1. Green Products and Supply Chain Disruption
Conflict Minerals in the Supply Chain
Presented by GreenBiz.com, Moderated by John Davies

2. John Davies
VP, Senior Analyst, GreenBiz Group
 Andrew K. Reese
Editor, Supply & Demand Chain Executive
 Scott Wilson
Content Solution Strategist, IHS
 Rory King
Director, Global Product Marketing, IHS

3. Topics We’ll Cover
• U.S. Conflict Minerals Law
• Original Research on Conflict Minerals
• Supply Chain Sustainability – Risk and Reward
• Sustainability Tools Best Practices
Visit booth #103 to speak with IHS and obtain valuable resources. 3

4. Disclaimer
• The information contained in this presentation
addresses complicated and fact-specific issues. In
no way is any of this intended to convey legal or
regulatory advice on matters discussed or implied.
You should seek professional legal, regulatory or
supply chain advice regarding any applicability of
these matters and with respect to your company's
specific circumstances.
© 2010 Supply & Demand Chain Executive
Copyright © 2010 IHS Inc. All Rights Reserved.
4

5. Conflict Minerals
Andy Reese
Editor, Supply & Demand
Chain Executive magazine
AREESE@SDCEXEC.COM
Visit booth #103 to speak with IHS and obtain valuable resources. Copyright © 2010 IHS Inc. All Rights Reserved. 5

6. Supply & Demand Chain Executive
The executive’s user manual for
successful supply and demand chain
transformation, providing analysis,
viewpoints and case studies to steer
executives and supply management
professionals through the world of
supply and demand chain enablement
to gain competitive advantage.
www.linkedin.com/in/andrewkreese
twitter.com/SDCExec
www.SDCExec.com
Visit booth #103 to speak with IHS and obtain valuable resources. © 2010 Supply & Demand Chain Executive 6

7. Green Supply Chain Awards –
2010 Winners
4flow AG D.W. Morgan Company Image Microsystems Penske Logistics
ADTRAN Damco International INSIGHT, Inc. PUMA
Aspen Logistics, Inc. DHL Express JDA Software Group, Inc. Ryder System, Inc.
Basware DSC Logistics Kaiser Permanente Saddle Creek Corporation
Black Diamond Equipment Ltd. e-LYNXX Corporation LeanLogistics SciQuest
Brightpoint EcoVadis LOG-NET, Inc. Source4Style
Brightstar Evergreen Line Maersk Line Spinnaker
Cargill eZCom Software Inc. ModusLink Global Solutions Strive Logistics, LLC
CaseStack Firefly Technology Corp. Murphy Warehouse Company SYSPRO
Cass Information Systems, Inc. Geodis Wilson National Retail Systems, Inc. The Timberland Company
Cathay Pacific Airways Limited Global eProcure Norfolk Southern Corporation Total Logistic Control
Celestica Global4PL Supply Chain Services Novartis Animal Health Trade Wings
CHEP Equipment Pooling Systems Half Price Books Novation Transplace
Cisco Systems Horizon Lines, Inc. OB10 Unisource Worldwide
Container and Pooling Solutions ID Label, Inc. OfficeMax Wallenius Wilhelmsen Logistics
Converge IHS Inc. Omnify Software Watson Land Company
YRC Worldwide
Visit booth #103 to speak with IHS and obtain valuable resources. © 2010 Supply & Demand Chain Executive 7

8. The Country
 Democratic Republic of
the Congo (DRC)
 12th largest country in size
 71 million people (18th largest)
 GDP: $22 billion
Visit booth #103 to speak with IHS and obtain valuable resources. © 2010 Supply & Demand Chain Executive 8

9. The Country
 Democratic Republic of
the Congo (DRC)
 12th largest country in size
 71 million people (18th largest)
 GDP: $22 billion
 Rich in natural resources
Visit booth #103 to speak with IHS and obtain valuable resources. © 2010 Supply & Demand Chain Executive 9

