The Economic Benefits of Supply Chain Transparency

Business Area Challenges and the Evolution of MitigationA 5 Part Weekly Thought Leadership Article SeriesArticle 3:  The Economic Benefits of Supply Chain Transparency

Co-Authors:  Hani Ahmad, SiliconExpert Senior Product Manager- Compliance & George Karalias, Industry Executive Consultant

Do you know the origins of your supply chain?  Beyond procurement, why would origins matter?  It does matter.  The new day delivers focus on supply chain transparency.  Suppliers, OEMs, the Government and even consumers are demanding details on the sources of their goods.  Quality, safety, environmental impact, business ethics and profitability related to sourcing is top of mind for all major industries.

Global recession warnings, economic slowing, financial clashes with China and threats of global tariffs—today’s headlining news all have an impact on your bottom line and how you manage your business. To now add the burden of supply chain compliance management to an already resource constrained organization may seem daunting and first to go when identifying company cost reductions.  Shouldn’t this be managed upstream of my supply chain?

Due diligence is defined by the Organization for Economic Cooperation and Development (OECD) as an ongoing, proactive and reactive process through which companies ensure that they respect human rights and do not contribute to conflicts in high-risk areas (OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas Second Edition, OECD Publishing, 2013, http://bit.ly/2t9iQcD. Staying aware and proactive on today’s compliance regulations is exercising due diligence—even if the legislation is not immediately applicable or impacting the products you are manufacturing today  Regulations change, product exemptions change or even expire, parts become obsolete – all could have immediate impact on your business.

When it comes to conflict minerals, due diligence must be performed annually as smelter information can change over time. Conflict minerals compliance is a government requirement for publicly traded manufacturing companies under Section 1502 of the US Dodd Frank Act. Soon Europe and China will adopt their own regulations, will you be ready for the impacts to your supply chain?

Beyond the moral, ethical and sometimes legal responsibilities of ensuring your company delivers quality and safe products, there are tremendous economic benefits to companies that practice due diligence and supply chain transparency.   Ethical companies’ performance is significantly better in almost every aspect of business due in large part to consumers’ willingness to pay a premium for ethically produced products.  The credibility derived from transparent sourcing also adds to the company’s sustainability within the marketplace.

In July 2019, a third directive began for the EU RoHS adding four new substances to the existing six substances included in the previous RoHS directives. For REACH compliance, new chemicals are added to the list every year. Obligations and regulations that include EU RoHS 2015/863, EU REACH, California’s Proposition 65, and other regulations require eliminating or reducing the amount of restricted hazardous substances, reporting use, labeling, and other means of staying compliant.  Use of the 3TGs (tungsten, tantalum, tin, and gold) must be tracked and reported to determine whether minerals originated from nonconformant smelters in the Democratic Republic of Congo and its adjoining countries. Cobalt (not part of the Dodd Frank Act) is being evaluated as a result of human rights issues of child labor.

How does any company committed to supply chain transparency keep track of issues affecting compliance, new regulations released, and most importantly discern what impacts have or will have their business?  Staying informed at a worldwide level should be a part of any companies’ core competency.  In today’s digital age there are data intelligence platforms that collect, manage and disseminate compliance insights as well as provide proactive alerting and automated data feeds to deliver accurate and up-to-date compliance regulation data that is specific to your components and parts.

The key to an effective strategic compliance management plan is data collection that is transformed into valuable, useful, and efficient information. SiliconExpert delivers compliance data solutions that digitally thread into the core systems and platforms you use and work in daily, ensuring access to critical compliance data that can be utilized throughout the organization, from design to product maturity.

SiliconExpert’s strengths consist of collecting the data of components from multiple sources, including the OCM (original component manufacturer), validating and standardizing the component information, and presenting the information efficiently to drive your company’s supply chain management process.

The benefits gained from partnering with SiliconExpert will enable your company to focus on core strengths of product development while providing you the most current, on-time and accurate compliance insights for informed parts selection.   By implementing SiliconExpert’s compliance management solutions, your company will gain the assurance that legal compliance obligations, social responsibility of ethical sourcing, and end-customer quality/safety assurance are standardized within your business management processes.

To learn more about SiliconExpert Compliance Management solutions, contact us at sales@siliconexpert.com.