How to be Successful at Material Compliance Building & Sustaining, suppliers, processes, infrastructure and metrics

RoHS Ready LLC www.RoHSReady.org

Jim Kandler Managing Director [email protected]

Todd Riley Partner - Consultant [email protected]

RoHS Ready provides Clients assistance to implement timely, and cost effective substance compliance projects, for RoHS, REACH, Battery, Packaging, & Conflict Minerals.

RoHS Ready LLC IT Tools

Regulatory Consultants

Low

Effective Process

High

Relative Benefits of RoHS Ready, IT Tools, and Regulatory Consultants

Low

Cumulative Cost

High

Jim Kandler Managing Director - RoHS Ready LLC Led the GE Healthcare Sourcing effort to collect data for 250,000 parts Worked with business team members to set up company-wide procedures. Started team that collected 150,000 declarations from 6,000 suppliers Utilized tools: BOMcheck , PTC InSight, Dassault ENOVIA MCC, Gensuite PCC Efforts included RoHS, REACH, and Packaging Member of IPC-1752A Committee to further develop the IPC-1752A Standard.

Todd Riley Partner-Consultant - RoHS Ready LLC Developed the training for global company colleagues and Suppliers to enable data collection Managed team overseas that collected 150,000 declarations from 6,000 suppliers and loaded into PTC insight and Dassault MCC. Developed simplified templates and processes for Suppliers to utilize for data collection Expert at assessment and triage for data collection campaigns

Substance Compliance Flow Customers Regulations

Requirement Update Sources: - New Substances - Expired Exemptions - New Countries or Regulations - New Customers or changes

Varied & Changing Requirements

Product(s) & Parts Compliant by Design ?

Potential Updates

Responses & Updates

Potential Risks & Impacts - Delayed product launch - Barrier to markets - Revenue

- Product updates required - Resource demand - Cost

Report to Customers & Regulatory

Challenges for Manufacturers Operations

Business

• Delayed product launch • Anticipating regulatory deadlines • Annual regulatory reporting • Exemption expiration • New substance implementation • Customers with specific substance content requirements

• • • • • • •

Lost revenues Increased overheads Increased maintenance cost Increased regulatory risk Dilution of resources Resource efficacy Increased supporting infrastructure • Increased supply chain integration

Materials Landscape - Today Regulations

Impact

• RoHS (EU, China, Korea…) • REACh (EU) • Conflict Minerals (EU) • Proposition 65 (CA) • Canada DSL • CRoHS • Battery (mult) • Packaging (EU)

• Eliminate 6 substances • Approval needed for 36 substances • Reporting of use of 155 to 2000 substances • Many different product families in scope or pending • Exemptions eliminated frequently • Advance notifications • Reporting thresholds and reporting formats vary widely • Some compliance linked to CE Mark • NGO engagement

Materials Landscape - Tomorrow Regulations

Impact

• • • •

• More substances added routinely • More labeling and reporting • More products impacted in more countries • When will enforcement drive implementation? • Sustainability and Circle of Life efforts increasing • More controls on chemical use in manufacturing • More NGOs more active • Reporting thresholds and reporting formats vary widely

• • • • • •

RoHS + 4 REACh + ?? Every 6 months Conflict Minerals + EU Proposition 65 + new labeling Canada DSL + 25 CRoHS ?? KRoHS implementing Battery Packaging Linkage between other regulations

Future RoHS Categories The broad categories bring products into scope of the RoHS Regulations at different times over a 6.5 year period starting from 2 January 2013. Details are provided below. • Existing categories 1-7 and 10 remain in scope. • Categories 8 In vitro diagnostic instruments From 22 July 2016

• Categories 9 Industrial monitoring and control instruments From 22 July 2017

• Category 11, other electrical and electronic equipment not covered by any of the categories above • From 23 July 2019, as do two wheeled electric vehicles

The Question

Business Leader

Will We Be Ready ?

