A consultant’s take on Product Compliance for Discrete Industries: Part 1 – Trends, Requirements, Challenges and A Single Source Of Truth
This blog post belongs to the series “A consultant’s take on Product Compliance for Discrete Industries”.
Part 1: this post
Part 2: What makes up a Compliance Product Structure?
Global trend 1: Electronic devices outnumber humans and trigger a surge in e-waste
Recycling and reusing electronic components has of course many advantages, but it means as well that more people come into direct contact with dangerous chemical substances. This is problematic, as electronic components often contain substances that pose a risk to people and the environment. That’s why for example the EU, but as well many other countries, has introduced a directive (RoHS) that prohibits the use of substances like e.g. lead, cadmium, or mercury in electronic devices. So, if a company is producing any parts that end up in an electronic device, it is only allowed to sell it if it doesn’t contain any of these prohibited substances.
Global trend 2: Supply chain sustainability requirements from governments and industries become more and more holistic
While in earlier times, clearly substance-related regulations like RoHS or REACH Art. 33 could be seen rather separately from other requirements and regulations on supply chain sustainability, this has changed today. We are seeing that various national and multinational laws on supply chain sustainability are focusing on multiple aspects at once. For example, the German parliament has just passed a “Supply Chain Due Diligence Act”, that is targeting both social and environmental aspects. Fulfilling regulations like this is only possible if a company has a consistent approach to handle supply chain sustainability data, no matter if it is related to reducing the amount of child labor in the supply chain, or fulfilling regulations on Conflict Minerals, or preventing the use of certain substances like e.g. mercury or persistent organic pollutants.
Global trend 3: Regulators and industries are implementing circular economy imperatives in new requirements
Since the beginning of 2021, it is mandatory for all companies to submit data to the so-called SCIP database, if they import or sell articles on the EU market and the article contains a substance of very high concern. This should help waste operators to limit the risks for humans and the environment during the recycling processes. On the other hand, it is targeted to help consumers to make informed purchase choices and provide insight to authorities. Another example is the International Material Data System (short: IMDS) established by the automotive industry. And some companies are even establishing their own specific substance watch lists and are asking their suppliers about the presence of these substances in the articles they supply.
All these global trends pose various requirements for product compliance – and coping with these requirements requires a cross-functional approach
Engineers need to ensure their design is compliant. Purchasers need to ensure they only buy compliant parts and raw materials. Salespeople need to make sure they only sell compliant products in their markets. Compliance specialists need to be able to perform compliance assessments. And so on.
Every function can benefit from a single source of truth
SAP Product Compliance serves as a single source of truth and enables companies to establish a consistent and cross-functional process. All relevant data to determine the compliance status of a product is made transparent in a Compliance Product Structure. As SAP Product Compliance is natively integrated in SAP ERP (both on SAP ECC and SAP S/4HANA), companies can realize significant productivity gains by automatic synchronization and native integration. This saves a lot of cost and effort compared to other solutions like Excel or 3rd party island solutions.
How does it work in detail? Stay tuned for the next parts of this blog post series.