Environmental Compliance Reporting - Moving Towards Full ... Environmental Compliance-Work... · Available Tools –Summary Notes Some of the solutions offer the tool only, and leave

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Yoav GiladDirector, Quality Assurance,

Environmental Management & Safety

Environmental Compliance Reporting -

Moving Towards Full Material Declaration(strategies for today that will still work tomorrow)

Content

Problem Statement

Reporting requirements

Available solutions for data management

Terminology:

1. RoHS – Restriction of Hazardous Substances

2. REACH - Registration, Evaluation, Authorization and Restriction of Chemical substances (EC 1907/2006).

3. ECHA - the European Commission and the European Chemicals Agency

Compliance is becoming more

costly and labor-intensive.

It’s becoming more difficult to

manage compliance accurately –

greater risk of failure.

The task of getting and

staying compliant is

increasingly complex

What the Heck is Next ???

More Regulations, More Complexity

WHN

Global Environmental Compliance Tsunami

What’s in Your Product?

Environmental Compliance Regulations are making it more difficult to sell products in the global marketplace.

Environmental legislation and your customer are requiring more disclosure.

Are you getting questions about restricted substances in your product?

Are you finding that your CoC are no longer acceptable?

The trajectory of compliance reporting is quickly moving towards reporting on “What’s in your product?”.

Compliance to assorted environmental compliance directives to date has been based on an “honor system”.

Compliance reporting mainly consisted of a declaration/certification of compliance or a labeling requirement.

Recent compliance legislations show an increasing movement towards reporting actual material content.

Less “self declaration”.

More registration, certification & reporting.

Evolution of Compliance Reporting

Risks

What are the risks for an incomplete restricted materials program?

What are the real issues if I do not comply or my data is incomplete?

Penalties

• Fines

• Public media exposure

• Loss of new client

• Loss of a current client

• Health and safety incident

• Product recall K

R

The Cost of Failure

A $70B consumer electronics manufacturer

A $1.6B telecom Equipment Manufacturer

A $90B computer manufacturer

California Proposition 65 resulted in 24.5M USD in fines in 2008

Product shipment suspended 45 days

Lost sales: EUR 110,000,000

Reduced profits: EUR 51,000,000

Flagship product removed from EU

market

No product shipment for several

months, and then region-specific

product

Greenpeace tested product and found

hazardous substance

Remedial action

Public relation impact

over 200 companies exposed in the

media in 2008 (2009 is expected to

exceed 2008)

Restricted Substances

+3,000

4 628

Environmental Compliance Reporting Moving Towards Material Disclosure

RoHS Restricted Substances – in certain markets the presence or actual amounts of restricted substances in products must be quantified and reported.

REACH Substances of Very High Concern (SVHC) reporting – REACH disclosure require producers to know and report the presence of certain substances in their products.

Suppliers need to identify the presence of any candidate SVHC which is present in their products in amount greater than 0.1 weight % (currently 15 substances).

Manufacturers must update their product’s candidate SVHC disclosure as the list grow over time (draft of a second list of 15 candidate substances published. Due to be finalized by 14 December 2009).

The Challenges

1. Complex supply chain.

2. Complex product.

3. Constant change.

REACH Reporting Requirements

The REACH authorization process defines a chemical content reporting requirement for candidate SVHCs:

The current SVHC candidate list of 15 substances are the first candidates for recommendation. Seven of the 15 were recommended on June 1, 2009. Recommended substances will probably be restricted in the next 3.5 to 5 years.

Further additions to the candidate list are expected to come out every 6 months, starting in Dec. 2009. manufacturers and importers of products will need to track this closely and update their product content disclosures to address new substances as they are added to the SVHC list.

If you ship a product that includes an SVHC candidate (>0.1% w/w) you must provide the recipient of the product with sufficient information, available to the supplier, to allow safe use of the product including, as a minimum, the name of that substance.

You must provide this information to anyone that asks for it within 45 days of the request (free of charge).

Customer Driven Compliance Reporting

Many companies selling their products worldwide have developed their own data formats and systems to help them cope with and track compliance with the ever-increasing number of environmental regulations in their markets.

IBM Product Content Declaration (PCD) form.

Several Japanese companies require the Japan Green Procurement Survey Standardization Initiative (JGPSSI) form.

JAMP-AIS: Japan Article Management Promotion Article Information Sheet (for REACH).

HP REACH form.

Motorola “W18” Control and Reporting Materials Disclosure spec.

IBM WEEE form.

NEC Examination Sheet on compliance with RoHS Directive.

IPC-1752 Material Composition Declaration.

RoHS Exemption Change Impact Assessment

EU RoHS exemption reviews – the EU Commission consultant’s final report for the first review was recently issued in March 2009.

The review may result in modifications or expiration of exemptions that currently allow manufacturers to sell their products in the EU.

