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Tracing it back to the source


06-May-11 15:50

From the outside, procurement is quite a mysterious procedure: supply chains stretch off beyond unheard-of seas and into corners of the world you’re never likely to visit. Indeed, a recent phonecall with a senior procurement figure at a US company reminded me that there’s a vast difference between what the world sees and how it’s done. But perhaps that’s changing.

 

One of the most obvious examples of the change in understanding around sourcing is something like conflict minerals. Witness how much time and pressure it’s taken to bring about any change in sourcing habits, even in the most dire circumstances.

 

Wars have been fought and funded for decades in countries like DR Congo, where minerals such as Coltan and Wolfranite that are found in mobile phones and laptops are mined in conditions of armed conflict and human rights abuse.

Yet it wasn’t until last year that President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act to force manufacturers to face regulation on their sourcing policies.

 

There wasn’t much fanfare in April when the US Securities and Exchange Commission said it has postponed implementation until at least August – but it was significant. There were several reasons, but one simple one is that it’s difficult to implement a system to punish companies for something they may not even know they’re doing.

 

Moreover, the slow implementation is hurting artisanal miners – some communities where the profits aren’t fuelling conflict rely on the money from some of the technology companies that are scrambling to ‘do the right thing’ and disassociate themselves from these sourcing practices.

There’s an interesting Reuters feature on it here – the writer argues that the traceability programmes have flaws themselves.

 

Knowing what you’re getting when you procure a material or a product and what conditions it has been produced under requires a concerted effort and the complexity of global supply chains has continued to put layer upon layer of potential misinformation in the way.

 

But increasingly, consumers care (which also means regulators care).

 

And more than that, they are learning about the true extent of global sourcing. Jordan Early in his post on the Procurement Intelligence Unit blog points out the value of a tool like sourcemap.org – a site that lets you trace the constituent sources of a particular product.

 

Recently, Apple ran afoul when one of its sourcing projects was uncovered – iPhones apparently send data on users location to the company. Or so run recent allegations; Apple claims it was merely ‘crowd-sourcing’ data on groups, rather than individuals.

 

“Users are confused,” argued an Apple spokesperson.

 

On one hand that’s a statement that deserves to be picked apart by the technology press. On the other, he’s right.

 

Users, or consumers, are confused by sourcing, but they know what they expect from a company’s sourcing policy. While it’s all smoke and mirrors, they might be happy with the innocence of not knowing where things come from, but when they look deeper, like when an expose over child labour comes out, they can have strong opinions.

 

The technology, the interest of the press, the increased sharing of information and even the general nature of globalisation as a wider trend means that more and more, these stories of where companies get components and materials from are a topic for debate.

 

Meanwhile those in the process of making sourcing decisions face markets that are rapidly changing, csr-issues they would argue they couldn’t have anticipated or didn’t know.

 

So maybe the tables are turning – consumers know more and more about supply chains, but the sourcing decisions are becoming more and more complex.

 

 

 

 

 

 

 


Steve Hall Steve Hall is Editor at Procurement Leaders. Steve oversees the publication of Procurement Leaders Magazine and draws on a decade in business publishing, providing quality coverage to senior business leaders. Follow Steve on Twitter: @thestephenhall

 
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