Conflict Minerals Webinar. Impacts of SEC Regulations in the Electronics Industry

Transcription

1 Conflict Minerals Webinar Impacts of SEC Regulations in the Electronics Industry

2 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 The presentation will be sent to you after the webinar Please respond to the survey questions at the end of the webinar

3 Agenda Agenda SiliconExpert Introduction 5 minutes David Cheek- Cheek Consulting 25 minutes Tierney Powers- SiliconExpert 20 minutes Questions & Answers 10 minutes

4 SiliconExpert Panelist Tierney Powers Sales Associate (415)

5 About Us 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

6 Reactive Our Database 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

7 Conflict Mineral Module Reactive vs. Proactive Approaches to Obsolescence SiliconExpert Management & Conflict Minerals Data Collection * EICC stands for: Electronic Industry Citizenship Coalition * COC stands for : certificate of compliance (company statement)

8 Today s Expert Panelist David Cheek Founder Cheek Technical Consulting (719) (719) david@cheektc.com

9 David Cheek 22 August 2013

10 Objective Background Responsible organizations Update Supply Chain Implementation Conclusion References Contact Information

11 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

12 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 Pages vs 6 in Section 1502 Requires publically traded companies to Disclose the source of Conflict Minerals used in their products

13 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

14 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% (4 th ) Brazil, Mozambique and Rwanda Based on 2009 data

15 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

16 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

17 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

18 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

19 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.

20 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)

21 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.

22 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

23 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

24 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 s Include link to Template, YouTube video, etc., Be prepared to educate your suppliers

25 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.)

26 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

27 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

28 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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31 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

32 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

33 EBN Infographic &doc_id= PWC Study Court Case Conflict Free Smelter

34 David Cheek (719) (Cell)

35 SiliconExpert Panelist Tierney Powers Sales Associate (415)

36 Environmental Team Definition of Conflict Minerals

37 Conflict Minerals- Products

38 Conflict Minerals Process SiliconExpert Research and Analysis

39 Conflict Mineral Module Reactive vs. Proactive Approaches to Obsolescence SiliconExpert Management & Conflict Minerals Data Collection * EICC stands for: Electronic Industry Citizenship Coalition * COC stands for : certificate of compliance (company statement)

40 New Module: Conflict Minerals Live Demo Portion

41 Q&A Session Q&A If we do not get to your question in this 1 hour allotted time period, we will respond personally via following this broadcast Contact Information: