Navigating the World of Green Tech Regulations

Navigating the World of Green Tech Regulations

Author: Richard Kubin
REACH. WEEE. RoHS of all shapes and sizes. Governments around the world have begun to regulating manufacturing and end-of-life issues with technology. This is what you need to know about the new world of green technology.

Product compliance requirements, largely regulated by government agencies to help ensure quality and safety, have long been a factor in the design, manufacture and sale of goods and services. While environmental regulations themselves are not new to industry, they historically have been associated more with manufacturing plants than with products themselves. But this has changed dramatically in recent years. Green technology is here to stay.

Due to worldwide interest in the development and implementation of green technologies, the focus has shifted to environmental regulations such as the European Union's Restriction of Hazardous Substances (RoHS) directive, which took effect July 1, 2006.

This and similar regulations are having a big impact globally throughout the supply chains of the electronics, telecom and automotive industries, among others. As a result, eco-compliance regulations have become a major concern of companies trying to ensure both product compliance and continued market access, which, in turn, has created a hotbed of debate.

The challenges are considerable. With the globalization and outsourcing of manufacturing, the complexities of product eco-compliance increase exponentially. For instance, a product may be designed in the United States and its components sourced from hundreds of suppliers across many countries. It then may be assembled by a contract manufacturer in China and eventually shipped to countries throughout the world.

How can companies manage their global business operations to make sure their products comply with the various environmental regulations?

Senior executives must understand current and upcoming eco-compliance regulations to effectively prepare their supply chains to assume responsibility for the environmental impact of their products. The regulations include:

EU RoHS: The compliance deadline of July 1, 2006, has come and gone, but many companies still struggle to adhere to this directive. For most companies, the initial RoHS-compliance focus was on identifying the presence of banned substances and removing or replacing them.

OEMs and their suppliers are now concentrating more on the processes and documentation needed to support compliance in ongoing operations, and are implementing structured compliance methodologies and supporting systems.

Energy-using Products (EuP): This directive will impact electronic products sold in the EU starting in August, when the first phase takes effect. It calls for the development of more energy-efficient products. Key elements in the EuP directive include reducing the consumption of energy in both the manufacturing and use of these products. The exact requirements of the directive are still being determined, but they will be rolled out in phases, starting with products that have the highest energy consumption rate.

What's expected at some point is that producers will have to provide consumers with an "ecological profile" of their products, which could become a competitive factor.

REACH: The Registration, Evaluation, Authorization and Restriction of Chemicals regulation was adopted last December and takes effect June 1. REACH will require the chemical industry to put health-and-safety information on approximately 30,000 chemical substances used in the EU market. While much of the directive targets the chemical industry, manufacturers and importers also will be required to provide information about the chemicals in the products they sell.

The data will be entered into a database managed by a central chemicals agency, which will coordinate in-depth evaluations of potentially dangerous chemicals. All findings will be made available to consumers.

China RoHS: Effective March 1, manufacturers of products within scope must use product labels that indicate the presence (or absence) of six identified hazardous substances, and provide information on their location within an electronic product.

Although there is overlap with the hazardous substances included in the EU regulation, the China version of RoHS encompasses products in automotive electronics, radar equipment, medical devices, semiconductors and other manufacturing equipment, components and some raw materials, as well as packaging materials.

Certain categories of the EU RoHS, such as toys and home appliances, are not included within the scope of the China RoHS. Some components of these products, however, are included in the scope of the China RoHS.

Regarding penalties, the China RoHS is also different from the EU RoHS in that every company in the supply chain--not just the final product manufacturer--is subject to fines. One other key difference is in the handling of exemptions. Under the China regulations, no explicit use of the six substances in question is exempt.

Korea RoHS: This eco-compliance regulation, which goes into effect July 1, combines elements of three EU directives: Waste Electrical and Electronic Equipment, RoHS and End of Life Vehicles. Many details have not yet been specified by the South Korean government on the scope, materials and maximum concentration values of the chemical substances cited, but there is strong indication that they will be similar to the EU RoHS.

California RoHS: Although the United States does not have a national eco-compliance directive like RoHS, the state of California has its own RoHS regulations, which took effect Jan. 1. The EU RoHS and California RoHS differ in that the latter initially applies only to specific categories of electronic devices, such as plasma televisions and electronics with LCD screens, manufactured on or after Jan. 1. More product categories are expected to be added over time, however.

