The European Union’s REACH (Registration, Evaluation and Authorization of Chemicals) Regulation is having profound effects on global supply chains, extending the impact of REACH far beyond the European Union.
Some of these effects are unintended. Others are perhaps successful consequences of the European Union’s efforts to control the types of chemical hazards to which its people and environment are exposed.
The following REACH impacts illustrate the influence this massive piece of legislation has wrought on our interdependent, global economy with its complex supply chains.
Manufacturers and importers are now responsible for their products’ environmental footprints for entire product life cycle
REACH is a major catalyst forcing a sea of change in environmental responsibility. In the past, governments and consumers bore a substantial burden of proof for identifying chemical hazards. REACH changes the equation worldwide with the burden of proof shifting to manufacturers and importers to demonstrate their products are safe before they are placed upon the market.
Suppliers are now expected to provide chemical content information to manufacturers and importers
In order to identify chemical hazards, manufacturers and importers must know what chemicals are actually in their products. If manufacturers want to avoid costly testing, the primary way of doing this is to require chemical content disclosure from their suppliers. While there are issues with the need to keep some information confidential, the expectation is now developing in global supply chains that suppliers will share chemical content information with their manufacturing and importing customers.
Greater need to understand toxicological behavior of chemical substances in products
Because REACH will require industry to gather some type of hazard and risk information for approximately 30,000 substances, global industry now is faced with a need to better understand the toxicological behavior of the chemicals in products.
Prior to the advent of REACH, proactive risk assessments were not required and were rarely undertaken for most products. REACH has increased the need for in-house expertise in order for companies to evaluate the hazards associated with their products, and the risks involved with their customers’ uses of those products.
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Increased chemical disclosure requirements for articles manufacturers and importers
Manufacturers and importers are accustomed to providing safety information in the form of Material Safety Data Sheets MSDS) for materials which may contain hazards substances. REACH is broadly extending that mandate to require a certain level of disclosure, even for articles, which generally did not require any type of chemical content disclosures in the past, as it was assumed substances in articles did not pose significant risks since substances in articles were not exposed to humans or the environment.
Article 33 of the REACH regulation essentially requires companies to know about the presence of any Substances of Very High Concern (SVHC) in their articles and to communicate this to customers.
Design engineers need to be aware of any REACH SVHCs in products
Substances of Very High Concern will eventually be banned in the European Union, except for specially authorized uses. For SVHCs which are not successfully authorized, companies need to redesign and/or re-engineer parts to eliminate these SVHCs from their products.
Companies need to be more vigilant in their design process to ensure they do not become surprised by the loss of a substance which is critical to their new designs, and subsequently, experience a disruption in their design cycles due to the inability to respond quickly.
Customers need to ensure suppliers are meeting requirements such as “pre-registration”
Customers will need to ensure their suppliers have completed necessary pre-registrations by November 30, 2008 or critical materials may no longer be available to the customer. As REACH puts it: “No data, no market.”
Unfortunately, if one of your supplier’s products is non-compliant, that supplier’s product could be taken off the market thereby shutting down your production, even if you have met all REACH requirements that fall directly upon your own company. Therefore, your suppliers’ compliance issues are your compliance issues.
Supply chains will be required to work together on compliance issues
REACH is a major driver for a more integrated approach to compliance with entire supply chains coming together to facilitate compliance. Proprietary concerns, confidentiality business information, and anti-trust provisions are barriers to this process but companies are learning how to navigate around these issues.
Substance Information Exchange Fora (SIEFs) will be formed in January 2009 to share a wide variety of information about substances; hazards, risks, testing data and strategies for compliance. This will be a new process for most companies, but is mandated by the REACH requirement.
Summary
REACH has changed the complexion of global compliance. More information now needs to flow from customers to suppliers and vice-versa.
Compliance is becoming a collaborative effort. It’s not possible to defend the compliance status of a manufactured product without support from suppliers who manufacture each component within that product.
Different types of information such as toxicological information, is also being required of companies…stretching resources and competencies of companies throughout the supply chain to respond to these new requirements.
Integrated supply chain compliance efforts within the context of SIEFs and consortia should help companies leverage each others’ expertise. This new and evolving collaborative environment will be a new way of working that may take some getting used to, but should provide benefits once the groundwork has been laid.
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