Yesterday, the SEC promulgated rules associated with section 1502 of the Dodd-Frank Act, or the Conflict Minerals Law, as we informally call it.
In a post yesterday, we intimated that this rule would have a profound impact on manufacturing organizations. Many organizations “are already doing it,” according to Mickey North Rizza, vice president of Strategic Services at BravoSolution, and formerly of AMR Research and Gartner. “This is all about risk management.”
Readers can review the rules in their entirety.
We asked Rizza to describe what she sees as the steps manufacturing organizations will need to take to comply with the new rules.
All About Data
“It’s about collecting the data, analyzing and reporting on it and putting it into a process, with a few key process changes,” said Rizza, suggesting companies need to ask themselves a few easy questions:
- Do we make products? Do we have products that could have conflict minerals in them?
- Are they coming from the Congo?
- Are we at risk and what’s the risk? How do we find out if conflict minerals are in our products?
- How do we ensure we don’t do it?
“Regulations such as this make us realize that everything in the world is connected and you need traceability from a risk and compliance perspective,” Rizza told us.
Where To Start
Rizza suggested that the bulk of the work begins with data collection activities that lie within the sourcing organization. “Traceability involves all tiers of suppliers -- the end-to-end value chain -- and understanding your company’s tier levels will expose where you don’t have enough clarity and information in your supply chain,” she said.
Companies will need to consider how data will get collected -- will the company collect it like they do for OSHA or more like it is done to gather quality information from suppliers? Will it get collected in material data sheets or via the ERP system? (Rizza speculated ERP didn’t seem a likely place for it.)
“A lot of the work is going to be within the sourcing function,” said Rizza. “It comes back to operational compliance risk. Your supply chain information will need to be tied to your sourcing information or wherever you house that information.”
In a follow-up post, we’ll invite Jason Busch of Spend Matters to talk about some of the technologies designed to support traceability and CSR initiatives.