A Logistical Nightmare Print E-mail
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Written by Mike Buetow   
Monday, 31 March 2008 19:00
Caveat Lector I recall, about seven years ago, then Viasystems vice president of global supply chain management Ken Pastewka telling me the EMS firm was seeking five layers of visibility into its supply chain “all the way back to the mines.”

It seemed like a great idea. OEMs could “see” into their EMS suppliers and vice versa, thus averting costly overinventory issues. Further down the line, assemblers and fabricators could ascertain stock levels and constraints at their suppliers, thus achieving long-sought supply chain balance.

The news last month that Congolese rebel soldiers are running national tin mines – the same mines that ultimately supply many leading assemblers around the world – made painfully clear Mr. Pastewka’s vision most decidedly has not come to fruition.

Among the mines being run by the renegades is the Bisie mine, which produces 63% of Congo’s tin exports, according to British government estimates. The resulting journey the tin (which is mined as cassiterite and yields tin after smelting) takes as it makes its way into everything from video games to TVs is wreaking havoc with consumer electronics firms intent on following best practices for corporate humanitarianism.

As reported by the Financial Times in early March, Congolese-mined tin is finding its way through middlemen to solder manufacturers in Asia. That uncomfortable fact is spurring several big-name OEMs, Hitachi, Microsoft, Pioneer and Samsung among them, to investigate the possibility they could be indirectly procuring tin solder from these unlawful miners.

According to the FT, the Malaysia Smelting Corp. Berhad purchases about 12% of its tin ore from the region. The FT fingered Hitachi, Kenwood, Panasonic, Pioneer and Sony as among the companies that purchase the refined solder powder from Malaysia Smelting’s customers.

This is disconcerting on many levels, not the least of which is that the Congo is Ground Zero to the world’s deadliest battles since World War II. More than 5 million people have perished there over the past decade, and the United Nations estimates more than 1,000 people a day are dying as result of the ongoing conflict. The Bisie mine is controlled by rebel Congolese soldiers accused of a long list of crimes: forced labor, robbing other miners, illegal taxing, rape, torture, murder.

It was somewhat reassuring to hear the OEMs aren’t taking the news lightly. Samsung has asked for an investigation into its component suppliers’ tin, while Hitachi said the company would review compliance of primary suppliers. Pioneer is also said to be taking the allegations seriously and looking thoroughly into the matter.

Yet for electronics companies, this represents another potential black mark on their supply-chain management report card. One need only consider the recent problems of counterfeit parts plaguing the industry – as we’ve reported often over the past year – to draw the conclusion that the space between EMS companies’ boasts of expertise in supply-chain management and logistics and what is really happening when laborers (some reportedly as young as 12) descend into the sweaty depths of the earth to extract much-needed metals is more gulf than gap.

It also casts doubt on the ability of OEMs and EMS firms to ensure their solder vendors are following the rules. As the saying goes, a chain is only as strong as its weakest link. None of this is helped by the fact that tin prices have run up 39% over the past 12 months (see Market Watch, page 16), and – tin being a core replacement constituent to lead in solder – as the lead-free movement hits full stride, there’s no end in sight.

It is an exceedingly difficult task, we know, to truly be in command of every detail of your supply chain. An appeal of outsourcing is that it obviates us from direct responsibility for all sorts of unpleasantries. But knowing I might be in some small part accountable for funding the hatcheting of some of the most vulnerable people on earth would certainly keep me up at night. It is incumbent on all of us not to dismiss this as something else to outsource.
 

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