conflict minerals webinar - electronic parts cross …...supply chain assessment reasonable country...
TRANSCRIPT
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Impacts of SEC Regulations in the Electronics Industry
Conflict Minerals Webinar
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Asking Questions
• Ask questions during the webinar by using the Questions window
• Questions will be addressed at the end of the webinar
• Any question we do not get to will be answered individually by email
• The presentation will be sent to you after the webinar
• Please respond to the survey questions at the end of the webinar
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Agenda
Agenda
• SiliconExpert Introduction 5 minutes
• David Cheek- Cheek Consulting 25 minutes
• Tierney Powers- SiliconExpert 20 minutes
• Questions & Answers 10 minutes
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Tierney Powers
Sales Associate
(415) 990-7256
SiliconExpert Panelist
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• Leading OEMs, Distributors, Suppliers &
EMSs use SiliconExpert Daily
• Our Electronic Component Database of
over 250 million components powers our:
o Comprehensive software tools
o Integrated solutions
o Professional services
About Us
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Reactive vs. Proactive Approaches to Obsolescence Management
250 Million+ Orderable Part Numbers
Up to 42 Parametric values/product line
Risk Analysis & Obsolescence
Forecasting Algorithms developed
with CALCE
Environmental Data tracked: EU &
China RoHS, REACH, WEEE
compliance & Material Declarations
Parametrically-derived cross-references
for millions of parts
Our Database
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Reactive vs. Proactive Approaches to Obsolescence Management SiliconExpert & Conflict Minerals
Data Collection
* EICC stands for: Electronic Industry Citizenship Coalition * COC stands for : certificate of compliance (company statement)
Conflict Mineral Module
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David Cheek Founder Cheek Technical Consulting
(719) 694-2670
(719) 237-8293
[email protected] www.cheektc.com
Today’s Expert Panelist
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David Cheek
22 August 2013
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Objective
Background
Responsible organizations
Update
Supply Chain
Implementation
Conclusion
References
Contact Information
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Most Conflict Mineral webinars concentrate on legal aspects
No implementation view Discussion laying the ground work for
implementing Conflict Minerals and highlights some of the issues ◦ Implementation will vary depending on your situation
Limiting this webinar to the Supply Chain Assessment
My perspective implementing the Supply Chain analysis
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Dodd-Frank Wall Street and Consumer Protection Act of 2010, Section 1502 ◦ Intent is to limit the funding of the war in the
Democratic Republic of the Congo (DRC) and the 9 adjoining countries
SEC released the Final Ruling on 22 August 2012 ◦ 356 Pages vs 6 in Section 1502
Requires publically traded companies to Disclose the source of Conflict Minerals used in their products
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Defined Conflict Minerals as ◦ Tin, Tungsten, Tantalum and Gold (3TG) ◦ “any other mineral or its derivative determined by the (US)
Secretary of State to be financing conflict in the Democratic Republic of the Congo or an adjoining country”
Supply chain audit to define the source of Conflict Minerals ◦ Suppliers and Validate data
Form SD and Conflict Minerals Report must be provided to SEC
Defined Grace period (2/4 Years) ◦ Conflict Mineral Undeterminable
Private Companies, Distributors and Small Businesses are Exempt
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Gold from the DRC is 0.08% global production ◦ China, US, and Australia
Tungsten from the DRC is 0.28% ◦ China, Russia and Canada
Tin from the DRC is 3.62% ◦ China, Indonesia and Peru
Tantalum from the DRC is 12.99% (4th) ◦ Brazil, Mozambique and Rwanda
Based on 2009 data
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Anyone who manufacturers ◦ NIKE, Ford and Walmart are working Conflict Minerals
Small businesses and Privately held companies although exempt are affected
Primarily focused on the electronics industry
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Supply Chain Assessment ◦ Reasonable country of origin inquiry (RCOI) to determine if
minerals were sourced from the conflict zone ◦ Determine source to smelter or mine
Implement Supply Chain Due Diligence ◦ “Nationally or Internationally due diligence framework” –
OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas
Generate documentation ◦ Form SD (Specialized Disclosure) ◦ Conflict Minerals Report (CMR) which must be posted to
website for 1 year
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Legal/Compliance or Purchasing/Supply Chain will be responsible for implementing Conflict Minerals within a company ◦ PWC July 2013 Study (PricewaterhouseCoopers)
This person will lead a cross functional team working across multiple divisions
Implementation strategy depends on decisions at corporate level
CFO or Legal will probably sign Form SD
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Establish strong company management systems
Identify and assess risk in the supply chain
Design and implement a strategy to respond to identified risks
Carry out independent third-party audit of supply chain due diligence at identified points in the supply chain
Report on supply chain due diligence
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What impacts will the 2-year grace period have on suppliers that have a 4 –year grace period? ◦ Legally the supplier can take the 4-year grace period. In
reality they will be on the same schedule as customer with a 2-year grace period but on the 4-year documentation schedule to the SEC
What impacts will being Exempt have on suppliers (Small business/Privately held)? Issue of Legal vs Commercial Obligations. Legally a small
company does not need to comply if it is exempt. But to not impact their revenue stream they will provide the Supply Chain data to the customer but not the documentation (SD/CMR) to the SEC.
