By John Wagner, AEM Director, Materials Management, and Michael Wurzman, President, RSJ Technical Consulting
(This is the 10th and last in a series of articles that assist AEM members in meeting today’s sustainability goals and compliance-reporting requirements; reducing financial risks; and generating financial opportunities from their sustainability and compliance activities.)
Just do it! We know the wisdom of “just do it” when the time is finally ripe for action.
Well, the time is more than ripe when it comes to aggregating quality compliance and sustainability data in regard to substances in your products. More specifically, there is no better time to start implementing a Regulatory Compliance Management Process (RCMP) into your routine business functions. As you do so, you will be able to flexibly adapt the RCMP for meeting sustainability goals and for leveraging sustainability opportunities.
So, if your company has delayed its introduction of a quality-data program...if its pace of implementation is glacial…if you are still using outdated spreadsheets to collect data…and/or you are still collecting inadequate Supplier Declarations of Conformity to justify compliance…now is the time to get started launching or accelerating your integrated RCMP.
To assist you, below are key points to consider and steps to take.
POINTS TO CONSIDER
1. The non-compliance risk of losing global revenue, customers and/or markets is truly greater now than ever before.
Ten to 20 years after enactment, laws like ELV, REACH, RoHS and many others have evolved, and enforcement authorities have been trained.
Take EU REACH: last month, the EU published its “Guidance on Requirements for Substances in Articles” draft version 4.” This document further defines the 2015 EU Court of Justice’s ruling that the basis for REACH compliance is at the lowest article level vs. the finished-product level. The document also makes it clear that all companies are responsible for verifying the accuracy of data they receive from their suppliers vs. passively accepting a “Yes, we’re compliant” statement. The Final Guidance document is expected in Q3, 2017.
For equipment manufacturers, California Proposition 65 is even more challenging than REACH. For instance: the recent Prop 65 revision requires that, by August 30, 2018, labels on your products must identify Prop 65 substances in your products. Furthermore, you should know that the revising authorities added a clause to specifically cover our industry; that state penalties are stiff; and that enforcement is done through “Bounty Hunters” who drag your company and supply chain into court. Additionally, as with REACH and other laws, you are responsible for the accuracy of data collected from the dozens, hundreds or thousands of suppliers in your supply chain.
If you are a supplier, it is critically important to know that your customers are legally and fiscally responsible for compliance in the EU, California and every other major market. Understandably, then, your customers expect you to have the data they need and to be responsible for its accuracy and completeness. In that regard…with the looming termination of various RoHS exemptions in July, 2017…RSJ Technical has been contacted by companies in full fire-drill mode, because they never implemented an RCMP and are suddenly facing the loss of customers and markets.
No business could function today without processes that generate quality data. In that regard, the requirement for quality substance data is very similar to the requirement for quality financial, EH&S, sales and many other kinds of data. The common thread is that all those various data requirements necessitated the implementation of a process. What is different, however, is that compliance with today’s EPR laws requires a more sophisticated process that takes into account all of a company’s suppliers.
2. Failure to implement an RCMP is no longer an option.
Failure to Understand a Law
A company’s failure to know the details, requirements and implications of REACH, RoHS or any other similar law can be costly, if not catastrophic. Given the numerous public consultations and extensive guidance documents over the years, this failure to understand is no longer considered a defense by regulators, courts and many customers. Worse, it opens the door to potentially devastating liabilities.
Failure to Act
Companies often justify their RCMP delays by the costs and complexities of implementing it. However, these companies should be aware that, in the EU for example, there is only one mitigating factor in your favor, should customs of other enforcement authorities investigate your compliance status: namely, that you have an RCMP in place that includes your supply chain; and that it demonstrates your ability to “inspect what you expect” in terms of substance data from your suppliers. In fact, companies who have already been investigated had to show a compliance process in place to demonstrate their ability to be compliant.
3. Sustainability programs require quality data
Given the growing shortages of natural resources and the increase in governmental “circular” policies, a company’s future success will be directly tied to its sustainability programs; in particular, its ability to re-use or recycle end-of-life materials. In that regard, here is some good news: a) those sustainability activities require the same substance data as compliance activities; b) the same data-infrastructure and processes can be utilized, as greenhouse gas, water consumption and other data-sets are introduced over time; and c) the same RCMP can be used to generate traceable and updateable data in all the required data sets. In other words, the same RCMP will provide the foundational basis for both your compliance and your sustainability data.
GETTING STARTED: STEPS TO TAKE
Whether you need to launch or to accelerate your RCMP implementation, there are defined actions to take that closely mirror other internal projects your company has developed. In particular, AEM’s Market Access Pathway (MAP) program includes all the essential pieces that you will need to get your program in place.
These steps include finding internal executive sponsorship and accountability, earmarking funds and selecting an implementation team. Additionally, it likely involves a product risk-assessment to determine which products in which markets you should initially address; a function-by-function gap analysis to determine where compliance tasks can be cost-effectively incorporated; and the development of a detailed project map and timeline. Finally, these pre-implementation activities must include planning for supply chain awareness and training.
Once launched, each step of the RCMP implementation should be tested and revised so that it fits best with your corporate culture, structure and personnel. During this phase, it is important to remember that the RCMP elements that involve your suppliers and customers take time to put in place. The deeper the chain, the longer it takes. However, once your RCMP foundation is in place, sustainability reporting can be cost-effectively added in order to meet your sustainability goals and to leverage your sustainability opportunities.
Over time, your RCMP will become a routine business process – like your Quality, Sales Tracking and other processes. Like those other processes, it will require “Plan-Do-Check-Act” continuous-improvement cycle. As such, it will cost-effectively generate the data and reports you need to comply with current and future EPR laws; to accommodate future requirements for water, energy and other data sets; and to open new sales, marketing and sourcing opportunities.
Now is the time to launch or accelerate your Regulatory Compliance Management Process in order to capitalize on compliance/sustainability requirements and opportunities. AEM has extensive experience and resources to assist you.
For More Information
For further information about how AEM and RSJ Technical can assist your company with designing and launching its RCMP, contact John Wagner, AEM director, materials management (firstname.lastname@example.org, tel: 414-298-4164) or Michael Wurzman at RSJ Technical (email@example.com, tel: 972-679-8996)
Click on headlines below to read other articles in this series:
Quality Data Allows Manufacturers to Profit from Sustainability
What's Needed to Achieve Quality Compliance Data? An Integrated Compliance Process
What’s Needed to Achieve Quality Data? Ubiquitous Training
To Achieve Quality Data, Collection Infrastructure Must Fit Needs
AEM's MAP Program: An Integrated Approach to Achieving Quality Data
Supply Chains Pose Obstacle to Quality Data
Chemicals in Products: The Next Big Risk for OEMs, Suppliers
How Quality Data Reduces Risk and Cost
Quality Data Allows for a Compliance Value Proposition