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Materials in the Supply Chain: Why Organizations Need Clear ‘Material-Input’ Visibility

March 12, 2024

Article

Raw materials or, better stated, “material inputs,” form the beating heart of modern supply chains. While hearts usually aren’t visible, they are fundamentally essential to the health and security of a supply chain.

Material inputs (things like metals, plastics, electronics, chemicals, and active or inactive ingredients) are the building blocks that products are made of. Manufacturers need clear visibility into material-input supply chains in order to comply with regulations, manage costs, prevent reputational damage, and ensure successful business operations. This includes visibility into widely used intermediaries in most material-input supply chains, not just the mines or manufacturers of a material or ingredient.

In this article, we’ll explore why clear visibility down to the nth tier in supply chains is essential, especially when it comes to the timely purchase and supply of material-inputs.

What Risks Are Hiding in the Raw Material Supply Chain?

Due to the fact that most assemblies, parts and components that go into modern manufactured products are outsourced — it’s hard to know where material inputs originate.

Identifying which materials are sourced from which vendors or intermediaries, for example, often requires digging deep into the weeds and ensuring full visibility and monitoring at every stage in a globally distributed manufacturing process. Many companies are now required to ensure no associations with sanctioned entities or individuals. Examples include: the U.S. OFAC list and EU Blocking Statute that require organizations to conduct thorough due diligence processes with all applicable suppliers, vendors, and contract manufacturers.

Another more vexing challenge is that it’s not enough to know what n-tier dependencies are. Increasingly, companies are required to know how a product or piece of equipment was produced or how the raw materials or ingredients were mined or manufactured. For example, global regulations against modern slavery affect the sourcing of many materials, like cotton. If your product contains cotton, the shipment of that fiber could be seized if it’s from the Xinjiang region of China due to forced labor considerations.

The bottom line? Businesses need transparency when it comes to where material-inputs come from — and that means tracking each item through every step in the mining, manufacturing, distribution, packaging and re-packaging process. Sophisticated technology from Exiger can help simplify that work.

Exiger’s Technology Creates Visibility into the Materials in Your Supply Chain

Exiger’s proprietary 1Exiger platform connects all the n-tier suppliers, products, assemblies, parts and material inputs in your distributed manufacturing or supply partner network so you can easily track, trace, and report on potential disruptions or compliance with various regulatory requirements.

This kind of visibility can help with everything from regulatory and criminal risk mitigation to onboarding and monitoring of existing vendors, predicting such things as operational disruption and shortages, or detecting cyber vulnerabilities in suppliers — all with an eye toward creating a more resilient vendor ecosystem.

Let’s look at three distinct benefits within the 1Exiger platform that deliver a robust supply chain management solution.

Track Material Origin and Supplier Compliance

Many manufacturers are in the dark about their suppliers’ compliance status and the origin of materials or ingredients that go into the parts or products they furnish. Without tracking the material-input provider and compliance details, businesses can face bottlenecks — from lost revenue due to recalls and supply chain disruptions to extra expenses from the costs of litigation and/or penalties associated with noncompliance.

Reduce the Cost of Material and Component Parts

Exiger’s SDX solution can also help you reduce the cost of material inputs and component parts (like fasteners, electronics, and more) that go into your products. It leverages n-tier and item-level visibility to enable the consolidation of material-input sources and the purchase of common materials in quantities that qualify for volume discounts.

By providing you with insight into who is purchasing what materials, in what quantities, and at what intervals and prices, you are able to collaborate with n-tier suppliers on the purchase of certain strategically important material inputs. Often this will yield savings in the 7-22% range by enabling multiple independent users — previously purchasing in small sub-optimized quantities — to buy off of the same contract. Moreover, by sharing a forward-looking forecast with material-input sources, you can dramatically reduce speculation about the quantities, sizes and types of material required, and when they need to be in inventory. By eliminating speculation at mills, manufacturers, and distributors, this enhanced view of demand tends to dramatically improve material-input lead times and service levels.

Access New Sources of Supplies

Finally, in scenarios where common material-inputs are sole-sourced or where alternative sources are limited, SDX can help you create conditions that increase competition for common material inputs or that attract new sources of supply. In many instances, aggregating common material inputs and allowing multiple independent users to purchase off a common contract has proved instrumental in forging true supply chain partnerships and in eliminating persistent supply constraints.

SDX allows organizations to forecast combined raw material demand across multiple sites and sub-tier supplier life cycles. This data can help reveal additional suppliers that may not be on your radar — potentially helping to reduce lead times and giving you access to new sources of supply.

Ensure the Compliance and Security of Your Supply Chain

Gaining visibility into raw materials throughout your supplier ecosystem is essential for supply chain risk management and ensuring compliance to many regulatory requirements, including but not limited to: USMCA, UFLPA, Buy America Act, REACH, and RoHS. Exiger’s technology solutions provide the visibility your organization needs in order to identify and surface risks buried deep within your supply chain, customer pools, and third-party relationships.

By leveraging Exiger’s sophisticated analytics software coupled with a re-imagined approach to procurement, organizations gain the visibility needed across their distributed manufacturing network to reconnect finished parts with raw materials and component parts. With this advanced supply chain insight, organizations gain the clarity that is necessary to help make the world a safer place to do business.

Illuminate every level of your supply chain with Exiger. Request a demo now and get started.

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