Environmental Compliance: Creating an Effective Program

June 24, 2008
If your company can't prove compliance, it may be at risk of losing valuable contracts.

In the global economy, environmental 'non-compliance' is a 'non-option.' Alongside more populist topics -- such as energy consumption and carbon footprints -- demonstrating regulatory compliance, reducing hazardous substances, new chemical substitutions and systems for monitoring/controlling product compliance should be major concerns as manufacturers create and implement a comprehensive Green program.

Concern for the environment is affecting every aspect of the manufacturing process, from the energy required to operate the machinery to the chemicals used in products and the manufacturing process. Fuelling these concerns, geographies as diverse as China and Europe are implementing strict environmental compliance laws such as EU REACH and China RoHS with penalties that can completely exclude companies from the market, creating a very tricky landscape to navigate. If you can't prove your compliance, you may be at risk of losing valuable contracts or automatically taking yourself out of the running for new, lucrative deals.

While the initial investment of resources can be daunting, the benefits are infinite. Not only will you lessen your negative environmental impact and protect your business and those of your clients, but you'll also positively position yourself as a proactive corporate citizen committed to responsible business practices. This not only enhances your reputation in the industry and your respective communities, but it is also being recognized as a major business driver.

Inevitably, this increased attention on compliance has spawned new technologies that can help you make sound decisions and create an all-encompassing environmental compliance program that will protect and grow your business while benefiting the environment. Below are the six essential steps to researching and implementing your ideal program.

Evaluate Where You Stand Now

  • Step 1: Documentation: In the manufacturing world, the two most important environmental compliance mandates are RoHS and REACH -- companies need to be able to demonstrate that certain substances in harmful amounts were not used in their products. Do you have the ability to provide the needed documentation for any RoHS or REACH audit?
  • Step 2: Analysis: If you already have an environmental compliance process, it's imperative to take a close look at what it's really costing you, not only in hardware and software costs, but also man hours. The important things to consider are:
    • Diverted resources and associated salaries
    • Time spent in manual data collection
    • Time per customer to respond to new or repeat reporting requests: 3 hours? 3 days? 3 weeks?
    • Interruption, time and outside costs for responding to customer audits or verification of compliance
    • Number of customer fire drills staff are able and willing to entertain
    • Costs incurred by engineering, procurement, quality, sales and logistics due to little or no visibility on compliance issues
    • Cost of errors and unintentional non-compliant shipments
    • Associated customer perception of your company as a quality vendor against declining customer support
    Once you make an honest assessment of these costs, you may be surprised. Recently, a semiconductor manufacturing company documented its manual compliance management efforts across multiple divisions at over $6 million per year!
  • Step 3: Self-Assessment: Consider the implications for the company should one of your customers challenge your compliance status:
    • Are you using any Substance of Very High Concern (SVHCs) likely to be specified by the REACH regulations?
    • Can you provide customer with the needed documentation for certificates of conformity for each part you manufacture, declaring that the use of the restricted RoHS substances is within the permitted levels?
    • Can you prove the material content for each part, based upon substances within homogeneous materials of product parts, with justification of RoHS categorization and use of exemptions?
    • Do you have or can you easily conform with a verification program that uses and documents 'suitable analytical techniques' for ongoing auditing of supplier compliance process/system, quality/accuracy and product conformity assurance?

Implement Your Best-of-Breed Environmental Compliance Program

  • Step 4: Appoint a Champion: To be successful, you need an internal champion who will spearhead your compliance efforts, positioning the cost/benefits to the executive team while ensuring that the compliance processes demonstrate due diligence to protect your market position as a company.
  • Step 5: Evaluate: Now, it's time to compare your possible solutions for managing the compliance process. Do you have the available manpower to manually collect all of this data and individually reply to each request? Or would it be better for the business to implement a technology solution that allows you to concentrate your resources on developing new approaches to making your products environmentally acceptable and building a case for competitive differentiation?

    Thankfully, new software innovations provide compliance solutions that can greatly ease and underpin your compliance project, fully automating the processes and constantly updating you on the steps needed to stay ahead of the curve. It can be shown that 99.9% of the time, the software solution makes the best business sense and eliminates a myriad of potential headaches down the road.
  • Step 6: Decision: Having completed your evaluation, it's time to select the right software solution for your needs. The options range from fully automated compliance products designed by environmental compliance specialists to add-on software modules from large enterprise software providers. Important factors to consider when choosing that solution are:
    • Functionality: How robust is the solution? Are you confident that it is a good fit for your business?
    • Flexibility: How often is its structure updated by the vendor? Environmental Laws are constantly changing: can the software solution?
    • Reporting: Is your reporting fully automated or does it require significant manual investment? If a customer were to audit you tomorrow, how quickly could you respond?
    • Ease of Use: Can you easily access information? Are you able to quickly judge compliance status and identify compliance problems?
    • Implementation: How easy is it to implement and integrate with your internal systems? How long will it take until you're 'up and running?'
    • Commitment: Once the software is implemented, how many man hours and internal resources will be needed to maintain the solution? Is the vendor up-to-date on regulation requirements, or is that up to you?
    • Cost: Does the cost/benefit of the solution stack up when considering all of the factors above?

As you can see, implementing an environmental compliance solution is not a decision that should be taken lightly. A solution that doesn't fit your needs can be costly and ineffective, necessitating an even bigger investment in resources. Implementing the right solution, however, will not only streamline operations, but it can also create new revenue opportunities, solidify your relationship with customers and, most importantly, protect the precious natural resources that we all value.

Graham Margetson is Co-President of Foresite Systems, a provider of environmental regulatory compliance software, that offers a comprehensive solution set to automate global product environmental regulations, including Worldwide RoHS, WEEE, Battery and Packaging, REACH and EuP, with integrated Design for Environment (DfE), Sustainability and Compliance Process Management. http://www.foresitesystems.com/

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