May 18, 2016 Interview with Carlos Alvarado, Conflict Minerals Manager, Global Supply Chain, Baker Hughes.
Due to the new regulations and reform in the US, UK, EU, and APAC, supply chain due diligence and corporate responsibility are necessities 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.
Carlos Alvarado, Conflict Minerals Program Manager, Global Supply Chain at Baker Hughes, recently shared with marcus evans best approaches to simultaneously coordinate product and company data:
What are the differences between being product level versus company level basis and how does that affect incoming data?
CA: Almost every supplier initially responded on a company-level basis. They provided responses and smelter data that applied to all materials or components they provided to Baker Hughes and did not differentiate one material or component from another. In the beginning, very few of our suppliers had sufficient insight into their own supply chains to provide product-level responses; they could map out supply chains only by performing their own due diligence. Company-level data from our suppliers nevertheless has been useful, in that it tells us generally where materials obtained from suppliers originate, as well as the conflict status of the processing facilities in our supply chain.
To continuously improve our Conflict Minerals program, our approach at Baker Hughes is to seek product-level data as much as possible. We find some of our suppliers are now able to supply this level of detail in their Conflict Minerals Reporting Template (CMRT)responses. We can then trace pertinent data for specific materials through our manufacturing processes, up to the relevant final products. Product-level data gives us a more granular insight for risk assessment purposes. Of course, the amount of data increases exponentially with product-level responses.
How do you maintain organization when receiving data through multiple channels?
CA: Baker Hughes determined early on in our program design phase that we would require the assistance of a third-party resource to help us manage both our supplier engagement and the data we expected to receive.
On the engagement front, using a third party has enabled us to limit the flow of data to one channel, as opposed to thousands of email streams. Our provider offers a web portal that our suppliers use to submit their CMRTs and seek additional information or instruction, if needed. Most communications to suppliers are conducted through the portal; as necessary, we communicate with suppliers directly from Baker Hughes.
On the data front, using a third-party’s platform benefits us in several key areas. First, it serves as a repository to store data and thereby meet retention requirements. Second, it functions as a database, which enables us to track response metrics, report on response data and monitor and address red flags.
Most importantly, we made certain our third-party platform was scalable. Our goal from the beginning was to go beyond company-level responses, and eventually seek product-level data. We realized a product-level dataset would be very large, so we obtained a platform that enables us to both retain and analyze this data.
What have you been doing to increase responsiveness rates among your suppliers and receive accurate information?
CA: At Baker Hughes, we partner with our suppliers and require them to adhere to the same Conflict Minerals standards and regulations that we do to exercise appropriate supply chain due diligence. For instance, we make training and informational resources available to help ensure this effort is a success. Also, when we request product-level data we provide a list of specific parts and materials that our records show we purchased from each supplier. When our suppliers do not respond, or do not provide true product-level information even with a list of parts provided, Baker Hughes’ personnel engage with them so they can provide the necessary information. Our discussions could focus on their need for more or different training and information, or help in refining their own due diligence programs.
Understanding smelter verification is essential for the success of an organization’s conflict minerals program, how do you confirm that supplier-provided smelter data is verified?
CA: This is another reason we partnered with a third party that has staff and processes in place to research and, if necessary, engage with smelters. Effective smelter research must go beyond the publicly available information from the Conflict-Free Smelter Initiative, and must include creation of a database of smelter verifications from direct engagement. It would be challenging for Baker Hughes on our own to research, eliminate, consolidate or confirm the thousands of smelters named by our suppliers.
Join Carlos at the 4thConflict Minerals Compliance and Supply Chain Transparency Conference, June 22-23, 2016 in Chicago, IL. View the conference agenda to check out who is joining Carlos on the speaker roster. For more information, please contact Tyler Kelch, Digital Marketing Manager, marcus evans at 312.894.6310 or Tylerke@marcusevansch.com.
Neither Baker Hughes, nor any of its employees, endorse any of the products or services referenced in this document. The views expressed are not necessarily those of Baker Hughes.
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