Three Steps for Conflict Mineral Compliance

By Paul Martyn — BravoSolution

The first deadline regarding last year’s SEC Conflict Minerals Rule is fast-approaching on January 31 – and companies are scrambling to report what conflict minerals – gold, tin, tantalum and tungsten sourced from the Democratic Republic of Congo (DRC) and surrounding countries – have entered their supply chains since the start of 2013.

That level of minutia rarely exists in a supplier database; if it exists at all, the information is scattered throughout incompatible systems or worse, in file cabinets somewhere.

To create a comprehensive process for adhering to the conflict mineral rule, consider these three steps:

  1. Start with data collection. Survey your supply base and ask two questions: Do you provide our company with any products manufactured with tin, tantalum, tungsten, gold or any other conflict minerals? If so, where are they sourced from? Then, capture this intelligence in one, central database, which can enable easy reporting and analysis.
  2. Tap the power of contracts. Contracts can define much more than payment and delivery terms. Build clauses into supplier contracts that restrict them from sourcing any materials from the DRC, or if they do, the clause must clearly outline the level of reporting the supplier must give to the buyer, in compliance with the SEC ruling. Again, this should extend beyond tier-1 suppliers to include tier-2, 3 and 4 suppliers.
  3. Leverage technology to optimize reporting.  Even with all the information at hand, if you don’t have the tools needed to make sense of the implications for your company and the new reporting standard, the legwork won’t mean anything. Invest in contract management and spend management tools that are complementary and will allow your team to analyze the supplier information based on different scenarios.

For advocates of deeper supply chain visibility (like me), the SEC ruling is a breath of fresh air, and motivation for companies to emulate this as a best practice for every raw material and product, at every phase in the supply chain. It’s a tall task, and we often only see the negative stories when companies are oblivious to what’s happening at supplier locations. Think Apple and the Foxconn scandal and the tragic fire that killed 112 workers at an unauthorized, subcontractor of a Walmart supplier.

Are you bucking the trend? How are you ensuring compliance throughout the supply chain?



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