Conflict minerals regulations were designed to reduce the use of raw materials sold to fund war crimes. However, a long-term benefit may be the dramatic improvements in visibility into supply-chain issues.
NASA’s Apollo program had the goal of putting men on the moon, but a lasting impact of the initiative was its multitude of spin-off technologies, from advances in athletic shoes to improvements in kidney dialysis treatment.
On the last three Apollo missions, astronauts drove a lunar rover on the moon.
In a similar fashion, conflict minerals regulations were specifically designed to reduce the use of raw materials sold to fund war crimes. However, a long-term legacy of these rules may be the spin-off benefit of dramatic improvements in visibility into supply-chain issues. This visibility has changed the nature of electronics supply-chain management, giving companies the capability to anticipate and manage all kinds of problems, including issues arising from unexpected quarters.
Supply chain journey
It seems remarkable, but just a few years ago, many U.S. electronics companies had very little awareness of their suppliers--and even less knowledge about their suppliers’ suppliers. Firms often didn’t know where their suppliers’ factories were located, or where those companies sourced their raw materials.
However, things began to change dramatically with the implementation of Section 1502 of the Dodd-Frank Act, which required U.S. companies to disclose the usage of these raw materials to the Securities and Exchange Commission. The requirements of Section 1502 compelled electronics companies to survey and audit their suppliers regarding their use of such minerals sourced the Democratic Republic of the Congo (DRC) and surrounding nations.
The effects of this effort are readily apparent. In 2015, a much higher percentage of companies indicated they had knowledge about their supply chains than they did in 2014, according to the US Government Accountability Office. In 2014, just 30% of companies could determine whether the conflict minerals in their products originated in countries covered by the regulation, the GAO reported in an August 2016 report. By 2015, that total had grown to 49%.
Continue reading on sister site, EBN.
Kelly Witherspoon is the program manager for social & environmental responsibility at Jabil Circuit.