10. The Conflict
 1996-1997 - First Congo War
 1998-(2003) - Second Congo War
 Eight African nations
 25 armed groups
Visit booth #103 to speak with IHS and obtain valuable resources. © 2010 Supply & Demand Chain Executive 10

11. The Impact
 5.4 million people dead
 >1,000 people still dying daily
 Forced labor
 Child labor
 Widespread sexual violence
Visit booth #103 to speak with IHS and obtain valuable resources. © 2010 Supply & Demand Chain Executive 11

12. The Law – History in Brief
 Bills on conflict minerals
introduced in 2009
 Dodd-Frank Wall Street Reform
and Consumer Protection Act of
2010
 Signed into law on July 21, 2010
 Section 1502: Conflict Minerals
Visit booth #103 to speak with IHS and obtain valuable resources. © 2010 Supply & Demand Chain Executive 12

13. The Law – Provisions in Brief
 Does not ban the minerals
 Imposes new reporting
requirements
 Annual disclosures to the SEC
 Due diligence requirements
 Audit / certification
requirements
Visit booth #103 to speak with IHS and obtain valuable resources. © 2010 Supply & Demand Chain Executive 13

14. The Minerals
 Cassiterite (tin)
 Columbite-tantalite
(coltan, tantalum)
 Wolframite (tungsten)
 Gold
 Or their derivatives
 “And other minerals ...
financing conflict in
the DRC.”
© 2010 Supply & Demand Chain Executive 14

15. Our Research Study
 Objectives:
 Understand awareness of Conflict Minerals issue and Dodd-Frank
legislation, and benchmark preparedness to meet law’s requirements
 Assess supply chain exposure to pending legal requirements
 Identify strategies for dealing with Dodd-Frank across the supply chain
 Research Period:
 Conducted: July – September 2010
 Practitioner Peer Review and Report Preparation: October 2010
 Survey Methodology:
 Online surveys
 Interviews and peer review
 Participants:
 190 Global Manufacturing & Non-Manufacturing Organizations
 77% US, 23% Non-US
Visit booth #103 to speak with IHS and obtain valuable resources. 15

16. Key Findings of Original Research
on Conflict Minerals
Scott Wilson
Content Solution Strategist,
IHS Inc.
SCOTT.WILSON@IHS.COM
Visit booth #103 to speak with IHS and obtain valuable resources. Copyright © 2010 IHS Inc. All Rights Reserved. 16

17. “Innovation, Security, & Risk” by IHS Inc, featuring Supply & Demand Chain Executive
IHS – A leading information provider
Founded in 1959, IHS is a leading source of • Employs 4,400 colleagues in 30 countries who
information and expert analysis in pivotal areas speak 50 different languages
shaping today’s global businesses
• IHS customers include nearly 70% of the US
Fortune1000 and 80% of the Global Fortune 500
• Public (2005), NYSE IHS
• Tens of thousands of customers and hundreds
• FY10 revenue: $ 1,075 million of thousands of end-users in over 100 countries
Energy & Design & Defense, Risk & EHS & Country & Industry Commodities,
Power Supply Chain Security Sustainability Forecasts Pricing & Cost
Visit booth #103 to speak with IHS and obtain valuable resources. Copyright © 2010 IHS Inc. All Rights Reserved.

18. Modest Awareness of the Bill Passing
Q: Were you aware that Conflict Minerals were signed into this law?
No – Not
aware
45%
55% Yes –
Aware
Only slightly more than half of those surveyed were aware of this conflict minerals law.
Copyright © 2010 IHS Inc. All Rights Reserved. 18