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Industry is still working through implementation issues
EICC/GeSI Conflict Minerals Reporting Template is the defacto standard (V2.03a)
IPC 1755 proposed format in ballot
Conflict Mineral Report is not defined
Vendor awareness and response
Limited number of Conflict Free Smelters ◦ Ta (22), Au (19), Sn (5), W (0)
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Update on the NAM, Chamber of Commerce and Business Roundtable – 24 July 2013
District Court Judge Robert Wilkins rejected all of the plaintiffs’ claims, denied the plaintiffs’ motion for summary judgment, and granted the SEC’s summary judgment motion. The Conflict Minerals Rule therefore continues in effect as adopted.
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Understand your Supply chain ◦ How you manufacture (i.e. ODM)
Need to understand how you Purchase ◦ ASL (Business relationship) or AVL (No relationship)
Cyclical nature of Purchasing and Conflict Mineral impacts ◦ SEC exempted everything in the supply chain prior to 31
January 2013
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Risk based analysis ◦ Prioritize list based on probability Conflict Minerals is
present ◦ Trustworthiness of supplier/vendor
Data Format ◦ PDF, EICC/GESI, other
Define who will work issues ◦ In-house, Contract Manufacturer, Build-to-print supplier
What are you willing to accept for proof of compliance for simple components ◦ Metals
Due Diligence measures ◦ Validate data
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Start with a survey (i.e. Survey Monkey) of a portion of your suppliers ◦ Determine what is available ◦ Define the holes in your process ◦ Define the level of effort ◦ Help address the question if supplier does not provide CM
information
Tie all the available supplier information together to generate your supplier list ◦ Remove suppliers that don’t provide CM or you have data
Develop canned supplier emails ◦ Include link to Template, YouTube video, etc.,
Be prepared to educate your suppliers
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Use Analysis Tool (i.e. Silicon Expert ) as the first step in the analysis process to filter list ◦ Issue will be to determine if the data is acceptable (i.e. PDF)
Prioritize list based on Risk ◦ Probability of a CM being present ◦ Trustworthiness of supplier/vendor
Supplier list will include suppliers/materials that may not be listed in your Analysis Tool ◦ Chemical (Glue, Epoxy, etc.) ◦ Build-to-Print (Metal Fabricators, Molders, etc.) ◦ Mil-Spec items ◦ Hardware (screws, nuts, washers, etc.)
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Filtered out Suppliers ◦ Have data in acceptable format
◦ No CM used (includes HW)
Start contacting companies requesting CM data ◦ Found that the information is available in the EICC/GESI
format but not posted to website
Record contact information
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Develop process to validate supplier data ◦ Most Recent Template (2.03a)
◦ Mandatory Fields completed (i.e. No Yellow)
◦ All Questions answered
◦ Smelter Information detailed
◦ Checker Tab fields Green instead of Red
◦ Product List includes PN information for your Declaration Scope
Need to validate smelter information ◦ Identified Smelters names in Template are not all Conflict
Free
◦ Need to develop Smelter validation procedure
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Not the most recent version ◦ Request the information in the latest revision
Declaration Fields void of information (i.e. Yellow)
Declaration Scope does not list products in Product List Tab
Checker fields void of information (i.e. Red) No Smelters identified Not all smelters identified ◦ Gold but not Tin smelters identified
Some companies save the Template in PDF
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After you’ve evaluated the data you need to decide what to do ◦ Do nothing if not buying from zone or purchasing from
zone but legitimate smelters
If you are buying from the region and funding the war ◦ Do nothing
◦ Work with supplier to stop funding the war
◦ Stop buying from supplier
◦ Get new supplier
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Industry is moving towards providing Conflict Mineral data in the EICC/GESI format but all companies are not ready
Time consuming process
Use the available tools at your disposal
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EBN Infographic ◦ http://visual.ly/conflict-minerals ◦ http://www.ebnonline.com/author.asp?section_id=
2981&doc_id=261574
PWC Study ◦ http://www.pwc.com/us/en
Court Case ◦ http://www.actio.net/default/index.cfm/actio-
blog/breaking-nam-vs-sec-case-rejected-by-courts/
Conflict Free Smelter ◦ www.conflictfreesmelter.org
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Tierney Powers
Sales Associate
(415) 990-7256
SiliconExpert Panelist
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Definition of Conflict Minerals
Environmental Team
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Conflict Minerals- Products
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SiliconExpert Research and Analysis
Conflict Minerals Process
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Reactive vs. Proactive Approaches to Obsolescence Management SiliconExpert & Conflict Minerals
Data Collection
* EICC stands for: Electronic Industry Citizenship Coalition * COC stands for : certificate of compliance (company statement)
Conflict Mineral Module
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New Module: Conflict Minerals Live Demo Portion
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Q&A
Q&A Session
Contact Information:
If we do not get to your question in this 1 hour allotted time period,
we will respond personally via email following this broadcast