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Recently, at a supply chain conference I was attending, the discussion came around to collaboration and transparency in the communication between supply chain actors. The question was what information should be shared, and what are the limits to transparency, if any? As expected, service providers, OEMs, distributors, and logistic companies had different approaches.
In the customer-supplier relationship, the customer wants to understand everything about the cost structure of its supplier, whereas the supplier is trying hard to preserve its margin. As every company is the customer and supplier of someone else, there is some sort of a schizophrenic attitude; the information we expect our suppliers to give us we do not want to provide to our own customers!
I believe that there is a definite need for a better understanding of each other's cost drivers, and that the more comprehensive the understanding, the more collaborating partners know what they can expect from each other. This helps to drive enhanced responsiveness, predictability, and financial sustainability and contributes to the goals of reducing risks in the supply chain.
At the same time, the fuel for process innovation and improved efficiency is a company's appetite for improved growth, profit, and return. If, for the sake of collaboration, the customer ends up having full control over its supplier's gross profit, this is very likely to inhibit the supplier's creativity, and it will diminish the collaboration efficiency in the longer term.
Think about it: A common theme when talking with OEMs about their logistic service providers is that they regret their lack of creativity. Many are saying they would love to have more dialogue around innovative solutions. Those conversations will only be enabled if we move from an open-book policy to a shared benefit practice. A conclusion drawn in a paper by Martin Christopher and John Gattorna was that “alignment of supply chain strategies and processes between business partners enables service improvements to be achieved at less cost,” and that “by releasing value in this way prices can actually be reduced if necessary whilst still maintaining the supplier's margin.”
Targets should be focused on longer-term process improvements that reduce cost across the supply chain, rather than being short-term and standalone as well as driven by suppliers' gross profit goals. I don't see how an open-book policy between supply chain partners can encourage anything but a short-term focus where the attitude is more toward making quick wins on the back of one another, instead of embracing the overall efficiency of the supply chain.
The planned economy has shown its limit; the opportunity for enhanced profit is the fuel for innovation. If that opportunity is taken away, I fear that there will be a loss of appetite for innovation.
I do agree with the point open book pricing leading to minimal innovation with suppliers. Definitely when suppliers need to share everything about their pricing they never worry to bring it down by using innovative tools or processes. But now a days most of the big OEM's demand open book pricing to get better control of price. Some suppliers able to do so and be successful but most of them gets deterred in long term.
In the consumer market, the price buyers pay for goods and services are supposedly transparent and they can therefore do comparison shopping. A buyer knows exactly how much an iPad costs versus the Google Nexus.
In the B2B world, price masking is the norm and it is encouraged especially in the electronics manufacturing world where buyers don't want to tip their hands as to what kind pricing they received from a supplier and sellers don't want open pricing either for whatever reasons.
Yet this information is sorely needed by buyers and sellers. In order to get this information, companies pay third party service providers to do the investigation for them. What exactly are the benefits of price opacity and do they outweigh the advantages of having open pricing?
@Bolaji
“What exactly are the benefits of price opacity and do they outweigh the advantages of having open pricing?”
I can't answer for sure, but apparently suppliers seem to be satistied with that. Price opacity may give them a dominant position over their customers who are in competition with one another and therefore do not (apparently) collaborate. It is a kind of omerta between rivals for the fear of having to share other information than just pricing.
Great post by the E14 blogger. Shame on the Obama administration; another example of the absolute incompetence of this president. Maybe we can have the world just start dumping all the e-waste on US soil or in our rivers and waterways.
One would think a $200Million a day trip to India for 10 days by this president last year would have gotten more accomplished
@Screen Writer,
The question is “ Why is the US Congress unwilling or unable to act? ” Does that have anything to do with the president spending a $200Million a day trip to India? Please can you elaborate?
Maybe someone from the EPA can tell us how they dispose there electronic equipment.
I know , they take there electronics to a electronic component recycler and the recycler sales the electronics to CHINA or INDIA who then in turn sales the component back to OEMS as counterfeit parts. Now I understand the meaning of recycle.
Recycle only RoHS compliant electronics, this makes complete sense!!!!!!!!
May guest is that CHINA and INDIA can't recycle the worlds electronics so they want all the countries to take care of there own recycling. There countries are turning into a Hazardous waste pits.
Kudos to Indian Government for this bold initiatives. Kabadiawala are good, but government should regulate it for safety and and well being of all citizen. What is reason US is not making law for this?
” It also doesn't ban e-waste exports to developing countries or restrict the hazardous substances in our electronics.”
I think it should do it , every country should be responsible for its e wastes plus this will give a strong hit against counterfeit parts. (We have discussed the subject in details in EBN)
Every country is responsible for the consumption of various electronic goods and they should manage the ewaste with in the country rather than exporting it to other countries treating them as dump yards. I appreciate finally India decided to put some rules and regulation in place ewaste management.
Gark, usually the EU/US countries are dumping the e-waste either to India or any of the African countries on different accounts/names. Now the situations had changes, environmentalist and green peace movements are stronger. I think the new rules are formulated because of the pressure from such organizations. Let’s wait and watch how much it’s effective and able to take further by respective authorities.
Nemos, I think if we are handing over the e-waste to the OEM companies, then it's their responsibility to recycle and to do the saftey measures. The main advantage is, from manufacturing point onwards they will take care about the saftey measures and may force to adhere to the international standards and RoHS. I personally feel that this is best way for forcing companies to follow ecco friendly measures.
