Consumers want to know where the products they buy come from. Companies will have to disclose more supply chain information than ever before as consumer pressure and regulations increase. The average U.S. company works with 500 suppliers directly, but supply chains are much more than direct suppliers only. A company's total supply chain can contain 10x the amount of direct suppliers!
Regulations That Effect Supply Chain Transparency
There are many regulations that can effect the supply chain all over the world. These regulations effect businesses selling to the EU market, public U.S. companies, and/or companies over $100MM doing business in California.
The Dodd Frank Section 1502 Conflict Minerals regulation requires companies to investigate and report on sources of tin, tantalum, tungsten, and gold from the DRC and surrounding countries. This regulation is estimated to effect 5,994 issuers.
The Foreign Corrupt Practices Act (FCPA) requires that companies assess their supply chain and business partners for the risk of corruption and bribery.
The United Kingdom Modern Day Slavery Act requires companies to investigate their supply chain and take action to eradicate forced labor. This regulation is estimated to effect up to 12,000 companies.
The Restriction of Hazardous Substances (RoHS) restricts companies from using certain hazardous substances in their products.
California Prop 65 requires companies to detailed testing and analysis of their products that are potential to Proposition 65 exposure, chemicals known to cause cancer, birth defects, or other reproductive harm. Prop 65 has been in place for over 65 years.
Some regulations coming soon are the EU Conflict Minerals regulation and the US HR4842: Business Supply Chain Transparency on Trafficking and Slavery Act of 2014.
How Can Companies Meet These Requirements?
Companies can meet these requirements by a variety of measures, including:
- Data collection
- Due diligence
- Assessment
- Verification
- Reporting
Some challenges companies face in compliance are:
- There's many countries that each have their own set of requirements
- Language barrier when communicating with supply chain
- Multiple tiers of suppliers beyond direct ones
- Sprawling supply chain, some businesses don't have contact with all of them
- Keeping up with changes in regulations and products
.png?width=800&name=Supply%20Chain%20Transparency%20(6).png)
Source Intelligence can help you manage your supply chain risk and get the supplier data you need when you need it. Find out how by requesting a demo and see what our solutions can do for you!