RoHS exemption modification or withdrawal –manufacturers will need to review the chemical content of their products to determine the impact of these changes on their products and potentially identify replacement parts and materials.

Example: Which parts in your products are affected by this proposed 2010 phase-out?

– 7 (c) Lead usage MLC caps/resistors <125V AC or <250V DC.

– 11(a) Lead usage C-press compliant pin.

– 12 Lead usage C-ring gasket.

How do you assess the impact of these changes without chemical content data?

Compliance Reporting is Not Limited to 6 Substances

You need a physical inventory of all of the substances and their compounds that are in your product.

To assess compliance to environmental legislation, you need to check for the presence of >600 substances and compounds!

Each substance has several compounds that use it.

Most of these compounds have unique CAS number to identify them.

Rule of a thumb: For each substance, expect 10+ compounds.

Substances are Used in Several Compounds and Alloys

Lets look at Lead as an example of how a substancehas several compounds that include it:

Example of Amount of Substances and Compounds in One Company

A regular PCI card might have 300 IPN (Internal Part Numbers).

The card might contain about 350 different components/manufacturer cat. number (several components has several alternatives).

Assuming the product is assembled from 10 similar type boards, there are 3,500 components.

If you manufacture 10 different products of the same average quantity of components, you reach 35,000 components.

Assuming each component has at least 5 substances/compounds (conservative assumption!), you have 175,000 data!

Other Data to Manage

In addition to the chemical content of the component, the following additional data is needed:

Internal Part Numbers

Manufacturer cat. Number

Manufacturer name

Total part mass

Substance name

CAS number

Content amount in ppm

Applicable exemption (if there is any)

RoHS compliance (Yes/No/with exemption)

REACH candidate SVHC (Yes/No)

Lifecycle status (active, obsolete, EOL)

Source documents (COA, lab certificates, letters, etc.)

How Can a Company Deal With This More Efficiently and Effectively?

First, Take it Seriously!

Then, Implement Best Practices

The Solution

In order to be able to know your compliance status today and be able to cope with future changes, manufacturers must have quantifiable chemical content data management system which is –

Easily available

Updated periodically

Able to validate compliance to various environmental compliance

legislations

Best Practice for Data Management

Create a content database on your parts and materials

Be proactive – ask for full substance disclosureEnable proactive approach to reducing hazardous/high risk substances in your product.

The data you can’t get is information, too.

Do not limit the types of substances inventoried or tracked – this is a “best practice”.

Broaden your collection requirements.

Analyze the data you collectWhat substances are used? Where? Why?

Do not imagine for a second that you can manage this

in simple Excel workbook…use database!

The Cost of Manual Solution

Assume:

1. OEM with 1000 parts from 100 suppliers.

2. Parts & suppliers info are complete and error-free (rarely the case!).

3. Two components engineers assigned (paid $2000/w).

4. 80% of the data collected within the first 2 months, 20% within 6 months.

5. One hour/day in the first 2 months, 2 hours/week in the next 4 months.

6. Handling time is 1Hr per component.

7. 25% turnover of parts per year and 30 min./part for data processing.

Result:1. It will cost $57.80/part, or $57,800 for the 1000 parts!!!2. Maintenance cost of $25/part or additional $6,250/year!

Budgeting for Compliance Data Management Tools

Determine your access and integration requirements

Define a budgetary range for the project

Internal systems can cost $100K to $1M+

External systems can cost $30K to $150K + (per year)

Standalone systems can cost $5K to $20K+

Plus maintenance or annual subscription fees

Plus (maybe) services fees for software integration/implementation

Plus (maybe) consulting fees for integration in to your current business processes

Identify required implementation and ongoing support requirements.

Who need to collect, input, validate, extract and maintain information?

Justify it and bring it to management.

Categories of Some Available Tools

Six major categories for multi-user tools:

Internally hosted and managed integrated system: High end –

SAP; MatrixOne; Agile

Internally hosted and managed high-end standalone systems

PTC (InSight Environmental Compliance)

Internally hosted and managed integrated low-end systems

Omnify (currently not operating in Israel)

Externally hosted and managed integrated low-end systems

Arena Solutions (Arena PLM)

Externally hosted and managed high-end standalone systems

Foresite Systems (GEMS – Global Environmental Management System)

Internally hosted standalone systems

GreenSoft Technology; Papros (MRPRO)Note: By inclusion in this list the presenter is not endorsing any of these softwares; this is not

necessarily a complete list. All copyrights are those of their respective owners.

Available Tools – Summary Notes

Some of the solutions offer the tool only, and leave the data scrubbing, collection, and logging to you.

There are no L&F (Launch and Forget) solutions! Although most data is available in the internet, still the project involves and requires some bureaucratic work from you.

The weakest point in your BOM is your custom-made products. Look for solution which can help you cope with this challenge (S/W+ engineering team).

Item Master Page

BOM SVHC Report

Product Level Disclosure

Exemption Report

Exception Report

Exception Details