Beyond Conflict Minerals
for High Tech Companies:
Turn compliance into a
competitive opportunity
November 13, 2014
2 The information contained in this document is proprietary. Copyright © 2014 Capgemini. All rights reserved.
Your Presenters
Aaron Fromm, Senior Solutions Leader
Pegasystems
Aaron is a Senior Solutions Leader with Pegasystems, helping to drive operational efficiencies and digital transformation
for leading enterprises in Manufacturing and High Technology. Aaron brings over 20 years of experience in the
Manufacturing, Software and High Technology sectors. He holds a Masters in Business Administration in International
Business, Bachelor of Science in Computer Science and Bachelor of Arts in Economics from the University of Colorado.
Jambu Deviprasad, Senior Manager Supply Chain Technology Practice
Capgemini
Jambu Deviprasad is a Senior Manager with Capgemini’s Supply Chain Technology practice. He has 20+ years
experience delivering technology-enabled supply chain planning and execution transformation and associated change
management globally across multiple industries. Jambu is a graduate of Case Western Reserve University in Cleveland,
Ohio.
Greg Price, Intelligent Business Process Management (iBPM) Leader
Capgemini
Greg Price is the iBPM (Intelligent Business Process Management) Leader in North America for Capgemini and excels in
BPM strategy, delivery and client enablement. He brings 20 years of experience in business process enabling technologies
across multiple industries.
4 The information contained in this document is proprietary. Copyright © 2014 Capgemini. All rights reserved.
The Law – SEC Disclosure
Organizations are obligated to comply
where:
Files with SEC under Exchange Act
Conflict minerals are necessary to the
functionality or production of a
manufactured product
STEP 1
Understand Obligation
Where organizations establish an
obligation for compliance, they must
conduct country of origin inquiry to
determine whether conflict minerals
originated in DR Congo or adjoining
countries
Where conflict minerals did not
originate from DR Congo or adjoining
countries, or originate from “Green”
mines, organizations must:
‒ Disclose findings and methods for
investigation in annual report
‒ Post disclosure on web site
Where conflict minerals did originated
from DR Congo or adjoining countries
or is unable to determine if minerals
are conflict free:
‒ Disclose in annual report and web
site.
‒ File Conflict Minerals
Disclosure Report
STEP 2
Investigate Origin
Where conflict minerals did originated
from DR Congo or adjoining countries or
is unable to determine if minerals are
conflict free:
Conduct supply chain due diligence.
Create and post on its Web site a
Conflict Minerals Report , includes:
‒ Description of due diligence
performed
‒ Description of the products
manufactured and facilities where
conflict minerals used
‒ Certified independent private sector
audit report
Obtain an independent private sector
audit (part of due diligence).
Furnish report as exhibit to annual
report on Form 10-K
Disclose auditor‘s conclusion in
annual report
STEP 3
Disclose Conflict
Minerals
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Findings ‒ Initial Filings in 2014
Significantly fewer companies filed disclosures than either the industry or SEC
anticipated:
Costs higher than anticipated to implement SEC Rule:
NGOs criticized broad failure of companies to determine conflict status of products:
Most companies did not provide smelter information in their disclosures:
Source: http://www.bdlaw.com/news-1637.html
1300 out of an estimated 6000 companies filed a For SD conflict minerals disclosures
1000 out of an estimated 4500 companies filed full Conflict Minerals Reports
The SEC anticipated that 75% or covered issues would require a Conflict Minerals Report
In practice this was closer to 80%
Fewer companies were able to avoid heighted due diligence based on a conclusion they had “no reason
to believe” minerals were sourced from the covered countries than anticipated leading to higher costs
The SEC rule allows companies to describe their products as “DRC conflict undeterminable” for the first
two years, from May 2014, while they develop and implement their reporting compliance programs
The SEC is still issuing guidance
The SEC rules keep changing
Only 25% of reporting companies supplied smelter information
The SEC (backed by the D.C. Circuit ruling) require that smelter information be provided
6 The information contained in this document is proprietary. Copyright © 2014 Capgemini. All rights reserved.
Expectations in 2015
Expectations for 2015 summed up in one word:
A process that can do the following is necessary:
Track
Adapt
Plan for Change
CHANGE
7 The information contained in this document is proprietary. Copyright © 2014 Capgemini. All rights reserved.
“Green” 3TG traceable by barcode
SEC Requirements for Dodd-Frank – Conflict Minerals
T a n t a l u m , T i n , T u n g s t e n , G o l d ( 3 T G )
SCM
PLM
Purchasing
Necessary
Conflict Minerals?
End
Conflict Free?
End
Due Diligence
Filing Process
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Disclosures
Conflict 3TG from DR Congo and adjoining countries
8 The information contained in this document is proprietary. Copyright © 2014 Capgemini. All rights reserved.
Beyond Compliance
Tantalum
Tungsten
Tin
Gold
Conflict
Minerals Free
Supply Chain
Transformatio
n Agenda
Global Adaptively
(design anywhere, build
anywhere, deliver anywhere –
any product)
Growing Complexity
& Rising Customer
Expectations
Increased Stretch –
Global Visibility &
MFG SC Velocity
Growing Importance
of Sustainability
Rising Volatility
Accelerating Cost /
Price Uncertainty
Conflict Minerals
High Tech Manufacturing
Challenges
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Transformational Framework
Global Strategy
Establishes clearly defined CM Free SC strategy across the enterprise
Facilities utilizing key SC performance attributes to establish competitive separation
Goals & objectives are defined for strategic metrics to measure to desired performance
