While many companies still face uncertainty over Conflict Minerals reporting, some are re-focusing their efforts on supply chain transparency. Since the new SEC Conflict Minerals Rule, organizations are also now taking a closer look at how to best manage supplier information in order to meet SEC expectations now and in the future.
One reason for this greater focus on transparency for companies across the board: a ‘domino effect,’ of sorts, from the Conflict Minerals Rule, and other reporting requirements. For instance, while privately held companies aren’t required to report to the SEC on the Conflict Minerals Rule, they are still affected since their customers, who are public, now require them to trace back their supply chain.
The Conflict Minerals Rule affects about 6,000 public companies – each of which must identify if their products contain 3TG minerals, including tantalum, tin, tungsten or gold – and perform reasonable country of origin inquiry to verify that materials were not obtained from the conflict laden Democratic Republic of the Congo based on responses from their suppliers. About 250,000 suppliers work with U.S. based publicly-held companies that are required to file. As a result, suppliers from privately-held companies now also have to obtain information and be held accountable from their publicly-held buyers.
For those companies that do need to file, the depth and global reach of international supply chains can make it difficult to get responses and to verify the information, including identifying the right person at each supplier and assessing if he/she has sufficient knowledge to understand the requirements.
Further deepening the problem is the enormous amount of time spent checking back on supplier responses, verifying and managing information to comply with the new rule. While companies were expected to spend about 480 hours, on average, to complete a conflict minerals report, many – particularly those that supply other businesses – say they have spent far more, according to SEC reports.
Meanwhile, companies that have used technology to aid in this complex process have cut down their costs and time to streamline processes, track information, and do additional due diligence research to authenticate results of inquiries.
By implementing advanced technologies, companies can create and maintain best practices in the supply chain, allowing them to stay a step ahead of the ever-changing landscape of national and international trade regulations.
Increasingly, when it comes to supply chain accountability, more and more companies will be held to higher standards, whether from government regulation or public sentiment, to know more about the practices of companies with which people regularly do business. The better prepared companies are for present and future regulations – such as the Conflict Minerals Rule – the better for business transparency. As today’s regulatory environment continues to rapidly change, companies and organizations will continue to seek robust trade management systems to help lower risks and boost business.
Sri Ramadas, SVP- Projects & Services for Netwin Solutions, has 20 years of IT experience in business development, account management, project management and product implementation management. His company is online at www.gtkonnect.com.