Reasonable Country of Origin Inquiry (RCOI) is the important step in identifying the origin of conflict minerals in your supply chain. Most affected companies by this regulation have done the step at different scale of effectiveness during the 2013 reporting year.
We observed that most companies were not able to identify the mineral sources due to complexity of their supply chain and the lack of awareness in the tier-1 and tier-2 supplier base. ECCI and GeSI’s CMRT forms were available for standardizing the process across the industry, but some companies used their own RCOI forms which resulted in confusion that hampered the effectiveness of the process.
The major challenges observed in executing the RCOI effectively were as follows:
- Limited time availability to approach several hundreds of suppliers to collect information
- Limited knowledge about the regulation, across the Supply Chain
- Language barriers, time zone differences and limitations of resources availability to handle this task internally
- Prolonged delay in starting the compliance program
- Low motivation levels of suppliers to provide the required information
- Validating the data received from the suppliers and resolving red flags
- Consolidating hundreds of CMRT files received to prepare a final report
- Updating RCOI information each year and managing new supplier additions
As we know, completing RCOI effectively is the basis of the Form SD filing. RCOI is one of the major step in the due diligence process and running it effectively is essential for gaining knowledge about your supply base and identifying the risk associated with it.
The following steps will help you ensure control over the process.
- Classify your suppliers as per volume based approach or spend based approach
- Try to do a risk based classification of your suppliers
- Build your priority in the supplier base
- Communicate your conflict mineral sourcing policy to all your suppliers
- Provide training and support for your suppliers on conducting their conflict mineral research
- Adopt EICC- GeSI’s CMRT as your RCOI template and Join Conflict Free Sourcing Initiative
- Decide if tool base or manual mode for the process is suitable based on the supplier nos. and complexity
- Reach out to your suppliers using email and phone and ask them for conducting their own RCOI using the same template
- Give them support to implement the RCOI and follow up at regular intervals
- Collect the CMRTs and engage with suppliers who did not respond or did not disclose smelters
- Review the disclosures and check for red flags and resolve
- Consolidate the report using MRPRO or your adopted conflict mineral tool
The RCOI process is a major step in your due diligence process. The above steps will give you a broader perspective as to how to handle your RCOI using the supply chain tracing process with Conflict Free Smelter Program as the foundation of your analysis. Keep an eye on the smelters which are approved and those are active in each metal category to ensure that you are identifying the riskier ones in your supply chain.