(for this substance regulation stuff)

Examples Example scenario discussions 1 – We are OK 2 – Deployed a tool JK 3 – Short term focus 4 – Suppliers are not actively engaged 5 – Testing products Your companies’ situation may map to one or more

Example 1 – We are OK Current State • Basic processes established • No major complaints • No metrics tracked • Manual efforts dominate Effect on the business • Firefighting daily • Operation is not optimized • Customers not satisfied

Fix - Short Term • Start tracking metrics • Document team processes • Assess workload • Capture issues and triage • Correct process gaps Fix - Long Term • Data based decisions • Generate & execute plans • Add tools / process

Example 2 – Deployed a tool Current State • Declaration and reporting Tool • Established tool processes • Tool does not expedite reports • Tool missing functions • No regulation updates Effect on the business • Tool is not a solution • Manual processes • Late reports • Report format outdated

Fix - Short Term • Start tracking metrics • Document team processes • Capture issues and triage • Correct process gaps Fix - Long Term • Data based decisions • Add process steps to tools as appropriate • Generate & execute plans

Example 3 – Short term focus Current State • RoHS is 1 time activity • Just get it done attitude • No standard procedures • Isolated 3rd party service provider • Added burden to fully loaded resources Effect on the business • No desire to sustain • Single regulations effort • Compliance risk • Incomplete processes • Costly or poor quality

Fix - Short Term • Start tracking metrics • Document team processes • Capture issues and triage Fix - Long Term • Data based decisions • Add tools / process • Big fixes (80-20 Rule)

Example 4 – Suppliers not engaged Current State • Slow suppliers • Textual letter (SDOC) Effect on the business • Slow collection • Aggravated by regulation updates • Poor quality / wrong declarations • Supplier POs on hold • Chasing Supplier for declarations

Fix - Short Term • Start tracking metrics • Supplier training and support • Purchase agreements require reporting • Establish an escalation process for offenders Fix - Long Term • Data based decisions • 1st tier train 2nd tier • Integrate substance reporting • Eliminate poorest performers

Example 5 – Testing Product Current State • Started testing products • If it is not broken don’t fix it Effect on the business • Costly • Compliance risk • Confused suppliers

Fix - Short Term • Supplier training and support • Purchase agreements require reporting Fix - Long Term • 1st tier train 2nd tier • Start tracking metrics • Integrate substance reporting • Add tools and processes • Data based decisions • Eliminate poorest performers

Summary of Examples • 5 - Start tracking metrics • 5 - Data based decisions • 3 - Capture issues and triage • 3 - Add tools / process • 2 - Document team processes • 2 - Correct process gaps • 2 - Supplier training and support • 2 - Purchase agreements require reporting

• 2 - Eliminate poorest performers • 2 - Generate & execute plans • 2 - 1st tier train 2nd tier • 2 - Integrate substance reporting • 1 - Assess workload • 1 - Add process steps to tools as appropriate • 1 - Big fixes (80-20 Rule) • 1 - Establish an escalation process for offenders

Re

Key Recommendations • Do something different • Collect data to facilitate good decisions. • Ask about issues & fix most of them • Understand & document your processes • Understand & support your suppliers

If You Apply Understanding, and Knowledge…

Time for Questions

Follow up • Ideas you have for future discussion? • Was anything missed? • Further details on topics • Any of your suppliers that should get this presentation?

References Metrics • LinkedIn Post - 1 Metric to Determine If RoHS/REACh Declaration Collection Is TOO Slow • LinkedIn Post - 1 Metric to Determine If RoHS/REACh Declaration Collection Is TOO Slow – Part 2 • Presentations on RoHSReady.org/Resources 6 Important Metrics for Managing Materials Compliance Programs, February 2015 issue of CERM. Grade A information, January 2015 issue of Environmentalist. Have You Observed Issues Collecting RoHS and Reach Compliance Declarations? Presented at CARE INNOVATION 2014, Vienna, 18 November 2014