19. Extent of Each Mineral or Derivative Used
Don’t know (11%) Moderate + Extensive Use (29%)
Coltan Cassiterite (tin)
Coltan Cassiterite (tin)
(tantalum)
(tantalum)
Wolframite Gold Wolframite
(tungsten) (tungsten)
Gold
55%
None Used (35%) Minimal Use (26%)
Cassiterite (tin) Coltan Cassiterite (tin)
(tantalum)
Coltan
(tantalum)
Wolframite Gold
Wolframite
Gold (tungsten)
(tungsten)
More than one third of respondents use a significant amount of tin and gold today (42% tin and 34%
gold, respectively).
Copyright © 2010 IHS Inc. All Rights Reserved. 19

20. Difficulty Identifying Minerals and Source
Q: Your Company will find indentifying these minerals and their origin as:
Very Difficult Somewhat Difficult
42% 29%
Simple to Very Simple Moderately Difficult
7% 22%
93% of respondents believe that identifying these minerals and their origins will not be easy.
Copyright © 2010 IHS Inc. All Rights Reserved. 20

21. Supply Chain Impact vs. RoHS/REACH
Q: Compared to RoHS/REACH, what impact will Conflict Minerals have?
21% 16%
“Requirement to report
annually to the SEC
and to submit a due
About the diligence plan (audited
Compared with EU RoHS / Higher
same REACH Environmental and certified by an
Compliance, what Impact will independent 3rd party)
Conflict Minerals have on the
30% Supply Chain? 33% will generate more
high level attention
compared to
RoHS/REACH issues.”
- Supply Chain Professional
Unsure Lower
Opinions are almost equally divided on how Conflict Minerals compares with the impact of
RoHS/REACH on the supply chain. A combined 37% say it will have the same or higher impact, 33%
say it will have less of an impact, and almost a third are unsure.
Copyright © 2010 IHS Inc. All Rights Reserved. 21

22. Gap: Supply Chain Visibility and Control
Consider hazardous substances (e.g. lead in paint, EU REACH, EU ROHS), security
and IP issues (e.g. ITAR/EAR and counterfeit parts), or issues like conflict minerals.
Q: What % of your materials are fully controlled and traceable to their origin today?
35.1%
11.7% 10.4% 9.1%
3.9% 5.2% 3.9% 3.9% 2.6% 5.2% 3.9% 5.2%
0.0%
0% 1-10 11-20 21-30 31-40 41-50 51-60 61-70 71-80 81-90 91-99 100% (all Don't
(none) of it) know /
~ 1 of 4 surveyed have visibility ~ 1 in 4 surveyed have couldn't
tell
to < 40% visibility to 80%+
Copyright © 2010 IHS Inc. All Rights Reserved. 22

23. Barriers to Action Today
Q: What two (2) are most likely to PREVENT your company from acting
immediately on this regulation?
Other (please specify) 11%
None of the above 9%
Lack of tools/third parties/services to… 24%
Cost of compliance (complexity, time,… 28%
Technical feasibility of compliance (practicality… 37%
Disbelief that this will achieve the intended… 3%
Doubts of enforcement or regulation 13%
Technical feasibility to track and trace these materials, followed by cost of compliance and lack of third
party enablers, are top obstacles to immediate preparation by companies surveyed.
Copyright © 2010 IHS Inc. All Rights Reserved. 23

24. Drivers for Action Today
Q: What two (2) needs, risks, or benefits will likely INITIATE ACTION at
your company?
Other (please specify) 2.5%
None of the above 2.5%
Positive brand exposure of responsible… 9.2%
Opportunity for competitive advantage 3.3%
Customer requirements or requests for… 38.3%
Continuity of supply risk / assurances 10.0%
Risk to brand from negative exposure 10.8%
Fear of market share loss to Conflict Free peers 5.8%
Need to comply 42.5%
At 42.5% and 38.3% respectively, regulatory compliance and customer requests largely outpace any
other business needs, risks, or benefits to initiate action among companies surveyed.
Copyright © 2010 IHS Inc. All Rights Reserved. 24

