This KPMG report is the second in a four-part series that covers Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
The first report, published in September, focused on developing a compliance strategy. This second report covers the minerals supply chain and argues that, although it is not easy to achieve a more transparent supply chain, the benefits are great. Mapping the supply chain benefits not only investors and policy makers, but consumers who want to be reassured the products they buy are not fueling conflict in central Africa. More transparency means more data which can be transformed into a competitive advantage.
Some of the key findings of the study are set out below:
- Managing risk
While a complete mapping of a company's supply chain is ideal, it is not required by the final rule. Collecting the information is not going to be easy and suppliers may not be willing to divulge the source of their materials, but the more transparent the supply chain, the better for the company. At the very least, smelters need to be mapped to for compliance with the law and that is a start towards transparency.
- Promoting efficiency
There is a range of possible ways that a more transparent supply chain may lead to a leaner supply chain. Companies may, for example, find that they can save costs by reducing the number of suppliers. They may discover that suppliers are taking needlessly circuitous routes to ship the products from one tier to another. Faster routes speed up the time to market as well as lower transport costs.
- Strengthening governance
By demonstrating that its supply chain is conflict-free, a company can reassure stakeholders that it is compliant with Section 1502 and can engender trust among suppliers, consumers and others. By working with its suppliers on compliance with the Act, companies can learn more about each other's ways of operating and can improve communications among them. A framework to comply with Section 1502 can also stand companies in good stead for other supply-chain-related laws and regulations, such as the US Foreign Corrupt Practices Act and the UK Bribery Act.
For more information, download the full report below.