Coursework 1- Portfolio Element 1
The Supply Chain for Gold
In this short essay the supply chain of gold will be discussed, in particular how the traditional supply chain can be applied to the supply chain of gold. Firstly, there will be a look on in what extent the supply chain of gold fits into the traditional supply chain. Secondly the possible issues and problems of the supply chain will be explained and finally the likely solutions for these problems.
The supply chain
The traditional supply chain exists of five components: the suppliers, the manufacturers, the distributors, the retailers and finally the end customer.
Gold has a rather large process stage, which makes the supply chain larger. To approach the supply chain a bit more in a practical manner, a few different companies will be used as an example player in the supply chain.
Gold as a raw material comes from the mines. These mines are located in countries such as the Democratic Republic of Congo or Rwanda (The Guardian, 2013). The next part in the process is the refinery stage. There are multiple companies who are occupied with activities in refinery. For example PAMP (Produits Artistiques Métaux Précieux), a Suisse based company. It is a leading international gold refiner and also the largest manufacturer of minted bars in the world (Gold Bars Worldwide, 2014). PAMP is part of the MKS Group, which is a leading global precious metal and financial services company based in Geneva (PAMP, 2014). This company has a broad client database including central banks and jewelry manufacturers and wholesalers (PAMP, 2014). After the process of the raw material, manufacturing and wholesaling comes the retailer. H. Samuel is a jeweler. This retailer has no activities in the processing part, only in the retailing (H. Samuel, 2014). An example of a company that has more parts of the supply chain in their hands is Perth Mint, an Australian based company that has their activities in refining, distribution, manufacturing, importing and wholesaling of industrial products and jewelry goods. In short, the gold supply chain is applicable to the traditional supply chain, but it is a bit more expandable due to the large process stage of gold as a raw material. In the second supply chain below a recycling stage can be added; as gold is a material that can easily be recycled (The Guardian, 2013).
The traditional supply chain
Example of a gold supply chain, Responsible Jewelry Council: Gold and the Jewelry Supply
Issues and problems
The companies that are discussed in the last paragraph all have a say or a policy regarding the ethical aspect of gold process. PAMP for example states that they monitor their suppliers, to check that each supplier comes across the criteria of ethics and business tasks such as the well being of the employees and reduce the impact on the environment as much as possible. The MKS Group has a “responsible precious metals group policy” which explains their commitments for responsible supply chain ethics (PAMP, 2014). Perth Mint also has a policy; “conflict metals and supply chain policy”, in which they state that they are committed to ensuring that their refining operations remain conflict metal free (Perth Mint, 2013). Because gold can be in many different “hands” in the supply chain it can be hard for the retailer to find out in what extent the operations of the previous stages in the supply chain were ethical responsible. Also, it is hard to trace back the origin of gold in specific products due to the possibility of mixing gold from different sources in the process stage (Verite, n.d.). H.…