APICS is the premier professional association for supply chain management.

The Devil Can Be in the Details

by APICS CEO Abe Eshkenazi CSCP, CPA, CAE |   0 | 0 | 0

“Conflict minerals” likely will become a common part of many supply chain and operations management professionals’ vocabularies. Next May when new Dodd-Frank financial reform rules go into effect, 6,000 companies will be required to name whether minerals excavated in certain conflict-heavy regions of Africa are used in their manufacturing processes.

According to the Wall Street Journal’s CIO Journal, “the law requires manufacturers to track the source of tantalum, tin, tungsten, and gold__all commonly used in electronics and consumer appliances ‘back to the mine … but it’s an almost impossible requirement,’” says Tim Mohin, director of corporate responsibility at chipmaker Advanced Micro Devices.

The tracking difficulty arises because the materials can be mined in very small operations__“someone with a shovel outside of his house.” These materials go though aggregation, are shipped to a port, and eventually make their way to the manufacturer, which faces challenges when attempting to determine exactly where its components come from. Adding to the complexity, supply chain partners can try to hide the source if it’s considered problematic.

There are some resources for manufacturers. The Electronic Industry Coalition sponsors a program to review smelters, who aggregate conflict minerals from many sources. The program currently has certified only a few dozen smelters, which is not nearly enough to provide all manufacturers with needed materials.

Enterprise software has the potential to enable companies to track their requests for supplier compliance data. According to the CIO Journal, the biggest enterprise providers, including Oracle and SAP, are offering options that enable compliance officers to record evidence of their efforts to establish the origins of materials, such as requests for suppliers’ bills of materials, that the company will need to prove due diligence if audited.

Even with next year’s legal due date, the Securities and Exchange Commission (SEC) is allowing companies to report their products as “indeterminate.” Experts predict many manufacturers will need that concession, and the SEC will be more tolerant if companies can demonstrate they have made strong efforts to confirm the source of their suppliers’ materials.

Conflict avoidance

Consider the following APICS Operations Management Body of Knowledge Framework definition: “Corporate social responsibility means using fair and beneficial business practices regarding labor and the community or region where a firm conducts its business.”

APICS is committed to exploring corporate social responsibility and sustainability though its products and services. For example, APICS 2013 features an entire learning path dedicated to sustainability. These sessions will present real-world solutions as well as innovative ideas for supply chain and operations management professionals. The APICS 2013 Expo presents opportunities for attendees to talk directly to representatives from enterprise software providers such as Oracle, Infor, and IFS. These interactions can support attendees looking for software solutions to comply with Dodd-Frank financial reform, seeking to streamline their production planning processes across locations, and much more. Visit apics.org to find out more about APICS 2013, September 29–October 1, in Orlando, Florida.

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