Responsibility is on Suppliers

“EU directive removes AirPort Extreme base station from Apple’s portfolio,” was the headline story in the Macwelt industry journal in June 2006. The IT and consumer electronics group Apple had just asked its European dealers to take the popular WLAN station off the shelves, together with the educational eMac computer. The reason: both products contained hazardous substances that failed to comply with the RoHS Directive of the European Union, which came into force in July 2006.

International directives for environmental and health protection
International directives for environmental and health protection

The purpose of the directive is to make manufacturers produce more environmentally friendly products. The title of the RoHS Directive is a clear statement of intent: “The restriction of the use of certain hazardous substances in electrical and electronic equipment.” The current cross-community discussions about “green IT” indicate that this concept is more wide-reaching further than the prevailing discussions about the energy-saving operation of IT infrastructures would perhaps lead one to suspect. Similar rulings on environmental and consumer protection around the world also lead us to draw the same conclusions.

Voluntary agreement on the part of OEMs

Spectacular cases such as that of original equipment manufacturer Apple undoubtedly result in a high level of publicity, but they are by no means common. In fact, the electrical and electronics (E/E) industry quickly learned how to comply with the legislative requirements. In many places, compliance with the new directive is a prerequisite for an enterprise that wants to launch its electronics products on the market. Consequently, companies such as Heidelberger Druckmaschinen have voluntarily agreed to become RoHS-compliant, even though their products are in fact excluded from the directive.
Through these voluntary agreements, the market is increasingly creating an environment of self-regulation. International original equipment manufacturers such as Nokia or Siemens are at the forefront of these developments. They are striving for a full declaration of all components in their products. On the one hand, they thereby want to be well-prepared for the different legislation in all their target markets. On the other, they do not want to get into difficulties in the event of future amendments to the compliance regulations. It is no longer just legal requirements that count here; the public’s perception of a company is increasingly becoming a driving force. If some eventuality causes an unregulated chemical to become the topic of the moment, original equipment manufacturers want to find out as quickly as possible whether and to what extent this substance is contained in their products, so that they can take the correct counteractive measures in a worst-case scenario.

Suppliers are responsible for providing information

However, it does not matter whether an environmental directive such as RoHS applies directly to the OEM or whether the enterprise chooses to comply voluntarily, it is the system suppliers and subcontractors that bear responsibility. They are being forced to comply with increasingly extensive material catalogs from the original equipment manufacturers, something which in practice amounts to a full declaration for the supplied parts. If the suppliers do not provide the requested information, they run the risk of no longer being able to sell their stocks.
The pioneer in these developments is the automotive industry, which set up the International Material Data System (IMDS) some years ago. Manufacturers such as Audi, BMW, Chrysler, Daimler, Ford, Opel, Porsche, Volkswagen, and Volvo use the IMDS to meet their obligations regarding the provision of data about the parts used in cars, in order to document material composition. After all, all vehicle manufacturers, and consequently their suppliers, are responsible for the complete product life cycle of every component, from design, production and subsequent use right through to disposal.

“Design for Environment” – designed for integration

However, meeting official or even voluntary reporting obligations is only the first step towards environmental compliance management. It is at least of equal importance for enterprises to ensure that banned hazardous substances are not used in product development in the first place – based on the target market in question. The industry calls this safeguarding process “Design for Environment”.
In view of the constantly growing range of materials involved, Design for Environment causes a considerable amount of administrative work, especially for larger enterprises. More and more market participants are therefore deciding to set up a comprehensive recording and reporting system, which participants involved in sales, design, production, shipping, and disposal can use to maintain or access the required information.
The advantages of also integrating this compliance management in the higher-level ERP solution are obvious. Numerous operations can be automated if existing product data can be transferred from the ERP system to the compliance management system electronically. In addition, user acceptance of an additional application of this kind is higher if the employees do not have to leave their familiar working environment to use the system.

Interplay between ERP, compliance management, and document management

As a rule, Logistics is responsible for the correct declaration of the goods and their smooth shipment. For Logistics to be able to supply accurate information on the ingredients and compliance status of a product or component, the compliance management system reads the required data from the article bills of material, purchasing info records, or logistics data in the ERP solution and makes this information available in a standardized interface.

Standard formats for data exchange
Standard formats for data exchange

If a status check reveals that information for a product or component is missing, tasks are created in the compliance management system and are forwarded to the manufacturer’s or supplier’s contact person. The required product data including information on ingredients, materials, and composition can be processed automatically, as it is usually available internationally in standard formats such as IMDS, IPC-1752, AIAG, or the IEEE formats. Irrespective of the format and scope, the compliance management system automatically captures the inbound information and stores this in a document management system (DMS). This is usually a standard DMS system in the ERP solution, for example SAP DMS. If companies use a DMS system that is independent of the ERP solution, links to the documents are usually stored in the compliance management system. If the products are changed or new legislation comes into force, the compliance management system creates a new inquiry addressed to all the members of the value chain concerned.

Compliance portal: The third member of the group

It makes sense to process these inquiries using a compliance portal. Authorization concepts defined for portals can be used to define who is allowed to perform which activities. To ensure data is protected, the departments and partners involved are given role-specific access to the functions and information in the compliance management system.
Web-based portals have proven the most economical solution. They offer a uniform user interface that can be easily accessed by all, on which the data relevant for compliance evaluation can be managed. This includes not only substance list data and information on the product structure right down to pure substance level, but also customer and supplier data, including the current compliance status. Checks such as an RoHS query can be executed automatically on the basis of this data. The result is provided in the form of a list that uses traffic light icons to indicate which parts contravene the applicable laws in the various target markets, and which comply.
A “stand-alone” compliance management system therefore helps enterprises to develop, manufacture, or sell products and meet product-related environmental requirements worldwide. In combination with an ERP solution and a portal, data redundancy can also be avoided and the processes can be largely automated. Cases such as the Apple product recalls or those for accessory toys for Mattel flagship Barbie can be avoided.

Heiko Römhild