Conflict Free Minerals: Competing on the Basis of Supply Chain Certifications and Audits

Supplier management is a topic that we cover almost daily on Spend Matters and MetalMiner. Much of the interest in this area continues to be from procurement and finance organizations looking at targeted programs for internal compliance or risk mitigation in supply risk management (supplier financial health), supplier diversity, basic compliance (e.g., OFAC, labor, code of conduct, etc.) and related areas that generally fall into either a bottom line or CYA bucket (in the technical sense). But we're finally beginning to see evidence that programs that focus on supply chain auditing are beginning to matter for the top line as well as the bottom.

Check out this press release from H.C. Starck as an example. According to the announcement, "H.C. Starck announced today that its tantalum supply chain has been declared free of 'conflict minerals' for a second consecutive year following an independent audit. The audit was conducted by a third party auditor assigned by the Electronics Industry Citizenship Coalition (EICC) and Global e-Sustainability Initiative (GeSI) as part of the Conflict-Free Smelter (CFS) Validation Program."

While the H.C. Starck example might be an outlier for June 2012, we suspect that by next year, we'll see an increasing number of suppliers (and even OEMs and consumer brands) competing and selling on the basis of their supplier management practices focused across a wide range of areas. These might take the form of multi-tier supply chain traceability programs including the avoidance of "conflict" items such as conflict minerals. Others will focus more on general supplier management compliance and the good corporate stewardship/citizenship that comes with such programs (e.g., certification that products do not contain restricted or hazardous substances, safety and quality standards, individual industry/category specific, certifications and accreditation, cross-industry corporate, social responsibility (CSR) compliance like emissions tracking and monitoring (CO2), labor practices, standards, supplier codes of conduct, factory audits and OFAC/government watch lists).

Regardless of whether you're reading your supply chain to compete on the top line on the basis or are pursuing more targeted supplier management initiatives, we would encourage you to check out our Spend Matters PRO research library on the subject. It includes a range of downloadable supplier management research briefs that are free to qualified practitioners:

Supplier Information Management Technology Fundamentals – Part 1
Supplier Information Management Technology Fundamentals – Part 2
Supplier Lifecycle Management: Reduce risk, Improve Performance and drive Supplier Value
Leveraging Supplier Management Platforms for Multiple Goals: Risk Reduction, Supplier Diversity and CSR
Supply Risk Management – Segmenting the Technology and Content Landscape and Choosing the Right Category of Solutions
Beyond Basic Scorecarding – Supplier Performance and Development Approaches to Drive Competitive Cost and Risk Advantages
Supplier Management Market Observations: Recent Trending, Musings on SAP's Core Offering and General Deployment Pitfalls (for all Solutions) to Avoid
Accurate Supplier Data Creates Savings for Pharmaceutical Shared Service
Getting Past the Existential Connectivity Funk: Stop Waiting for the Supplier Network Revolution
Developing and Maintaining Accurate Supplier Data: Lessons from Personal Hygiene to Overcome Dirty Supplier Information in Finance and Procurement

- Jason Busch

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