world (the U.S., Europe, etc) within the next two decades.

The study says developing countries share of the world’s total economic power has risen from 40% of in 2000 to 49% today – and will be 57% by 2030. The OECD says that, due to their rapid growth and sheer size, India and China will remain the key influencers of macroeconomic variables that matter for poor countries – interest rates, the price of raw materials and wage levels for low-skill jobs – and will continue to have major impacts on global trading and investment patterns. Read more here.

Steps Toward a More Integrated Supply Chain

(ThomasNet – David R. Butcher)

In many respects, the practice of supply chain management has made great progress in recent years. However, few companies have yet reached high levels of integration between planning and execution, a recent report says.

By 2015, supply chain planning and execution will blur, according to a recent presentation in which Supply Chain Digest’s editor-in-chief, Dan Gilmore, discussed specific key issues that he believes receive negligible attention.

“For many years, analysts and others have offered separate models of ‘supply chain planning’ and ‘supply chain execution’ processes, and the technology vendors were generally organized in that sense as well,” Supply Chain Digest said earlier this year.

Yet, according to Gilmore, “The need for response based on market demand and other factors is outstripping current planning cycles.

“Tactical and even some operational planning become completely intertwined with execution, causing changes in organizational structures, processes and technology,” he continued. Read more here.

AAEI Says 10+2 Costs Will Mount

(American Shipper)

The American Association of Exporters and Importers [AAEI] in comments filed last week urged caution over the costs of U.S. Customs’ Importer Security Filing interim final rule.

ISF, also known as ‘10+2’, requires cargo information to be transmitted to CBP agents at least 24 hours before goods are shipped to the United States.

“AAEI expressed concern to U.S. Customs and Border Protection that the costs of ‘10+2’ compliance are still unknown,” the association said. “In the first months of implementation, the only cost CBP is capturing is the transaction fee for filing. However, AAEI notes that the true costs are much higher, especially for small and medium-sized enterprises. Plus, hidden costs of ‘10+2’ compliance will add up quickly due to delays and slowdowns in the supply chain.

“AAEI is also concerned about the lack of tangible benefits for voluntary participation in the costly C-TPAT program…” Read more here (subscription required).

NFTC Publishes Global Supply Chain Study

(International Trade Law News)

The National Foreign Trade Council (NFTC) recently released a new study entitled “Connecting the Dots: The Global Economy and Supply Chain Management” that analyzes the trade and investment environments of 117 countries based on data from OECD and the World Bank, among others.

The NFTC’s study is an extremely valuable tool for companies to use in evaluating and structuring their supply chain.

Structured as a country-by-country analysis of supply chain performance, each country was evaluated in comparison to benchmark nations and “exemplars.” The study evaluated countries based on the following six criteria:

1. National policies for openness in trade and markets
2. Best practices for international trade
3. Infrastructure for a global economy
4. Financial services for cross-border commerce
5. Human capital
6. Effective legal and enforcement systems

The top ten highest scoring countries were Singapore, Luxembourg, the United Kingdom, the Netherlands, Sweden, Switzerland, Canada, the United States, New Zealand and Norway. The lowest scoring nations were Angola, Burkina Faso, Zambia, Rwanda, Burundi, Guinea, Mali, Venezuela, Algeria and Benin.

In addition to a detailed country analysis, the study also contains a regional analysis.The PDF version of the NFTC’s study is available here (PDF format, 138 pgs.).

Canada Seen Slipping in Global Supply Chains

(Globe & Mail via CSCB)

Canadian businesses are falling behind on participation in the global supply chains that are becoming key drivers of international trade and national economies, a new report from the Conference Board of Canada says.

The Conference Board study found Canadian businesses did a generally good job of integrating into the continental economy in the 1990s under the North American free-trade agreement, but supply chain participation has stagnated since. The performance is even worse with the rest of the world, the 20-page report “Stuck in Neutral” says, finding that Canada has mostly failed to take advantage of the quickly expanding economies in Asia and South America.

Although volumes of commodity exports to Asia have accelerated in recent years, Canada's share in the faster-growing “parts and final goods” segments of the production chain to the region have fallen back since 2000.

“This suggests that Canada may not have been taking sufficient advantage of opportunities to supply inputs into Asian supply chains, despite the rapid growth in this region post-2000,” the report concludes.

Report authors Danielle Goldfarb and Doris Chu explain that supply chains are the result of splicing the development, production and assembly of any product into tiny segments that could emanate from many different countries. They cite Toronto-based Samco Machinery Ltd. supplying India's Tata Motors with steel-bending machines for the new Nano car as entering the supply chain at an early or medium stage.

The Conference Board concludes that Canada is falling behind in integrating into global chains, particularly the fastest-growing chains in Asia, and that the failure will have implications on the country's future prosperity.

“Canadian leaders need to do a better job of seizing opportunities, adapting to rapid change and attracting high-value mobile activities,” the authors write.

Related: The Conference Board report (subscription required).