The chase for quality raw materials

Font Size

Print

Feedback

Email

Discuss

: traders of these raw materials procure lots from mills, re-cyclers, or import in lots. Their driving force is cost and their expertise to play with prices.

Another interesting feature of the Indian market is that whereas recycling as an industry was encouraged in developed countries to address the environmental concerns born out of waste, the prime objective of Indian recyclers is to leverage it as a tool to reduce cost. The choice of technology employed has been to only attain this objective. Quality is neither their forte nor their desire. Therefore, for a large number of SMEs, access to quality raw material is becoming a new challenge.

SMEs point out that this is one of the major reasons for their poor image as producers of ‘inconsistent quality’. They find it extremely difficult to have access to quality raw materials on a consistent basis. Second, they claim that in iron and steel, they have to bear the extra cost of 5-7% because of the poor quality of raw material.

Third, their requirement being of small lots, import is not viable in most cases. The net result is that it affects their competitiveness and impedes their efforts in becoming suppliers to large production networks. What is clear is that there are inefficiencies in the supply chain of industrial raw materials in India.

There are several things that need to be done to make the supply chains function more efficiently. First, large mills need to adopt best practices of product markings and ensuring quality right up to retail.

Second, we need to think why, in spite of a business opportunity in India, large national or international trading companies have not yet ventured to exploit market inefficiencies.

We are importing aluminum rods for the first time. There is a price premium of $10-15 if we accept an LME registered product. Should we go ahead?

Rajat Shah, Ahmedabad.

Trade experts are of the view that paying a small premium for LME registered products is always worthwhile. It would ensure a minimum standard disclosed of the product you import.