Conflict Minerals Compliance: Integrating Spend Analysis and Supplier Management Technology

Spend Matters and MetalMiner held an event earlier this year: Conflict Minerals EDGE. It drew over fifty senior practitioners from all areas of the Conflict Minerals supply chain – large OEMs, tier-one suppliers, distributors, attorneys, and consultants. The various sessions brought about much debate on the topic, but a number of topics stood out, especially after talking to more advanced organizations already making investments in the area (more on these in a minute).

One of our takeaways from talking to attendees is that the majority of companies don’t want to spend an arm and a leg on standalone Conflict Minerals compliance tools. Rather, they would prefer to integrate these efforts with other areas, to save money as well as to drive a better view of spending and supplier activity & compliance in a single, active repository and survey environment. The findings from this analysis are highlighted in the recently published Spend Matters paper: Conflict Minerals Compliance: Integrating Spend Analysis and Supplier Management Technology. BravoSolution has underwritten temporary free access to this analysis for Spend Matters readers.

When it comes to the key takeaways from Conflict Minerals EDGE that we highlight in the paper, a number of additional elements stand out as well:

  • Direct materials supply chains can be exceptionally deep. Tantalum, as one example, can have 5-6 different levels. It can be extremely difficult to determine a true source unless companies make a significant effort to do so, owing in part to intermediaries (e.g., metals traders in Belgium and Central Africa) and lower-tier corruption and extortion from the militaries in Africa.
  • Due to this challenge, “source unknown” has become the most common answer to early supplier responses for organizations taking compliance steps.
  • China represents the “white elephant” in the room in terms of compliance, with significant materials “laundering” happening in the country, making it very difficult to determine mine and smelter level sources involving any materials coming from the region.
  • The NAM legal case will likely have a small or no impact on the regulation. Companies should not plan for a legal win that will allow them to avoid making compliance investments.
  • Legal enforcement is likely to be weak (at least initially), with only 18 people available at the SEC to audit the 6,000+ firms impacted by the legislation.
  • Many larger companies have greater capabilities in-house than they think – including technology and supply chain expertise they can use without having to reinvent the compliance wheel.
  • In contrast to addressing the Sarbanes-Oxley legislation, the majority of organizations we’ve talked to are planning to spend little (or nothing) on third-party consultancies to help lead their compliance efforts, implementing programs, and systems.
  • Budget for technology is low, with most companies budgeting $250K or less for technology to support compliance efforts (note, this includes smaller companies as well, so the numbers might be lower than a survey of solely Fortune 500 organizations impacted by the legislation).

Given this context, it is high time for someone to provide a contrarian view on Conflict Minerals compliance technology: organizations should be as “green” as possible by leveraging tools already in their solutions portfolio to tackle the issue. In other words, recycle/re-purpose what you already have or pursue a compliance approach that will drive re-use in the future. This is in contrast to licensing one-off systems to address the compliance challenge outside of building greater visibility into supply chain spending and activities.

Spend Matters believes that among currently available off-the-shelf tools to drive Conflict Minerals compliance, spend analysis and supplier management capabilities show significant promise in this area. If you’re curious to learn the “how” and the “why” of integrating spend analysis and supplier management with Conflict Minerals compliance, we encourage you to download Conflict Minerals Compliance: Integrating Spend Analysis and Supplier Management Technology. As noted above, BravoSolution has underwritten temporary free access to this analysis for Spend Matters readers at launch.

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