Recycling is an embedded quality of India people. Indians recycle almost anything- clothes, paper, utensils, ornaments, machines and what not. The poverty of the majority of its people have taught them the art of living through recycling.
The world's biggest ship-breaking facility is also in India. and Indians are famous of making “Jugaads: ( contraptions ) out of the garbage – the punjabi's are well skilled at that.
So it is no surprise that India is also one of the largest recycler of the e-waste.
The govt regulations will only try to regularize this industry and prevent the ill-effects of the recycling – in my opinion
Correct. That's what this legislation aims at doing: That is, regulate an industry that needs to be monitored to avoid the negative impact of these activities on society. It won't stop companies from shipping electronic waste to India and it won't stop the recyclers but it will at least bring the activities out into the open to a large extent.
Hospice: Thank you for replying and thanks for the note on Congress. The US has done very little on most environmental issues. The US has never ratified the Kyoto Protocol, does not adhere to RoHS or WEEE practices and invests $140MIL a year in solar,wind and wave technologies as China invests $4Bil a year. Those comments are directed at the last four presidents and my disappointment is bi-partisan
My comment on Mr Obama spending $200Mil a day on his trip to India in late 2010 is just an example of the misguided values of this administration and past administations. He couldve had a TelePresence Call for free and used that $1Bil+ for environmental issues.
@Nemos,
“every country should be responsible for its e wastes”
Every country should enforce responsible e-wastes recycle policies, but I don't think the extended manufacturer resposibility makes any sense.
Ken, thanks for sharing the information that such a seminar/workshop is happening in Bangalore. Though i am working in electronics but i did not hear about it. When and where is this seminar happening?
Maybe you can ask the government about the enforcement agency (if any) to make sure that the rules are followed properly. Mostly either the general public in not aware of the rules or whom to approach if the rules are not followed.
Can Supply Chain actors agree to share strategy and agree to work towards agreed strategy metrics rather than showing their cards (i.e. cost structure)? For example if the actors agree that customization is the best strategy for the engagement then each actor can work (separately or collaboratively) in the direction of innovating the supply chain towards customization while each actor leaves their own internal optimization, cost-cutting, out-sourcing, etc. actions to themselves.
Sorry not to post until now. I was traveling but I'm now in India. Let me explain the two events I am attending. I participated in a Indo-US Seminar on “Waste, Risk and Hazardous Management” at the Bangalore Institute of Technology on July 27-28. It was co-sponsored by IEHMM and the Karnataka State Pollution Control Board (SPCB). It was attended by local environmental professionals. It addressed India industrial wastewater treatment and hazardous waste disposal concerns.
I am now participating in a three day (July 29-31) “Instruction Course on Hazardous Materials Management” at BIT. It is also co-sponsored by the Karnataka SPCB. I will speak on electronic waste disposal and the new India RoHS and WEEE rules. I will be supported by a member of the Karnataka SPCB. I have already spoken with the Karnataka SPCB Chairman. I will blog after my July 31 talk. Please know these conferences discuss a wide range of topics. India e-waste rules are just one of the topics.
Ken, Thank you for the update. I am curious how much of what's happening in India is being driven by events within the continent itself as opposed to the regulations in effect in other countries. Is there a sense that Indians are demanding restrictions on the use of hazardous chemicals too and how “green” do Indians want to be even as they desire economic growth?
Screen Writer,
Wow that sounds crazy (to a mere layperson) but have they documented anywhere what that $200M per was used for?
I have just returned from India. It is such a fascinating place! The people, the colors and pace of life are all intoxicating.
You asked how much of what's happening with e-waste is driven by events within the continent as opposed to regulations already in effect in other countries. Both are major factors.
India has long recognized their e-waste problem. E-waste has traditionally been inefficiently and unsafely handled by India's unregulated “informal sector”. The government drafted guidelines for ensuring the safe handling of e-waste in 2008, then published proposed e-waste rules in 2011 (modeled after EU RoHS and WEEE rules). The new rules that just took effect are a result of those efforts.
The Central Pollution Control Board's strategy is to develop a safe formal e-waste handling sector for use by industry, and to divert corporate e-waste from the informal to the formal sector. They are also banning e-waste imports and mandating that manufacturers eliminate hazardous substances in electronic equipment by 2014.
India is one of the “greeenist” societies I have ever seen. Because India is a poor country, everything has value. Very little trash is landfilled. Trash is picked through and everything of value is salvaged, reused or sold. Visting India makes a westerner realize how over-indulgant and wasteful we are.
Ken–thanks for the first-hand reporting. What if India were to become the leader in reclaimation and recycling? Rather than just accepting these items and allowing residents to pick them apart, capitalize on the influx of e-goods and resell purified materials and components back to the industry?
I'm sure this sounds a little naive…
Barbara – Good question. E-waste in India is curently a major source of raw materials for the electronics industry. Low wage workers from the informal sector are able to cheaply pick apart scrap equipment and salvage components/extract metals. The problem is these workers have been unregulated, are using unsafe practices, and are contaminating themselves and the environment.
India is requiring upgraded in-country e-waste handling and recycling practices and has decided to stop the import of e-waste. They want importers and India electronics manufacturers to remove hazardous substances from their products.
The detrimental effects of importing and improperly handling large quantities of western country e-waste, seems to outweigh the benefits of the reclaimed materials. If a developing country mandates proper in-country recycling, would it be cost effective to ship western e-waste there for handling? India doesn't seem to think so.