Raw materials are in the headlines again, and it's not for rising costs this time. Instead, electronic companies are scrambling to meet the January 31 Securities & Exchange Commission deadline for reporting on “conflict minerals” — gold, tin, tantalum, and tungsten — that have entered the supply chain.
It isn't as simple as filling out a quick form and forgetting about it; most companies lack the information, processes, and technology needed to adhere to the new SEC reporting standard. Compliance won't be easy or cheap. According to Deloitte, “The SEC has estimated it will cost U.S. businesses between $3 billion and $4 billion to implement processes to comply with “the rule.”
Right now, affected companies are asking suppliers these seemingly basic questions:
- Do you provide our company with any products manufactured with tin, tantalum, tungsten, gold, or any other conflict minerals?
- If so, do you source any raw materials from the Democratic Republic of the Congo or surrounding regions?
Yet, the answers are nearly impossible to find. At the heart of the problem is supplier relationship management 101. Companies have relied, for too long, on incomplete supplier data that is scattered throughout various ERP and SRM tools — or worse, hidden away in filing cabinets. Coupled with Tier-1 and Tier-2 suppliers thousands of miles away, the biggest tech companies are disconnected from what's really going on throughout the supply chain.
My hope is that there is a silver lining to this new level of reporting: Companies should be compelled to gain this level of visibility into the supply chain for every raw material, facility, and product, reducing costs and risks.