News

Safer supply chain: Burying cell phones

• By Lana Gates
• June 7, 2004

Supply-chain security and environmental compliance are things to watch for in the next supply-chain wave, predicted Bruce Richardson at AMR Research's recent Supply Chain Executive Conference in Scottsdale, Ariz. New rules for freight entering the U.S. have altered business profiles, noted AMR's senior vice president of research. Before that, in 2002/2003, new customs initiatives such as ISA, ACE and C-TPAT were the focus. Now "safe commerce" is a clear objective.

About 16 pilot projects, including some from Motorola, Hewlett-Packard, Starbucks, Canadian Tire, Unisys and Sara Lee, are in place to further port-to-port security. "The Department of Homeland Security wants to extend the U.S. borders into other countries," Richardson explained. In the future, he believes it will be edge-to-edge security using RFID and biometrics.

The pilot projects are due to end mid-year. Expected benefits of this expansion include lower inventory, reduced wait times, higher service levels and better risk management, Richardson noted. Currently, a "typical international trade transaction" involves 25 parties and 30 documents, he noted.

Meanwhile, environmental concerns are causing manufacturers -- among them Sony, NEC, Dell and Hitachi -- to adopt recycling programs. Richardson believes cell phones will come under these programs soon as well because they are made with arsenic and lead. The average turn-in time on a cell phone is every 18 months and "only 3% of these get recycled," Richardson acknowledged. He forecasts that companies will have to maintain a database of every product sold and what chemicals are in each product. "You have to recycle parts and know what you use," he said.

In addition, supply-chain investments are on the rise. AMR predicts this will be a $6.7 billion market by 2008, with ERP vendors currently the best positioned.