In A World Of Increasing Regulation How Do You Remain Compliant?

Barbara Hodge interviews Dr. Georg Niedermeier, Head of Product-related Environmental Protection at OSRAM AG

In 2007, the European Commission introduced chemical/substance-related legislation known as REACH (Registration, Evaluation, Authorization and Restriction of Chemical substances), which has far-reaching [no pun intended!] implications for communicating the presence of a number of listed substances in any of the products produced by an organization. To add some complexity: every 6 months, new substances are added to the list. What's required, therefore, is an excellent communication vehicle between a company and its multitude of suppliers, so that the existence of a given substance can, at any time, be verified and communicated. No easy task.

Any company that is involved in manufacturing products such as cars, furniture, clothes, shoes, light bulbs you name it needs to be in compliance. Bearing in mind that in shared services the mantra is all about standardizationautomationdata, adding regulatory compliance to the menu of services seems an obvious solution. Dr. Georg Niedermeier, Head of Product-related Environmental Protection at electrical lighting manufacturer OSRAM was kind enough to take a call from me, and shed some light on how product manufacturers and retailers can stand up to scrutiny under the EC's increasingly complex regulatory environment.

Dr. Niedermeier, can you outline REACH and ROHS legislation for us, and explain how it is impacting your operations?

REACH reflects the European Commissions increasing concern about the safely of chemicals and substances that are inherent in many of the products on the market. The regulation aims to protect the end-user through requiring detailed filings of any suspect or listed substances that may be present within a finished article. even if just in one of the thousands of parts that go into making the final product.

All manufacturers of products operating within the European Community must comply with these regulations a requirement that naturally impacts the often-extended supply chains we work with. Additional regulations are restricted to specific industries,for example RoHS (the Restriction of Hazardous Substances Directive), which regulates the lighting and electronics industry, in which OSRAM operates. It monitors the chemicals in our products, restricting the use of certain substances within productsion. This has incredibly powerful implications, if you consider that an average notepad may contain of 50,000 parts, each of which must be able to confirm the presence, or absence, of these listed substances.

An important point to make: compliance does not prohibit the use of certain so-called substances of very high concern - SVHC; it simply requires their presence to be communicated externally. Of course the onus is on us, to find out whether these substances are contained in any of our products components, even if our suppliers have not volunteered this information.

What's the core challenge for you, in complying with these regulations?

More and more information is required regarding our products, and on top of that there are dynamically growing lists of substances that are now restricted, to be avoided, to be declared, etc. EU REACH regulations and EU ROHS are the most important issues for us at the moment, but separately, customers also have more and more specific requirements. So those are some of the challenges we are facing.

Our main challenge, if you like, is to find out whether our products, and their component parts, contain any of the listed substances whether specified in ROHS or REACH legislation. Taking this a step further: We need to be able to provide verified information a declaration of proof as to whether these items are in our products. What it hinges on, of course, is excellent, timely, reliable information from our suppliers as we have a multitude of suppliers whose products end up in our lights or electrical products. Similarly, we supply various industries, such as automotive, and are required to prepare relevant declarations for these customers. Obviously conventional methods of communication e-mail attachments, Word documents, Excel sheets are far from optimal. What we need is a middle product, a database, that our suppliers can log into and through which they can verify the existence, or absence of, certain chemical substances. A number of these already exist in the marketplace and we rely heavily on them tools like BOMcheck IMDS (International Material Declaration System) and BOMcheck, IMDS (International Material Declaration System) which is specific to the automotive industry for which we are, of course, a major supplier.

Where the process becomes somewhat more complex, is that REACH lists grow dynamically. Approximately 1025 to 2040 new substances are added to the REACH list every six months or so, which necessitate us re-checking with our suppliers as to whether these items are contained in their products. When working with other organizations operating within the European Union we are helped, as European Union legislation already requires them to be on board. However where companies are operating outside the EU this is not as simple, although they are contractually obliged to provide this information to us.

At OSRAM we are convinced that all upcoming information requirements, all declarations and all restrictions can only be handled well through an extended communications strategy that extends through the supply chain so that all required information and declarations, as well as their updates, are available more or less automatically. Whats most important is that this information is fast, efficient, and reliable.

Are these data-sharing systems the solution, going forward?

Yes. We have been working with the interface databases I mentioned earlier for a number of years now. The real challenge is to get our suppliers onboard to familiarize them with these kinds of databases, and to facilitate their transitioning into these databases. When our suppliers input the required information into one of these industry-specific databases, it vastly simplifies things for us, as our SAP system is able to extract the data we require directly from this external database. As standardization is a core tenet for us when it comes to environmental health and protection, we encourage the development of reliable third-party database tools.

How have you enlisted the support of [BPO-provider] Infosys to facilitate regulatory compliance?

As I mentioned earlier, the main challenge is to persuade our suppliers to sign up for these third-party databases. This is fairly crucial as the standardized import of data provides for the fast, reliable communication of information that is so important for compliance of this nature. Where Infosys is providing invaluable support is in transitioning our suppliers to these sorts of databases, and therefore helping with our risk assessment and supplier declaration requirements. We see this as a one-time project, and therefore do not have dedicated long-term resources to devote to it. We relied heavily on Infosyss expertise in the industry, and their BPO team in Poland, to help move our suppliers into the databases, and support them through the process.

Dr. Niedermeier, thank you for your time today. Well be hearing from you again later this month, as part of our webinar on regulatory compliance.

SSON REMINDER: Dr Georg Niedermeier, Head of Product-related Environmental Protection at OSRAM AG, will be sharing more tips on getting your house in order as far as regulatory compliance is concerned in a complimentary, SSON-hosted webinar, where you can also pose your own questions to him. The webinar is sponsored by Infosys. Register now.