Manufacturer supply chains pose an obstacle to collection of quality dataBy John Wagner, AEM Director, Materials Management, and Michael Wurzman, President, RSJ Technical Consulting

Note: This is the 2nd in a series of articles that assist AEM members in meeting today’s stringent substance-in-products documentation and reporting requirements; reducing their non-compliance financial risks; and generating financial opportunities from their compliance activities.

Today’s Compliance Landscape                                                          

The world’s major-market governments are aggressively enacting laws like REACH, RoHS, Conflict Minerals and Prop 65. Their collective goal is to reduce toxicity in the products that you sell into those markets and in the processes by which you manufacture those products.

To protect your access to those markets, you must understand that this wave of compliance is substantially more complicated than past waves that addressed financial data, facility operations or safety standards. Forewarned with an understanding of this complexity, you will be far better positioned to reduce your costs of compliance and to leverage the compliance value proposition.

Furthermore, you will be able to cost-effectively implement the robust solution that AEM and a Steering Committee of its multi-national members have spearheaded.

High Mountains, Wide Oceans                                                                        

The number of substances for which data must be collected is now daunting. In 2000, the EU’s End-of-Life Vehicle directive targeted just four substances. Today, the REACH regulation identifies 169 substances as Substances of Very High Concern (SVHC). By 2020, there may be 300-400 identified SVHCs. California’s Prop 65 lists approximately 900 substances.

The only way to cost-effectively identify, collect and transmit all this data is to implement a Full Material Disclosure (FMD) program. But the complexity of implementing a FMD program is night-and-day more complex compared to gathering financial, facilities or safety data for one very critical reason: whereas, by itself, your company could meet past requirements for data, it needs the cooperation of all your hundreds, thousands or even tens of thousands of suppliers, who must report completely and accurately on the substances they incorporate in the products they sell you.

Drilling down into this unprecedented data-collection complexity:   

  • Compared to textile, electronics and even automotive supply chains, off-road, heavy equipment supply chains are amongst the deepest of any industry. AEM has calculated that they average 11 supplier tiers, and some OEMs have 15-20 supplier tiers.
  • For confidentiality reasons, most customers only know the identity of their direct suppliers. In addition, most materials manufacturers fiercely protect their formulations, some of which might contain 10-15 additives that produce flexibility, UV protection or some other desired property.
  • Many small-to-medium sized suppliers lack the financial or human resources to effectively collect, evaluate and transmit substance data.
  • To date, there has been no free or truly affordable standardized training for the entire supply chain on data-collection requirements and methods.

Scaling the Obstacles                                                                               

Is it possible to overcome the above obstacles in order to maintain market access, customers and revenue streams? In the past, probably “no.” Today, “yes, it is possible.” You now have available to you AEM’s Market Access Pathway (MAP) program. The next article in this series will provide you with MAP’s parameters and benefits.