Due to the new regulations and reform in the US, UK, EU, and APAC, supply chain due diligence and corporate responsibility is a necessity for corporations.  Companies are currently re-working their conflict minerals management programs in order to efficiently address SEC expectations. Enhancing smelter data and verification processes has become a major focus for both filing and non-filing companies responding to customer requests. 

Jennifer Prisco, Senior Counsel, Global Supply Chain at TE Connectivity, recently spoke with marcus evans about several topics that will be addressed at the upcoming 4^th Conflict Minerals Compliance and Supply Chain Transparency Conference : 

How do you use geographical risk maps in your risk management processes? 

JP: TE creates geographical risk maps using several criteria, most notably, the Transparency International Corruption Perception Index. We also leverage data obtained through our CFSI membership and through several web based sources that provide intelligence on mining activity and interests of various holding companies in specific geographies. When we receive a survey response from a supplier, we check the smelters against both our geographical risk map, and the CFSI certified smelter list. If the smelter is not on the list, but is found to be in a “low risk” country, we validate the smelter for legitimacy and then mark the smelter as compliant. This aligns with the SEC regulatory framework in that if you do not have reason to believe you are sourcing from conflict sources, you do not have to proceed to the due diligence step. 

What are some of the best strategies you found to interpret data and ensure the integrity?

JP: We developed a logic-driven validation tool that checks the answers on the EICC/GeSI standard template against certain programmed indicators. These indicators mostly center around the CFSI recognized smelter list, but also include elements that note contradictions within a response. For example, if a company responds that they do not have tin in their products but provide us with the name of a tin smelter, the system flags that response as unreasonable, and the survey is returned to the supplier. 

We also validate “out of scope” responses through the use of subject matter experts who can challenge a supplier response based on their knowledge of a product’s chemistry or engineering drawing. After all the data is collected for a particular year, our Chief Supply Chain Officer signs an affidavit that all data provided for SEC reporting was collected in accordance with our operating procedure, as does each TE business segment president. Once the draft CMR and all affidavits are reviewed by the audit committee and approved, the SD is signed by General Counsel in good faith reliance on the information contained in the CMR. 

How have you gone about preparing for the IPSA and making that public statement?

JP: First, we asked our internal audit team to do an assessment of our data collection processes, controls, and adherence with our operating procedure. Our last assessment was conducted mid 2015 and allowed us to address any gaps in the process and plan for program enhancements for 2016. Secondly, although the data collection is a rolling process, we do an end of year snapshot that can be audited against to verify end of year metrics as published in our CMR. We also consolidate our smelter lists from our various subsidiaries and affiliates who we recently acquired and are not yet fully integrated into the TE systems. The CMR is then drafted to reflect both our metrics and our revised operating procedure which describes not only activities taken during the reporting year, but projected future continuous improvement actions. Finally, we make sure that both our operating procedure and our CMR are organized to clearly show alignment with the OECD due diligence guidelines.

Where have you succeeded most in gaining supplier responsiveness? Has building the requirements into your contracts been helpful? 

JP: The most important program element is a strong policy that your executive management will stand behind. In TE’s Conflict Minerals Policy, we state not only our intention to source materials solely from non-Conflict sources, but we also publicize our willingness to terminate business with suppliers who refuse to respond to our survey. We do require that companies provide conflict minerals data via our supply contracts and terms and conditions of purchase, but enforcement is everything. 

We have already placed sourcing restrictions on some non-responsive suppliers and that activity will increase in 2016. TE Suppliers globally have come to recognize our commitment to conflict minerals compliance, and usually with some enablement education, take action.

Jennifer Prisco is the Global Supply Chain Counsel to TE Connectivity (“TE”), a publically traded S&P 500 company with corporate offices in the U.S., Switzerland and China.  She has led TE’s Conflict Minerals Program since 2009 when the 1502 rule was first introduced.  In 2015, Jen was identified among the top ten influencers in Conflict Minerals Compliance by Assent Compliance and TE’s annual Specialized Disclosure and Conflict Minerals Report was noted among the top 50 of all filers according to a Tulane University Study. Jennifer works closely with government and industry groups on a broad variety of supply chain regulatory matters, to provide guidance and understanding of the economic and practical impacts of proposed legislation.  

TE Connectivity is a $13 billion world leader in connectivity.  The company designs and manufactures products at the heart of electronic connections for the world’s leading industries including automotive, energy and industrial, broadband communications, consumer devices, healthcare, and aerospace and defense.  TE’s long-lasting commitment to innovation and engineering excellence helps its customers solve the need for more energy efficiency, always-on communications and ever-increasing productivity.  With nearly 90,000 employees in over 50 countries, TE Connectivity makes connections the world relies on to work flawlessly every day.  To connect with the company, visit www.TE.com.

Join Jennifer at the 4^th Conflict Minerals Compliance and Supply Chain Transparency Conference, June 22-23, 2016 in Chicago, IL. View the conference agenda to check out Jennifer’s case study topic. For more information, please contact Tyler Kelch, Digital Marketing Manager, marcus evans at 312.894.6310 or Tylerke@marcusevansch.com.

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