Shortages of natural resources and raw materials can make prices fluctuate substantially and even bring electronics manufacturing to a screeching halt. Proper planning is critical to staying ahead of the potential shortages.
Bindiya Vikal, CEO and founder of Resilinc, a provider of supply chain risk mapping and monitoring solutions, said:
Resilinc has been told by senior supply chain executives in high tech and automotive that they are closely monitoring natural resources and raw materials because shortages can quickly lead to extreme price fluctuations, directly leading to unplanned costs. These types of extreme price changes can have a direct impact to the bottom line.
She added that the raw materials on many people’s watch list include silicone (used in wafer production); ceramics (much of which comes from China and is susceptible to regional geopolitical changes); precious metals (widely used in component manufacturing); and, surprisingly, helium (which has been on the edge of a shortage for several months and could be in periodic short supply this year).
“Raw material analysis at the commodity level is required, and most midsized companies don’t have the resources to do all this work and keep a pulse on natural resource constraints,” Vikal said. “Analysis [and] early monitoring detection would help companies stay ahead of disasters.”
Some companies have already taken a proactive stand in identifying and managing possible natural resources risks and have linked them to business and supply chain sustainability initiatives.
At Johnson Controls Inc., for example, the company’s biggest challenges are material acquisition, including materials containing natural resources, and minimizing risks while maximizing business opportunities within the supply chain, said Charles Harvey, the company’s chief diversity officer and vice president of community affairs.
One way the company manages these challenges is by spelling out specific sustainability requirements in every supplier contract, he added. Along those lines, the company, which is a member of the CDP’s Supply Chain Committee, mandates that its direct suppliers reduce their greenhouse gas emissions by one percent absolute annually.