Product Compliance Requires Supply Chain Transparency

Estimated reading time: 2 minutes

Changes to the RoHS, REACH, and conflict minerals regulations make the need for supply chain transparency more crucial than ever. The European Court of Justice (ECJ) ruled in 2015 that the 0.1% threshold for notifying SVHCs ( Substances of Very High Concern) in articles applies to “each of the articles incorporated as a component of a complex product” and not to the entire article. Companies that file with the SEC must annually determine and report the sources of tin, tungsten, tantalum, and gold (3TG) in their products under section 1502 of the U.S. Dodd-Frank Wall Street Reform and Consumer Protection Act. Suppliers cannot afford to claim “confidentiality” or ignorance to the material and substance make-up of the products they sell that become part of another company’s product. Leary of public backlash and/or legal action, some OEMs are taking drastic measures such as discontinuing business with suppliers who do not give them the information they need in a timely manner.

Full material declaration (FMD) is quickly becoming the “gold standard” data requirement for an OEM to accurately assess the risk of restricted materials in a product. This means that suppliers must deliver the complete material and substance breakdown of their component/product in a manner that puts the least amount of impact on their core business activities and enables the OEM to collect and aggregate similar information from other suppliers. IPC has developed a family of standards dedicated to this task. The IPC-175x family of standards (e.g., IPC-1752A for material and substance declaration and IPC-1755 for conflict minerals) establishes a standard reporting format for data exchange between supply chain participants. It defines the information that most companies need to collect in order to prove compliance. It also specifies an XML-schema which enables more efficient and effective exchange of data by enterprise data systems.

Automating the exchange of FMD data is made simpler with the adoption of the IPC-175x family of standards but other critical elements must be in place to achieve success. The OEM needs to build a product stewardship process that enables them to efficiently collect and analyze the FMD data from their supply chain. This means they must have executive level support and a well thought out implementation plan for enterprise software to manage this data. The OEM and the supplier must commit to being partners in this venture; “no data means no business” for all parties involved. A statement must be included in supplier contracts that require documentation pursuant to any government’s legal requirements regarding restricted materials and substances.

To learn more, attend technical conference session, S03 at IPC APEX EXPO. I will present a paper titled, “Best Practices for Product Environmental Data Collection,” on Tuesday, March 15, 2016 at 2:00 pm. To learn more or register for IPC APEX EXPO, click here.