EH&S – Environment, Health & Safety
Lately we are hearing a lot about Environment, Health & Safety, in short EH&S. And we learn how it is a crucial part of ERP Operations, from sourcing and buying the right materials and components which comply with product safety standards to a safe and environmental-friendly manufacturing processes and last but not least sales and distribution of products that are safe to use for consumers.
But honestly, for most people this topic is still not on their radar. Everyone wants to run operations as smoothly and efficiently as possible. Who wants to invest additional time and effort in the implementation of EH&S solutions. But those solutions might very well be worth a second look, because they can keep you (or your CEO) your job and in severe cases even keep you out of prison. They will help you to avoid major trouble and significant financial losses. Let’s take the example of a toy company that had to recall over 10 million products within 2 weeks in the summer of 2007. I guess we all remember this story being all over the media for many weeks. A wide range of different toys posed a possible toxic lead-paint hazard or did contain tiny magnets that could be swallowed by children. And everybody was wondering how this could have happened, were there no adequate inspections and quality control measures in place, was there no close cooperation with manufacturers and suppliers abroad to guarantee certain safety standards?
Such a type of recall does not only have a negative impact on a company’s financial performance, it also results in a loss of market share and damages the brand value.
So what can you do to avoid such pit falls and comply with product safety standards and regulations to protect the environment, and health and safety of employees and communities?
SAP does offer a complete range of products that do address exactly those issues, they do fall into three different categories:
There’s the solution Product Compliance, making sure Product and Chemical compliance is meet (i.e. for REACH – Registration, Evaluation, Authorization and Restriction of Chemical substances or RoHS – Restriction of Hazardous Substances Directive), Product Safety Communication and Labeling are followed, and ensure that the planning and classification for the transportation of hazardous and dangerous goods meets safety standards, laws and regulations.
Environmental Compliance: those solutions do cover Environmental Compliance like air and water permits or the management of Green House Gas emissions. Hazardous Substance Management keeps track of chemical inventory and allows detailed reporting. Waste Management offers closed loop waste disposal and reporting capabilities.
Health and Safety Management includes Industrial Hygiene and Safety (like OSHA reporting) and Occupational Health with health surveillance protocols, injury logs and more.
Since we are discussing EH&S in the Procurement section today, let’s look at product compliance and refer to some of the thoughts that Rolf Weiland had brought up on Sunday, May 4th in his blog ‘Achieving Operational Excellence’. Rolf discusses how important it is to close the loop between the strategic sourcing cycle and the procurement cycle to really achieve sustainable savings. He also mentions the significance of supplier risk mitigation, compliant procurement operations and collaborative supplier management. And those are exactly the areas where EH&S should be incorporated. For example, make sure you include the suppliers compliance with product safety and standards (i.e. in our example used earlier: absolutely no lead-paint in toys) into your decision making beyond the standard factors of price, quality, reliability when selecting a supplier and awarding them with a contract. And then make sure you have a close cooperation and ongoing check-points and inspections with the supplier to guarantee that you are all on the same page in regards to product safety standards throughout a trusted relationship. Compliance with REACH and RoHS (and many more regulations) in your sourcing and procurement process is an important topic and if neglected will negatively impact your bottom line.
Consider putting EH&S on your roadmap, if you have not already done so, and take a look at the available software solution. Also establish processes that give you better control and insight. This will help to avoid that in a worst case scenario your products get pulled off the shelf and your company makes the 10 O’Clock News.
After all the efforts of implementing solutions and procedures are rather small compared to the penalties and financial damages you could run into for down-playing the importance of product compliance, environmental compliance and health and safety.