Third-Party Management, Millennials, and Your Bottom Line: The Connection
By Marketwired News
By Marketwired News
OVERLAND PARK, KS–(Marketwired – May 13, 2015) – Do you know the millennial generation accounts for 21 percent of all consumer spending? Do you also realize that a third of Millennials boycott or strongly support businesses based solely on the causes they care about?
And one of the issues they’re passionate about is conflict minerals. That means if Millennials know or suspect you’re making or selling goods using conflict minerals, they may take their $1.4 trillion in collective spending to your competitors. If you’re conflict-mineral free, they’ll likely open their wallets to you.
What’s more, if you’re a publicly traded company and need additional motivation to address conflict minerals, a major deadline is approaching. As of May 31, 2015, companies can no longer indicate that the origins of potential conflict minerals are “indeterminable.”
Now that we have your attention, it’s time to talk about vendor management.
Vendor management, or third-party management, is a significant part of many organization’s compliance and risk management efforts. The teams in charge of these efforts are responsible for making sure your organization doesn’t end up in the headlines due to some other company’s mess up.
This year marks an interesting time for companies needing to stay on top of such activities, specifically for companies dealing with conflict minerals. May 31, 2015 marks the end for companies being able to file as “indeterminable” in their findings to the origin of any minerals falling under the conflict mineral designation: 3TG (tantalum, tin, tungsten, and gold). No financial penalties are involved for having products containing conflict minerals, but it will be made public knowledge.
Why it’s the right thing to do
In 2010, Congress legislated Section 1502 of the Dodd-Frank Act. This requires companies to report whether their products contain minerals (those four mentioned above) originating in the Democratic Republic of Congo or any adjoining countries. Conflict minerals are called that because they are used to finance a regional war that has resulted in an estimated 5 million deaths, among other atrocities, since 1998. Local, rebel militant groups take over these artisanal mines and use forced labor (pseudo-slavery) to turn a profit and fund their violence.
As a result of the violence surrounding the mining of these minerals, groups such as the Enough Project (a fight to end genocide and crimes against humanity whose big advocate is NFLer, Aaron Rodgers) and Solutions for Hope (an integrated initiative to source conflict-free minerals from the DRC) have worked to raise awareness and try to provide a better life for those affected by the violence in the region. Conflict minerals carry with them an impassioned weight both politically and ethically. How the rest of the world approaches conflict minerals will likely be a topic of great scrutiny for years to come. For U.S. companies, Section 1502 of the Dodd-Frank Act is the main focus for compliance and risk mitigation.
Why it’s also a good business decision?
Understanding the cohorts within your market is the key to attracting specific customers. Consider the collective buying power of the millennial generation:
- Millennials are over 86 million strong, the largest cohort in U.S. history.
- Millennials already account for $1.4 TRILLION (with a “T”) of consumer spending, or 21 percent of the total spending.
Starting to speak your language now? According to a 2011 study done by TBWA/Worldwide and TakePart, 7 out of 10 Gen Y-ers consider themselves social activists. Of those participating, 33 percent said they would boycott or support businesses based solely on the causes they care about, and 75 percent think more highly of a company that supports a social cause. Quickly you can start to see how this all comes together.
That group of 20-somethings are all of a sudden grown up and quickly becoming the most influential crowd in recent history. These always-connected social media-ites are the ones shouting the battle cry for social responsibility at companies. Millennials now look to the corporate world, rather than the government, to help solve global issues. And, even though they came to age while watching their family struggle during the recession, they are willing to roll up their sleeves and pull the economy out of a rut with their hard earned money. But, they want your company to earn it by proving to them the company they’re investing in is investing in the greater good.
Why third-party vendor management is not as difficult as you think!
What has long been a nightmarish undertaking of insurmountable proportions, managing your vendors can now be an automated, streamlined process. Today’s risk management and compliance software solutions (GRC for short) remove the manual tasks and additional, unnecessary resources. Now your organization can automate things such as conflict mineral questionnaires, security assessments, and scheduled reviews and assessment updates. Risk rankings based on assessment feedback can also be automated. What’s more, this all can be done through a time-stamping, secure extranet that shows up-to-date assessment progress. This removes the need to keep up with messy email strings and the need to constantly remind vendors to finish the assessment.
Direct evidence as to how one of these solutions can help your organization handle third-party vendor management, specifically as it relates to conflict minerals, is shown in a GRC 20/20 case study. This in-depth analysis highlights how LockPath’s Keylight Vendor Manager application helped Fossil Inc. save $3.5 million and avoid hiring dozens of additional staff during their conflict minerals reporting efforts.
Bringing everything full circle
The Dodd-Frank conflict mineral reporting date is fast approaching. After this date, whether or not your organization is conflict free (a definitive yes or no) will be made public knowledge. Whether or not this publicity shines a positive light on a company is up to them to decide.
If left to conventional methods, vendor management can seem an impossible task. However, as shown, by implementing a risk management and compliance software solution, this venture quickly becomes far less daunting.
A new generation who are spreading their wings of consumerism is emerging with a better way of doing business. The influential power of the millennial group will only grow stronger as they mature into their careers carrying with them the demand for corporate initiatives aimed towards the greater good. The companies who emblazon their brand with a badge of social responsibility, and do so in an authentic manner, will be the biggest winners with this group.
LockPath is a market leader in corporate governance, risk management, regulatory compliance (GRC) and information security (InfoSec) software. The company’s flexible, scalable and fully integrated suite of applications is used by organizations to automate business processes, reduce enterprise risk and demonstrate regulatory compliance to achieve audit-ready status. LockPath serves a client base of global organizations ranging from small and midsize companies to Fortune 10 enterprises in more than 15 industries. The company is headquartered in Overland Park, Kansas.