Environmental Damnation 24: Rare Earth Metals

As defined by Wikipedia, a rare earth metal (REM), or rare earth element (REE), is one of a set of seventeen chemical elements in the periodic table, specifically the fifteen lanthanides, as well as scandium and yttrium (because they tend to occur in the same ore deposits and exhibit chemical properties). While many of these elements are relatively plentiful in the Earth’s crust, they are rare in that, due to their geochemical properties, they are typically dispersed and not concentrated in ore deposits that are (easily) economically exploitable.

They are a damnation because:

  • almost every piece of modern technology depends on at least one of these elements
  • many of these elements are in short supply and supply, based on current mining capacity, is expected to be insufficient as early as 2020 for some of these elements
  • many of them cost more than precious metals
  • on average, 95% (or more) of rare earth metals are now being mined and provided by a single country: China
  • … and China is considering export restrictions that could significantly cripple global production of modern technology if implemented

To illustrate just how important these metals are, consider the common uses:

Metal Selected Uses
Scandium aerospace, metal-halide and mercury vapor lamps, and radioactive tracing agents
Yttrium lasers, superconductors, microwave filters, and spark plugs
Lanthanum flint, hydrogen storage, battery electrodes, camera lenses
Cerium oxidizing agent, polishing powder, catalytic uses
Praseodymium magnets, lasers, carbon arc lighting, didymium glass
Neodymium magnets, lasers, didymium glass, ceramic capacitors
Promethium nuclear batteries and luminous paint
Samarium magnets, lasers, neutron capture, masers
Europium phosphors, lasers, mercury-vapor and fluorescent lamps
Gadolinium magnets, lasers, X-ray tubes, computer memory, neutron capture, MRI contrast agent, magnetostrictive alloys
Terbium phosphors, lasers, fluorescent lamps, magnetostrictive alloys
Dysprosium magnets, lasers, magnetostrictive alloys
Holmium lasers, optical spectrophotometers, magnets
Erbium lasers, vanadium steel, fiber-optics
Thulium X-ray machines, metal-halide lamps, lasers
Ytterbium lasers, decoy flares, stainless steel, nuclear medicine
Lutetium positron emission tomography, lutetium tatalate hosts

And every computing device requires magnetics, memory, and optimal transmission (and this includes your laptops, phones, cameras, cars, etc.). These days almost everything has a microchip with a persistent (flash) memory. So when you consider the five-pronged reality described above, rare earth metals are quickly becoming a thorny Procurement Damnation.

If You Still Rely On ERP, You Could End Up in the Supply Chain Disaster Record Books!

Back in 2006, Supply Chain Digest put out a paper summarizing the 11 greatest supply chain disasters, which it revised in 2009. (Download from SCD.) They are summarized in the following table:

Company Impact Cause
Foxmeyer Bankruptcy ERP and Automation Failure
GM Billions Lost Robotics
WebVan Bankruptcy ERP and Automation Failure
Adidas Forecasts 80% off; market losses persist for years ERP and Automation Failure
Denver Airport Late opening; PR fiasco Automation Failure
Toys R Us 1000s of orders unfulfilled; huge PR fiasco Serious Understaffing
Hershey Foods 150M+ revenue loss; 19% profit loss; stock plummet ERP and Warehouse failure
Cisco 2.2B inventory write-down; 50% stock plummet ERP and Inventory Forecasting
Nike 100M Profit shortfall; 20% stock drop ERP and Inventory Forecasting
Aris Isotoner Fire Sale Outsourcing Snafu
Apple PR Black Eye and Major Market Share Loss Conservative Inventory Strategy

See a commonality? Six (6) of the Eleven (11) failures are directly or indirectly caused by an ERP fiasco. Three (3) are due to poor inventory planning and/or management and ERP (integration) failures, and three (3) are due to warehouse automation failures (and include an ERP integration failure or management component). Technology has been the leading cause of major supply chain disasters, and the technology has always been either the ERP, or dependent on the ERP.

If this does not convince you that ERP is NOT Enough and an over-reliance on your ERP system is just a supply chain disaster waiting to happen, I don’t think anything will and will advise that if you are religious and pray, start praying for a smooth supply chain today. (Not that the doctor thinks praying will help, but nothing will as long as your organization over relies on the ERP.)