Ensures executive priorities and imperatives are aligned across the enterprise
Global Operating Model
Dedicates where and how the critical work gets done across the enterprise
Links strategy, detailed organization and operational execution design
Delivers goals for partners, customers, products, and channels
Global Common Operational Enablers & Governing Policies
Accelerates time-to-value and ensures a standardized and stable solution
Core operational enablers following pre-configured solution blueprint in Pega
Overarching policies which set & govern functional execution
Global Process, Data & Technology Model
Conflict Minerals Free Supply Chain Reference model ensures
synchronized and orchestrated solution design principles, elements
and leading practices
Supported by design standards across the enterprise to support the
global common template and operating model
Strategy
Operating Model
Enablers Policies
Process Data Tech
Governance
Pega 7
10 The information contained in this document is proprietary. Copyright © 2014 Capgemini. All rights reserved.
Optimizing Performance
Conflict Minerals Supply Chain
Performance Attributes
Fast Response
Reliability
Return on
Assets
Predictability
SC Costs
Flexibility
Fast Response
Agility to serve customers
(product development
manufacturing responsiveness,
and delivery lead time)
Reliability
Delivering the correct product,
to the right place, at the correct
time, with the quality agreed
with the customer, and with the
correct documentation. (Perfect
Fulfillment)
Return on Assets
Effectiveness in managing
Assets (equipment and
inventory) working capital
Predictability
Degree to which a correct
prediction or forecast of a system’s
state can be made either
qualitatively or quantitatively
Supply Chain
Costs
Efficiency in managing
the costs associated with
operating the chain
Flexibility
Chain ability to respond
to market and supply
changes (volume, data,
mix, behaviors, etc.)
DESIGN for CONFLICT
MINERALS FREE
MANUFACTURABILITY
CONFLICT MINERALS
FREE
SUPPLY BASE
OPTIMIZATION
FACTORY FLOOR
CONFLICT MINERALS
FREE
MANUFACTURING
OPERATIONS
CONFLICT MINERALS
FREE
INTERGATED
INBOUND MATERIALS
MANAGEMENT
11 The information contained in this document is proprietary. Copyright © 2014 Capgemini. All rights reserved.
DEMO
12 The information contained in this document is proprietary. Copyright © 2014 Capgemini. All rights reserved.
$600K
$40K / yr
MG Manufacturing
Company Overview
Building block supplier to the High Tech Industry
‒ Manufactures printed circuit boards and finished components
$5B / year revenue
200+ global suppliers
Business Imperative
Efficiently Perform Conflict Minerals Compliance by May 31, 2014
‒ Form SD, Conflict Minerals Report Exhibit
Establish Sustainable Processes & Systems for Ongoing Compliance
‒ “DRC Conflict-Free” as a Key Differentiator
Cost of Compliance
Activity Cost
Establish Processes & First Report Out $1.2M
Ongoing Management & Reporting $200K / year
Rapid attestation using industry best
practices and supplier self-service
Focus limited resources on high risk cases
Leverage existing Systems of Record
50%
80%
13 The information contained in this document is proprietary. Copyright © 2014 Capgemini. All rights reserved.
MG Manufacturing
Cathy performs a Conflict Minerals Attestation for EC Tech,
an MG supplier
Based on EICC/GeSI template (industry best practices)
Integration with external systems of record (Supplier, Product)
Dynamic Case Management drives the necessary Conflict Minerals outcomes
(Form SD, Conflict Minerals Report)
Auto expiration & renewal of attestation
Cathy
Compliance Analyst
Marv reviews supplier status and progress toward May 2014
Conflict Minerals reporting
Dashboard for progress
Reports to facilitate Form SD & Conflict Minerals Report preparation
Marv
Compliance Manager
14 The information contained in this document is proprietary. Copyright © 2014 Capgemini. All rights reserved.
15 The information contained in this document is proprietary. Copyright © 2014 Capgemini. All rights reserved.
Key Takeaways
Business Imperative
Efficiently Perform Conflict Minerals Compliance by May 31, 2014
‒ Form SD, Conflict Minerals Report Exhibit
Establish Sustainable Processes & Systems for Ongoing Compliance
‒ “DRC Conflict-Free” as a Key Differentiator
Cut Cost of Compliance
Rapid attestation using industry best practices and supplier self-service
Focus limited resources on high risk cases
Leverage existing Systems of Record
16 The information contained in this document is proprietary. Copyright © 2014 Capgemini. All rights reserved.
Presenter Contact Information:
[email protected]
www.pega.com
Thank you for attending today’s webinar!
Aaron Fromm
[email protected]
www.capgemini.com
Jambu Deviprasad
[email protected]
www.capgemini.com
Greg Price
The information contained in this presentation is proprietary.
© 2014 Capgemini. All rights reserved.
www.capgemini.com
About Capgemini
With almost 140,000 people in over 40 countries,
Capgemini is one of the world's foremost providers of
consulting, technology and outsourcing services. The Group
reported 2013 global revenues of EUR 10.1 billion (more
than $13 billion USD).
Together with its clients, Capgemini creates and delivers
business and technology solutions that fit their needs and
drive the results they want. A deeply multicultural
organization, Capgemini has developed its own way of
working, the Collaborative Business ExperienceTM, and
draws on Rightshore ®, its worldwide delivery model.
Rightshore® is a trademark belonging to Capgemini
Beyond Conflict Materials for High Tech Companies: Turn Compliance into a Competitive Opportunity
The Dodd-Frank Wall Street Reform and Consumer Protection Act, Section 1502, requires organizations to disclose the use of conflict minerals in their products or in the materials used in their manufacturing processes. By rule of the SEC, compliance is about disclosure. Capgemini and Pegasystems envision supply chain transformation far beyond mere compliance. This paper provides an overview of what is required for compliance and Capgemini’s vision to get you there and beyond.