25. Key Findings -
Conflict Minerals in the Supply Chain
• Moderate but growing level of awareness
• Mineral use extensive and critical among companies
• Difficulty for companies to identify use and exposure
• Preparedness low; disclosure requests materializing
• Cost and technical feasibility prevent action
• Compliance and customers will drive action
Copyright © 2010 IHS Inc. All Rights Reserved. 25

26. Taking Action – Get Started
Conflict Minerals in the Supply Chain
1. Get an understanding of the issue
2. Get involved in industry
3. Assemble and engage the organization
4. Assess your IT landscape
5. Simulate your response
Copyright © 2010 IHS Inc. All Rights Reserved. 26

27. Environmental Sustainability Tools –
Best Practices
Rory King
Director, Global Product Marketing
IHS Inc.
RORY.KING@IHS.COM
Visit booth #103 to speak with IHS and obtain valuable resources. Copyright © 2010 IHS Inc. All Rights Reserved. 27

28. Every Green Issue has a Discontinuous Effect
Disruptive ripple effect throughout global supply and demand balance
Bisphenol-A “BPA Free” China RoHS Customer RFP
Full Material Disclosure
EU RoHS Recast Energy Priority Declarable Substances List
(ASD PDSL)
Toxic Substances Control Act (TSCA) Waste Health Canada / Canada’s Chemical Greenpeace
SIN List - Substitute It Now! Management Plan
EU REACH & SVHC
Security US California Proposition 65
Hazardous ISO 14064 GHG Standards DEHP-Free Norway PoHS
UN Stockholm Persistent
Substances Organic Pollutants (POPS) Air Safety
Argentina RoHS Product Content Disclosure
EU RoHS and WEEE Thailand’s “RoHS”
EU Battery Directive
Directives
Japan Green ENERGY STAR Carbon Disclosure Project (CDP)
Volatile Organic Compounds
US FDA
Electronic Product Environmental Natural Resources
Regional Greenhouse Gas Initiative (RGGI)
Health Assessment Tool (EPEAT)
PCF - Product Carbon Footprint
Conflict Minerals
Water Lifecycle Assessment (LCA)
EU Medical Device Directive
Environmentally Preferred Products (EPP)
US EPA Executive Orders
Copyright © 2010 IHS Inc. All Rights Reserved. 28

29. Our Insight Shows Lifecycle Impact of EU RoHS
2M+ new parts. Major part changes. Cause of over 20% EOL in „06-07.
End of Life (EOL)
Specific to RoHS/Pb-free Environmental Compliance
EOL
2003 2004 2005 2006 2007 2008 2009
Product Change Notices (PCN)
Specific to RoHS/Pb-free Environmental Compliance
PCN
2003 2004 2005 2006 2007 2008 2009
New Product Introductions (NPI)
Market Shift Specific to RoHS/Pb-free Environm ental Com pliance
to EU RoHS
NPI
2003 2004 2005 2006 2007 2008 2009
RoHS in Force July 1, 2006
Copyright © 2010 IHS Inc. All Rights Reserved. 29

30. Past: 6 Substances Were Very “Costly”
Discontinued parts lead to shortages which lead to counterfeit parts
COMPLIANCE (explicit) SUPPLY CHAIN & DESIGN COSTS
Fines, Penalties, Recalls, Data, IT, Supplier Evaluation…. Obsolescence, Supplier Viability, Material Shortages, Continuity
Regulatory event = $160M+ government seizure
Japanese Electronics
of 1M+ product units due to high cadmium
OEM
concentration levels found in system cables
Recall
suspected to violate EU law.
Design reliability = $1B+ recall logistics, warranty
US Consumer
extensions, excessive rework/repair, while
Products OEM
customer loyalty dipped to resolve reliability
Recall
issues causing hardware failure.
Source: UK MOD
PRODUCT PROFITABILITY COSTS SAFETY & SECURITY COSTS
Price Variance, Manufacturing Processes, Inventory/LTB… Reliability, Tin Whiskers, Counterfeits…
Tin Whisker Images Courtesy of the NASA
Copyright © 2010 IHS Inc. All Rights Reserved. Counterfeits and Inferior Grade Components 30

