Big data, the key to navigating the resource risk maze?
A lack of robust data is hampering efforts to guard against some of the biggest environmental risks associated with the successful supply of goods and services, as Maxine Perella finds out
The increasingly complexity of manufactured products now makes it almost impossible to understand the value of materials in a supply chain, presenting real resource risks for businesses as climate pressures take hold.
Volatile commodity markets mean that if a specific material suddenly increases in price, or has very limited supply, this can accelerate up the supply chain and cause production processes to be put on hold with potential devastating consequences.
This was aptly highlighted in 2011 when Apple was badly hit by the consequences of the Japanese tsunami. A quarter of its ipad components are not only made in Japan, but are hard to source elsewhere. With production lines down for several weeks, the company saw its share price sink by 6% in a fortnight.
While natural disasters like tsunamis are hard to predict, other climatic trends should in theory be easier to map, especially around the supply of rare earth metals and minerals. But a lack of robust data - and access to it - are hampering efforts to drill down on this front.
The pressing issue of data was discussed in some detail at the launch event of the Defra/BIS Resource Dashboard in London yesterday (July 29) hosted by the Knowledge Transfer Network for Environmental Sustainability (ESKTN). The dashboard, which is a key output of the Government's Resource Security Action Plan, is a business tool that aims to define in greater detail how resource security links to critical materials supply.
In order to draw up a mitigation strategy, manufacturers and their supply chains need to make informed decisions on material and product security. For instance, what components contain specific elements, and how do they arrive in the final product? What are the consequences of restricted raw material supply? Future technology developments may help make a product more sustainable and cheaper to produce, but are there other demands on the same materials?
To be able to answer such questions, companies need reliable information and statistics to draw on, and for that data to be readily accessible - either in the public domain or from relevant stakeholders. However according to some experts, such data is sorely lacking - not least because of the relentless pace of change society is experiencing.
According to the British Geological Survey's head of Science for minerals & waste Andrew Bloodworth, global supply chains are drawing on more and more rare earth elements to feed demand for smarter IT and communications, but there remains a lack of understanding around the geological nature of these materials and their respective resource risks.
"The increasingly complexity of technologies we are using means we are using more of the periodic table," he points out. "The trouble is, things can change really quickly and the big issue is data, it's very hard to get the data we need, particularly around secondary recycling materials."
Bloodworth argues that with such poor metrics around raw materials extraction and secondary material flows, there is a pressing need for intervention right across the supply chain. He highlights the issue of metals mining and the fact that while around 90% of gold is recovered within a typical gold mine, other metals fare less well such as tungsten, where despite its rising use and application, less than 75% is extracted from the ore.
Greater extraction efficiencies could be achieved, but deeper, more sector-based research is required for certain material or product types. If this was then linked to material flow analysis across the value chain, right through to end-of-life, it would yield considerable value in terms of building up a reliable database that businesses could refer to.
However working out what type of new data is needed, what form it should take, and how it can be accessed, is one of the key stumbling blocks according to ESKTN deputy director David Gardner. In launching the Resource Dashboard, he says its aim is to provide an understandable representation across the supply chain of the risks to growth resulting from resource limitations.
"Material security and price volatility are big global risks to industry and business - but how do you differentiate between the two? How are people looking to use such data, where should that data be held and who should manage it? These are the big questions," he notes.
Many observers feel businesses can only do so much in isolation in attempting to address these issues, and that more public-private collaboration is needed, underlined by strong government support. It's something readily acknowledged by Defra's own head of sustainable business, Jonathan Tillson.
"There clearly is action required [from government]. Our intention is that the Resource Dashboard can play a key part in this approach, but there is a need for a partnership approach between government and business," he admits, while asserting that "we can't step in and solve everything".
Meanwhile the Government is working on its own set of industrial strategies which should serve as a template for such collaboration, provided sustainability is written into the heart of them. Braking down some of the market barriers, particularly around competition law to help encourage more environmentally beneficial co-ordination between businesses, would help in this respect.
Manufacturers would certainly welcome such intervention, according to EEF's senior climate & environment policy advisor, Susanne Baker. "Government has a role to play in mitigating some of the risks around material security for business. Companies who can adapt their business models around these risks and carve out new opportunities can start to add considerable strength to their profit margins," she says.
Maxine Perella is waste editor at edie