For a detailed discussion of Why ERP is not Enough, I suggest, if you have not already done so, downloading the linked white-paper by b2bconnex today (registration required).

As the doctor pointed out in his last post, not only does the paper address some critical ERP shortcomings in detail that you need to understand, but it also helps you understand why you need, depending on your business, ether a modern sourcing platform, a modern procurement platform, or, particularly in manufacturing, a modern supply chain communication and collaboration platform that handles all critical communications. And it does so without any reference to any particular platform and contains no marketing spiel, a rarity for a vendor white paper today.

So go ahead and download Why ERP is NOT Enough today and begin your journey to the adoption of a modern supply management platform so that your organization does not end up on the top 11 supply chain disasters list due to an inevitable ERP failure. (Like a natural disaster, it’s not a matter of asking “if” it will happen, it’s a matter of being prepared for “when” it will happen.)

45 Years Ago Today

Your intellectual property became safer throughout most of the world when the WIPO Convention entered into force and formally established the World Intellectual Property Organization.

The goal of WIPO is to provide a global policy forum where governments, intergovernmental organizations, industry groups, and civil society come together to address evolving IP issues. In addition, it manages the International Patent System that allows an individual or organization to seek patent protection by filing one international application and provides an international Alternative Dispute Resolution service to resolve IP disputes outside the courts in a neutral forum that can save you time and money. While big American companies prefer the courts, IP cases can run up legal bills in the hundreds of thousands of dollars, often more than the patent is ultimately worth.

Forget SIM. The Real Answer is SIR.

Earlier this year, Spend Matters ran a post by Jason Busch on Why Collect Supplier Information that highlighted some of the information needs addressed in a recent piece by Mr. Busch and Mr. Gustin on Supplier Enablement for Invoice Discounting and Supply Chain Finance: Background, Tips, and Secrets for Success that not only highlighted some of the needs for detailed supplier information but also outlined many other reasons why organizations need supplier information.

The traditional answer to this is Supplier Information Management (SIM), implemented by way of a supplier portal where suppliers provide, maintain, and verify their information to the buyer on an as-needed basis. While this sounded like a good solution, especially since the amount of information some buyers need to collect on a single supplier can be staggering, which makes the task almost impossible for a large organization with thousands of suppliers, all it does is shift the burden to the supplier. The rationale provided was that the supplier, who needs to sell its wares, would accept it as a cost of doing business, especially since the supplier would need to provide much of that information on an RFX anyway and this way only has to provide the information to the buyer once as it would be maintained and reusable on every future RFX or information request.

This sounds fine and dandy, but really only makes sense if the workload for the supplier is less than the workload for the buyer. Otherwise, the work is just being shifted, overall supply chain efficiency is not increasing, and cost is not being take out of the supply chain. And SIM is not delivering on its promise.

The reality is that the workload for the supplier is not decreased because, with the proliferation of SIM systems across Procurement, more and more organizations are asking more and more of suppliers. And the perception that the supplier has less customers than the buyer has strategic suppliers is not always correct. Since most large buyers with risk avoidance tendencies only buy from large suppliers, and since suppliers can only become large suppliers by attracting a large client base, the supplier has as many buyers as the buyer has strategic suppliers — and the supplier has just as much data entry and maintenance to do as the buyer did before the buyer purchased its SIM solution. The work hasn’t been minimized, only shifted, and the cost has only increased because the supplier’s cost of data maintenance is no less than the buyer, and the supplier will just add a mark-up to cover their cost.

The true answer to the supplier information problem is not a SIM solution, but a SIR solution — an on-line, shared-access, Supplier Information Repository where a supplier can enter all of their information once, maintain it, and, under a fine-grained security model, share it with their customers (the buyers) on an as-needed basis. This reduces costs for all parties and truly takes costs out of the supply chain as the supplier only has to maintain one set of data, and the buyers can access all data from all suppliers for one low-cost annual subscription, which, because a vendor does not have to maintain multiple SIM instances, allows the vendor to offer repository access at a cost that is less than the cost of a traditional SIM solution.