Skip to content

Avoiding the scrap heap!

July 19, 2017

When it comes to complex contracts and negotiations, scrap metal may not be the first thing you think of. But a recent edition of the Canadian ‘Globe & Mail’ tells us otherwise: “Despite the technological developments in the industry, the trust needed to do business effectively requires a face-to-face approach”.

The article goes on to explain the challenges of validating the integrity of suppliers, the provenance of the scrap and the standards of overall quality control in an industry that is increasingly global. These factors apparently demand site visits, human interaction and physical handshakes.

The arguments against automation reminded me of similar views from recent IACCM surveys – that the best way to improve negotiated results would be to reinstate face to face meetings. In both cases, not only is the conclusion wrong, but it flies in the face of the unstoppable march of technology. Rather than fight this advance, those who want to prosper should instead be thinking about how they can develop and deploy the right automated solutions faster than their competitors.

Let’s go back to scrap metal for a moment. The sources of supply are not infinite and margins are (apparently) low. It surely won’t be long before someone develops a ‘scrapadviser’ app where facilities are rated for their performance. They may even start selling through Amazon or a similar global platform, using industry standard terms and automated negotiation. And when it comes to a specific record of quality and origin, technologies such as blockchain lie at the heart of such information, offering reliable and authenticated data. (For more on blockchain and its potential to transform trade practices, see an excellent summary provided by Bertrand Maltaverne).

While scrap metal may not be top of mind for most of us, I found this story interesting. If something as mundane as the trade in scrap is heading towards technological disruption, just imagine how its going to affect you and your business – since I’m sure your ambition is to avoid ending up unwanted and on the scrap heap!

  1. Well, I guess I’m in danger of being called a fossil, however:

    -It’s the mundane items that are most easily automated. Complex purchases involving high-level strategic direct material products require a complex sourcing process, of which contracting is only a part.
    -Sourcing these items, particularly internationally, requires site visits to check quality practices, social responsibility practices and getting a general overview of management philosophies, production capacity ability to meet fluctuating demands. These items are more likely to be candidates for relational contract.
    -hitting the right balance between automation and relationship orientation is important and varies with the product being purchased and the countries of the buyer and seller.
    -certainly the transactional relationship should be automated.

    • Hi Dick,
      I don’t know to what extent you have been following developments in blockchain technology, but I think you will find many of your assumptions are already being overturned.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: