As we prepare for the conversations at the upcoming EHS Management Forum in Tucson, guest blogger Chris Nowak weighs in this week with some smart supply chain strategies.
Gathering supplier data is mandatory for the modern manufacturer. Requirements related to REACH, RoHS, California’s Prop. 65, and standards such as IPC 1752 mean that collected data must include multi-dimensional details, including chemical names, types, quantities, geography and regulatory compliance status.
And to make it more challenging, data gathered last year may already be out of date. Why? Because many manufacturers still choose to collect material declarations based on “negative declaration.”
The latest intelligence on how best to collect supplier data focuses on something called “positive declaration.” Seagate has been notably good at positive declaration in the past five years or so, but others are catching on.
Eliminate the negative
Negative declaration is asking Yes/No questions about chemical-substances in supplied materials and goods, and hoping for a No. For instance, you may ask a supplier: “Is there any substance in your supplied product that is restricted or banned on the REACH SVHC list?” If you get the No you are hoping for, you know the goods are compliant; at least for today. But tomorrow, if the SVHC list changes, you have to go through the process all over again.
In negative declaration, the questions have to be re-asked and re-answered for every change in recipe and process that the supplier makes, and for every regulatory update, of which there are hundreds, globally.
Accentuate the positive
The best way is to get necessary ingredient data from suppliers is to ask direct questions. What’s in your product? What are the chemical ingredients, exactly? What processes did you use to make those?
Compliance is in the details, but so is the devil. Inefficiency plagues the current ‘good enough’ processes that industry has used. Inefficiency is expensive. Companies have been demanding leaner operations around the increasingly complex job of regulatory compliance. Specifically, businesses need a more efficient way to screen morphing regulatory chemical types and thresholds against evolving regulatory or custom declarable substances lists. Many companies are turning to software to help manage the effort. This is great, as long as you make sure the software can create customizable questions for suppliers.
Best practices for positive material declaration
Best practices for supply chain transparency via material declaration include:
- To overcome supplier fatigue when it comes to filling out forms about chemical ingredients, the best way is a more proactive approach, positive declaration.
- Material transparency processes must exist in order for companies to manage change, reduce brand risk, handle inventory, manage quality control, and keep adequate business intelligence about products and a supply chain.
- Chemical-specific regulations and product labeling requirements demand substance-level disclosure from both upstream and downstream. If the process of proactively gathering this data can be automated, all the better
- Try to set the expectation that supplier data should be positive declaration rather than negative, because if the regulatory list changes five years from now (and it will!), you can still easily find out whether your products are compliant, without needing to re-engage the suppliers.
- Lastly, don’t apply undue pressure on suppliers, as too much pressure can result in them hiding or pushing unseemly chemical ingredients far back into the supply chain, not report them to you, and cause damage down the road
Some say the question is not, “How much can we get suppliers to tell us?”, but “How much do we really want to know?” When you’re ready to know a lot, you’re ready to try positive declaration. But if you’re not ready, the yes/no questionnaires are certainly a great way to start because they can be customized later on.
Chris Nowak is a Director at Actio Corp. and has been helping businesses handle material disclosure for REACH, RoHS and hundreds of other regulatory parameters for almost 10 years.