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DSC Green Thursday:“If you think compliance is expensive – try non-compliance”

Digital Supply Chain Green Thursday – SAP S/4HANA for product compliance

Hello and welcome to the Digital Supply Chain Green Thursday blog-series. Every Thursday we will together take a closer look at one of the SAP Digital Supply Chain solutions and how they contribute to sustainability in supply chains all over the world. Have fun in following the blog series, we invite you to get in touch and feel free to share the blog posts among your peers. Here you can find last weeks article about our opportunity to rethink supply chains with a sustainable mind set.

Compliant products ensure customer security

Whenever we have a yoghurt in our hands, we have a feeling of security, so familiar we don’t even actively recognize it anymore. “This yoghurt will not harm me”. We simply trust that this yoghurt or any other product on the market will not harm us (if we us it in the intended way). It is a feeling backed up by knowing that there are rules & regulations in place that prohibit or limit the amount of harmful substances. Even though we as customers don’t really need to think about those rules in detail, for companies they are a mandatory and quite complex requirement.

As Paul McNulty, a former U.S. Deputy Attorney General, points out in our title-quote – non-compliance is very expensive because of high fines and restricted market access. One of the biggest and most recent examples is the emissions scandal in the automotive industry, where cars produced more emissions than allowed in the European and American market and big fines are still being paid until today. I guess everyone now would agree, that compliance is of crucial importance, right?

Current trends in product compliance

Compliance defines the legal boundaries of product design

A developer has to balance many demands, when creating a new product. First of all, the customer wants a product to perfectly fulfill their needs. The manufacturer prefers utmost efficiency in their processes and minimal costs for the products materials and production. To add to these demands the developer can’t decide as they wish but have to stay within legal boundaries. This playing field is defined by the regulators requiring numerous laws, regulations and guidelines to also be considered before a product is deemed compliant to be sold in the respective market.

Different markets demand different measures

In times of globalized supply chains many companies do not only manufacture their products globally but also target different markets all over the world. A company which wants to fulfill customer demands around the globe will make one crucial discovery – Compliance does not mean the same everywhere! In different markets regulatory bodies have various standards to be met and an ingredient or material that is allowed in one market could be non-compliant in another market. Especially, when buying parts and raw materials in global supply chains, a company has to comply to a complex maze consisting of numerous different compliance requirements, which is easy to get lost in.

Do you know what you transport? – Show it!

Especially regarding the transport and handling of hazardous materials or potentially harmful ingredients, the right documentation is crucial. Compliance also means to transparently label your products and raw materials as needed. Again, companies must deal with numerous, country-specific requirements on when to declare which information visibly on the product container and different templates on how to show this information.

Protection of the environment and people through correct classification

Another key capability in ensuring compliance is to know from the beginning which kind of substance you are dealing with and how it needs to be handled correctly. Only when you know about the dangers of the substances you are handling can you ensure that the colleagues who transport and handle the material to it the right way and secure the load accordingly. Knowledge gives you the power to ensure compliance and protection for every member in your supply chain.

Comprehensive and integrated software helps to reduce the compliance pain and risk

Powerful software solutions such as SAP S/4HANA for product compliance, targets the right pain point for customers in the process and discrete industries and ensures compliance in an end-to-end approach. A huge regulatory content database, managed by SAP strategic partner Verisk 3E, supplies companies with up to date regulatory information. With this build-in database, already many use-cases are covered and SAP S/4HANA for product compliance offers the possibility for each customer to include their individual compliance requirements to be managed and checked easily in all processes.

Examples of S/4HANA for product compliance integration into business processes

SAP S/4HANA for product compliance integrates compliance in all processes

SAP S/4HANA for product compliance is part of SAP S/4HANA and can be enabled by purchasing the respective engine license. Through this technical integration into S/4HANA compliance information can be connected to material master data and procurement, production, sales and distribution processes. The level of integration achieved is such that point solutions would struggle to generate without a massive load of customization. With SAP S/4HANA for product compliance the developer can already check whether the chosen substances or ingredients exceed certain compliance limits in target markets, procurement colleagues easily know about required certificates that need to be made available by the suppliers, sales colleagues can easily confirm that the product is compliant and registered to be sold in a certain market. Last but not least, the right labels and documentation can easily be obtained for transport or in-house handling.

SAP S/4HANA for product compliance ensures a sustainability baseline

Thanks to the integration into S/4HANA master data and the availability of important compliance information throughout all processes, SAP S/4HANA for product compliance ensures that each company knows and can follow the sustainability foundation set by legally binding laws, regulations and guidelines – every day and everywhere. Thanks to this, people and the environment are protected from mishandling or hazardous materials or harmful effects of substances within products.

Furthermore, the developer can follow his own drive towards sustainability during the design process. As the developer has transparent information about the potential harm of a substance within the design product, the search for an adequate, sustainable substitute can start – like this every product becomes more sustainable step-by-step.

Features of SAP S/4HANA for product compliance

Easy and up-to-date access – on premise and in the cloud

S/4HANA for product compliance is available as an on-premise solution and in the cloud. Compliance transparency and the ability for everyone who needs to know to check product compliance is powerful support to ensure marketability of products in all target markets, while all hazardous substances are handled and labeled in the correct way. As compliance is a very complex and individual topic, reach out to your SAP contact to discuss the right setup of SAP S/4HANA for product compliance for you, have a look at the product website, or check this great YouTube videos about SAP S/4HANA for product compliance and the S/4HANA capabilities to ensure product marketability. Act and make sure that you have the same feeling of security as your customer when he finds your product in the store – comprehensive compliance is achieved!

 

I hope you found this blog post helpful and interesting. Please make sure you follow me to not miss any future blog posts in this series and stay informed about how a Sustainable Supply Chain is supported by SAP Digital Supply Chain solutions! Feel free to get in touch with me on LinkedIn and have a look at my earlier posts:

DSC Green Thursday: At the end of every tunnel there is a light – will it be a green one?

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