The ever-growing set of government regulations is impacts most every supply chain, whether you’re a public company or supplier to one. Anywhere there is the potential for the government to step in and require a company to fill out paperwork or prepare for an audit by an outside party, the supply chain will slow down as shipments are set aside to be inspected and cataloged. To make sure this doesn’t happen, it helps to be ready beforehand. Here is a list of the six biggest regulations that will impact your supply chain this year:
1. Restriction of Hazardous Substances
The RoHS rule is governed by the European Union, and is not U.S. law, although the U.S. has similar regulations in some states. Essentially, RoHS restricts the use of lead, mercury, cadmium, hexavalent chromium, polybrominated biphenyls, and polybrominated diphenyl ether, according to the RoHS Guide. Most electronic products are affected by the restrictions. This includes lamps, power tools, computers, household appliances, large machines such as ATMs and sports equipment. These products cannot contain more than 0.1 percent of the banned substances, and they cannot contain 0.01 percent of cadmium. The EU determines the percentage of a chemical in something by separating the object into parts that are homogeneous. For example, if the plastic casing of a radio has too much polybrominated biphenyl, then the entire radio would be banned from the EU Even if the product has a lower amount of this chemical as per the percentage of the entire item, it only requires one part of the device to have a sufficient amount to ban the object.
2. Registration, Evaluation, Authorization and Restriction of Chemicals
The REACH law is another EU rule that regulates chemicals. Similar to the RoHS law, REACH govern chemicals considered “substances of very high concern.” These are listed by the EU. Anything that contains SVHC chemicals greater than 0.1 percent of the mass of the object must report to the EU.
Nearly any company that imports items from outside the EU or manufactures items has some responsibility under REACH. Even if a company imports machines, it is likely the objects have some plastic components, and these plastics may contain SVHCs. Testing anything that comes into the country will likely be necessary for those who deal with anything of a chemical nature – just to ensure they do not inadvertently contain SVHCs.
3. Conflict minerals as defined under the Dodd-Frank Act
In the U.S., when the Dodd-Frank Act was signed, it included a provision that public companies must be able to prove their sourced minerals are not coming from places that are financing conflict in the Democratic Republic of the Congo or an adjoining country, according to Source Intelligence.
The following are the minerals that must be proven not to derive from a business that is financing conflict: tantalum, tin, gold and tungsten. Companies that want to source these items must ensure their origins are cleared by the U.S., and they must be able to prove where the products were purchased, as well as provide information about how they were transported to the U.S.
This issue is more important than it may initially seem to a company that doesn’t have experience sourcing these particular minerals, as many of them actually do come from sources that are directly or indirectly financing the current conflict in and around the Congo. Often the sources are disguised through smuggling or some other tactic. A good company takes care to ensure that its products are sourced appropriately. There are tools that help do this.
4. Waste from Electrical and Electronic Equipment
WEE is similar to RoHS in its application to electronic devices. It essentially requires that electronic equipment, such as computers, be recyclable and that the manufacturer is able to collect the items itself to recycle the products. Interestingly, according to the European Commission, radio frequency ID tags meet the definition of electronic device, which means they must be collected and recycled. The individual member states of the EU are responsible for achieving the appropriate collection rates, but companies that sell electronic products must also collect the equivalent product and distribute it to the maker for it to be recycled. In other words, a business that sells computers must also collect the old computers it receives and return them to their respective manufacturers.
An interesting rule is that any company that produces something with a battery inside it must not only be able to collect the object, but also collect the battery for recycling.
5. Traceability of pharmaceuticals and medical equipment
Another traceability issue has to do with pharmaceuticals and medical equipment. The recent passing of the Drug Supply Chain Security Act, along with the Unique Device Identification (UDI) rule, both of which are monitored by the Food and Drug Administration, states that companies must always have an adequate amount of information about the raw materials their products are made from, Health Care Distribution explained. This information must be stored for a certain numbers of years not yet defined, and must include all data about the suppliers and the carriers that shipped the raw materials to the factory. The data kept by the manufacturer must also include information about how the product was sent to the final retailer or distributor. According to Drug Store News, the data can be stored in a number of ways, although using a computer database is likely the easiest. The rules are essentially the same for both medical devices and pharmaceuticals, Healthcare Packaging reported, whether someone is making drugs or building a medical device, such as a pacemaker or artificial limb.
6. Title 21 CFR Part 11
This is a regulation by the Food and Drug Administration that determines what exactly qualifies as an appropriate record for usage in an FDA compliance program. This relates to traceability, as well as food delivery records. It is a complex rule that does not feature an easy compliance solution, 21cfrpart11.com stated. Companies must take multiple steps and have many different procedures in place to ensure they meet compliance with the regulations. Those in charge of receiving paperwork or signing for deliveries must have undergone appropriate training so that they follow the right protocol for documenting information. To do this, it helps to have a software solution that can enable companies to easily meet compliance rules.
These are just a few of the continually growing list of compliance issues supply chain leaders need to be aware of. But by having a robust Product Lifecycle Management system in place, such as Oracle Agile PLM, engineers and supply chain leadership can easily respond to requests from their legal and compliance departments whether the products they’re building meet government regulations.