31. Present: EU REACH is a Huge Deal
European Commission roadmap includes 106 priority SVHC by 2012
“Airbus UK’s director of operations and
compliance, said the cost of REACH had been
evaluated at several million Euro over three
years, with provisions up to hundreds of
millions of Euro over five years”…
“…*He+ said there is a level of ambiguity
because it will depend ‘on the substances that
will finally be added to the candidate list and
in Annex XIV’. Airbus UK has set its 2009
REACH budget at somedifferent conclusions”, Jane’s, September 2009
Source: “EU and industry REACH EUR12 million.”
Copyright © 2010 IHS Inc. All Rights Reserved. 31

32. Future: The Next Shoe(s) Have Dropped…
U.S. Conflict Minerals Law:
Dodd-Frank Wall Street Reform and
Consumer Protection Act of 2010
was signed into law on July 21, 2010.
Is BPA (Bisphenol-A) Next?
Kaiser Permanente’s October 28,
2010 research announcement
concluding, “Exposure to BPA
Associated with Reduced Semen
Quality.”
Copyright © 2010 IHS Inc. All Rights Reserved.
32 32

33. Entire Peer Groups Are Concerned
Last October, we held a Webcast called “Redesigning Medical Supply Chains”
Over $80B in spend among the Fortune 1000…
… and only 1 did not attend our webcast…
Copyright © 2010 IHS Inc. All Rights Reserved. 33

34. Sustainability Tools –
Best Practices from the Congo’s ICGLR
Lessons Learned from Africa’s International Conference on the Great Lakes
Region (ICGLR) response to Conflict Minerals legislation can illustrate best
practices in approaching supply chain sustainability, specifically risk/reward.
34

35. About the ICGLR
Member States:
Angola, Burundi, Central African Republic, Republic of Congo, Democratic
Republic of Congo, Kenya, Uganda, Rwanda, Sudan, Tanzania, and
Zambia.
Mission:
To be an effective and dynamic institution which: Coordinates; Facilitates,
Monitors and Ensures the implementation of the Pact and other
initiatives, in order to attain peace, security, stability and development in
the Great Lakes Region.
35

36. Public Pressure Turned ‘Shocking’
SUPPLY SHOCK: “New US legislation regarding “conflict minerals” from the
Democratic Republic of Congo (DRC) is likely to push up the price of tantalum
oxide as it could lead to a supply squeeze, Africa-focused Globe Metals &
Mining…”
Mining Weekly, July 2010
DEMAND SHOCK: “Compliance and our reputation as an ethical
company [is our risk exposure]. Our benefit is to make our customers’
lives easier. End consumers shouldn’t be burdened with the task of
discerning which products are ethical.”
Supply & Demand Chain Executive, November 2010

37. #1 Act Immediately: Design Cycles Exceed
Regulatory Timelines in Most Scenarios
37

38. #2: Continuity as Supplier to Market, not
“Compliance”, is Your Business Case
38

39. #3: A Platform of Transparency is Key in
the Sustainable Supply Chain Generation
39

40. #4: Standardizing Supply Chains Lowers
Risk and Cost; Improves Time-to-Market
40

41. CONCLUSION
Not merely “Compliance” but…
… a matter of continuity and survival
as a supplier to global markets.
Copyright © 2010 IHS Inc. All Rights Reserved.

42. For more resources, visit - http://bit.ly/SDCEconflict1104
Copyright © 2010 IHS Inc. All Rights Reserved.
42

43. John Davies
VP, Senior Analyst, GreenBiz Group
 Andrew K. Reese
Editor, Supply & Demand Chain Executive
 Scott Wilson
Content Solution Strategist, IHS
 Rory King
Director, Global Product Marketing, IHS

44. www.greenbiz.com
www.ihs.com
www.sdcexec.com