By Matt Thorn, COO and Co-Founder, Source 44
When retailers and manufacturers learned of Section 1502 in 2010, they knew it would have a far-reaching impact on their business practices. Never before had regulations existed that required a company to understand its entire supply chain, from mines to marketplace, to discover the origins of every bit of gold, tin, tungsten and tantalum used in the manufacturing of its products.
Given the vast network of suppliers and distributors, supply chains can become an intricate web that grows harder to manage the more complex a product is. Mines are often many tiers removed from direct suppliers. As a result, even companies committed to sustainable sourcing could inadvertently source minerals from regions of concern.
There is, however, some good news for companies that face the daunting challenge of meeting the requirements of the act: Forward-thinking organizations have been forging paths that can help companies trace materials used in their products to their source—and thereby ease the burden of conflict minerals compliance.
Path One: From Smelters to Mines
Believing that an industry-wide approach is needed to address the challenge of tracing conflict minerals, over 80 companies in the electronics and information and communications technology industries have joined the Electronic Industry Citizen Coalition (EICC) and the Global eSustainability Initiative (GeSI). Efforts by the EICC-GeSI have resulted in programs, like the Conflict-Free Smelter (CFS) Assessment Program, that aim to enable companies to source conflict-free minerals by evaluating the status of minerals that are processed by mines. CFS is a voluntary program in which an independent third party evaluates smelter and refiner procurement activities and determines if the smelter or refiner demonstrated that all the materials they processed originated from conflict-free sources.
Path Two: From Finished Products to Smelters
Companies like Source 44 that have experience bringing transparency to the supply chain offer a way to trace the metals used in finished products back to the smelter from which they were sourced—a process that requires transparency across a supply chain. Using a combination of proprietary technology and a staff skilled at engaging directly with suppliers from around the world, Source 44’s Conflict Minerals Program provides a comprehensive approach to complying with the requirements and intentions of Dodd-Frank. The tool automates the tracing process, making it easier to identify companies and regions of particular concern and thereby assess the potential presence of conflict minerals in a finished product. The information about a finished product is compiled in an easy-to-understand disclosure statement that summarizes the supply chain map, traceability and risks—another benefit for companies looking to streamline the due diligence process.
Arriving at Due Diligence Disclosure
Other coalitions or not-for-profit organizations, such as the Automotive Industry Action Group (AIAG), have formed for the purpose of finding industry solutions to pending regulations. While at this point major industries have different approaches to addressing the conflict mineral issue, solutions being developed do promise relief to retailers and manufacturers: Armed with tools designed to identify the origins of their raw materials should give companies the confidence they will be able to meet due diligence disclosure requirements.
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About Source 44, LLC
Source 44 is a leading provider of supply chain sustainability data services and solutions. The company brings value to retailer and manufacturer companies by delivering a unique blend of cost-effective technology, expertise and data to rapidly improve supply chain sustainability and transparency. Source 44’s solutions for conflict minerals, product carbon footprints, compliance and supplier assessment are accessed through its innovative web-based supply chain intelligence platform: Source Intelligence™. This dynamic tool enables users to leverage data and technology to drive sustainable supply chain decision making. Source 44 is headquartered in San Diego, CA. For additional information about Source 44, visit the company’s website at www.source-44.com
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