Compliance with product-related regulations is a must for manufacturing companies in the process industry. But how can manufacturers ever hope to keep up with increasing regulatory requirements worldwide while meeting customer, market, and industry demands, and ensuring compliance along the whole product life-cycle? The answer may be an enterprise-wide software solution.
In recent years, SAP has been investigating product compliance trends and challenges facing customers from process industries with a keen interest in understanding how software can best support the compliance processes and reduce time and effort. To this regard, it is no secret that the number of product compliance requirements is growing every year and that manufacturing companies have to cope with increased complexity and dynamics. In addition to regulatory requirements, there is increasing demand for product compliance from NGOs, customers, regional markets, and industry groups. All this makes it more and more difficult for companies to introduce new products or to establish a footprint in new markets and grow their business with confidence. To master these challenges, companies first need to identify and know all compliance requirements that affect their product portfolio. This is perhaps the first area where software can provide a helping hand, by identifying and showing all requirements that are relevant for a specific product line in different markets. If, for example, a chemical product is to be sold to cosmetics producers in Germany, the software can highlight the EU cosmetics directive as applicable regulation and provide details on the regulation such as a brief description and links to public sources.
However, knowing all relevant compliance requirements is only one side of the coin. At the end of the day, companies must ensure that their products fulfill these requirements. This means they have to determine the compliance status of their products against all applicable requirements and in case of non-compliance must decide on follow-on activities such as performing necessary registrations or changing recipes and formulas. Again, software, and specifically enterprise software, can support these tasks, e.g. by automating compliance determination.
The automation of compliance determination can be achieved by pulling together required data such as compositions, bills of material, available registrations, and combining this information with built-in compliance knowledge, logic, and regulatory content to determine the compliance status. One example would be the software automatically comparing the substances contained in a product or recipe with banned substance lists and indicating all products or ingredients with issues. Another example would be the software automatically checking to see if all required registrations have been carried out. If a registration is missing, the software can automatically trigger follow-on activities or inform the person in charge.
Importantly, for a company to avoid costly and lengthy compliance-related redesigns, compliance must already be at the product development stage. By embedding product compliance in development processes, enterprise software can streamline these processes and support the development of compliant products from the very beginning. By the above described automation of compliance determination, software can moreover relieve the resources needed for innovation from manual compliance determination tasks.
In practice, compliance does not only affect product development, it also needs to be considered in other stages of the value chain. For instance, before purchasing a raw material from a specific supplier, compliance certificates or other information may need to be available from the supplier. It might, for example, be a good idea for producers of kosher food to receive a confirmation or certificate from their suppliers that the supplied ingredients are, in fact, kosher. Another example is the European REACH regulation: Here manufacturers need to check that chemicals they use in their products have been registered for their uses and the intended uses of their customers. By embedding checks in the purchasing process and making compliance information easily accessible, software can ease the compliance burden by helping buyers purchase compliant raw materials. Furthermore, network solutions can streamline the collection of compliance information from suppliers.
In sales, enterprise software can also help to ensure compliance and provide decision support. For instance, checks embedded in sales transactions can ensure that import or export restrictions concerning chemicals are not violated and that required notifications are in place before shipping a product to a specific country. Product introduction can be supported and accelerated with comprehensive decision support, for example, by showing all products that can be introduced in a certain market or can be used in a certain application area without violating compliance requirements. Furthermore, enterprise software can help prioritize compliance work: By combining revenue numbers with compliance information, the most important products can be identified and registered first.
Unfortunately, with the fluctuation of today’s regulatory landscape, product compliance is not a one-time effort; manufacturers must constantly make sure that they are still compliant. Fortunately, by providing up-to-date regulatory content and logic, ongoing visibility into compliance, and alerts, enterprise software can greatly ease the burden of ensuring on-going compliance. Crucial here is of course that the software is updated on a regular basis so that built-in compliance knowledge and regulatory content remains up-to-date.
So what are the key elements of a software solution that can support product compliance throughout the product life-cycle as described above? To be able to automatically pull together information from various sources for compliance determination and to embed compliance controls in various business processes, the solution needs to be integrated with business software. Key capabilities required of this integration are, for example, recipe development, materials management, purchasing, sales and distribution. Furthermore, the solution should be able to support communication along the supply chain to collect and distribute compliance information. Additionally, in order to provide comprehensive decision support and visibility into compliance for the whole product portfolio and on individual products, raw materials, and substances, the solution should provide powerful analytics on many different levels. Finally, such a software solution must have short innovation cycles that can be easily consumed by the companies using the software. Only then do companies have the flexibility to quickly react to regulatory changes and ensure compliance an ongoing basis.
Enterprise software provides the underlying integration needed for compliance and integration with enterprise-level cloud solutions ensures quick innovation cycles and easy consumption.
Based on the comprehensive investigation mentioned in the beginning of this post, and the clean requirements for enterprise-level solutions, SAP plans to provide a new cloud solution on the HANA Cloud Platform supporting product compliance in the process industry. Stay tuned for more information in the near future!