Most large electronics OEMs have well-established environmental programs that are now becoming product-focused. The most effective approach is to include these environmental compliance requirements within the overall product quality process. In doing so, the following four requirements must be supported:
  • Establish an understanding of compliance requirements based on the product type and its target market.
  • Revise technical and procurement specifications to include eco-compliance parameters. Ensure that all suppliers understand the requirements and can provide required compliance data.
  • Request and collect specific supplier compliance documentation. The documentation may vary but typically includes material composition declarations, certificates of conformance and chemical analysis reports. Ensure that suppliers understand that they are also responsible for any materials or components they procure from their suppliers.
  • Establish a compliance assurance system that includes documented processes and the collection, analysis and management of compliance data. The common thread is the linkage to the product record, with clear association of BOM, AVL/AML, component/ material specifications and supplier compliance information.
Compliance requires scrutiny and diligence across the entire product life cycle. Primary compliance activities must occur during the design stage, taking into account the target market and applicable regulatory requirements. However, compliance diligence must continue throughout the manufacturing of the product, during any repair or refurbishment, through to end of life. In many cases, there are specific requirements for supporting the return and recycling of products once their life cycle is complete.

Viewing compliance as an integral part of overall quality processes naturally leads to reference of the ISO 9001 standards. The primary intent of ISO 9001 is to define clear expectations around quality management practices, processes and documentation. Process control, monitoring and demonstrated adherence to the processes are essential.

While it is possible to be ISO 9001-compliant using manual, paper-based processes, it is neither practical nor cost-effective for most companies. Software technologies exist to support process definition and execution of associated workflows, while also maintaining the process state and all interaction history. Further, the compliance landscape is being altered by new technologies and data exchange infrastructure to extend these processes across a multitier supply chain.

In the electronics industry, where product life cycles are short and competition is intense, companies can benefit from integrating these collaborative elements within their product life cycle management infrastructure.

While various data formats and electronic exchange standards for material declarations have been established in the past two years, there is no officially recognized international standard.

Many companies are still using proprietary forms and formats, which greatly limit the options for automation, forcing suppliers to manually support customer requests. Companies' customer service offerings are dramatically impacted, resulting in slow responses and poor data quality.

To address the issue of automating processes to better service customers and meet compliance requirements, the Inter- national Electrotechnical Commission's (IEC) Technical Committee 111 is in the process of developing international material declaration standards to improve manufacturers' efficiencies.

Standards development in general is an exercise in compromise, and this case is no exception. The good news is that existing standards have made considerable advances that can be used as a starting point, most notably the IPC-1752 standard from the United States, the JGPSSI standard from Japan and the RosettaNet 2A13/ 2A15 standard.

Both the IPC-1752 and RosettaNet 2A13/2A15 standards provide XML schema-based data models, and there is work under way to align the XML schemas. The primary difference is that the RosettaNet PIPs are defined as XML schema only, primarily aimed at supporting system-to-system exchange between trading partners, while IPC-1752 also includes a standard electronic form that allows direct entry by a user.

As the overall supply chain varies in IT sophistication, both options are typically required to support all direct material suppliers. The IEC standard is also expected to provide a standard XML schema that supports electronic form technology. Standards-based declarations and reporting will reduce internal costs, as well as the costs borne by suppliers and manufacturers. Supplier on-boarding using standard formats will be faster and smoother, as they will be able to establish a library of declarations and reuse these across multiple customers.

To meet existing and upcoming eco-compliance regulations, leading electronics companies such as component/subassembly providers, electronic manufacturing services providers and OEMs are deploying or designing compliance assurance systems (CAS) that include eco-compliance within a broader framework of overall product compliance management.

An effective CAS can be established using XML schema-based structures for material declarations; available technology to support data management, analysis and intercompany processes and data exchange; and the methodologies and practices of ISO 9001 for quality process and documentation management.

Such a system provides the required support for compliance and process control, thereby mitigating the risk and ensuring supplier accountability, while reducing overall costs through automation and higher data quality.

Product-level compliance has become a complex exercise for many companies. The implementation of new regulations such as the EU's RoHS in 2006 and REACH in 2007 will have a broad impact across the supply chain.

Companies are finding that the principles of quality process management defined under ISO 9001 are well-suited to the management of product compliance. Further, the definition and deployment of a CAS that builds on the ISO 9001 processes and extends them across the supply chain is changing the way many companies manage compliance.

Software designed to manage intercompany processes now allows companies to integrate key internal systems such as PDM and ERP with controlled collection of supplier information and compliance analysis to better manage the growing risks associated with noncompliance.

By addressing product and supplier compliance in a more holistic fashion, companies can ultimately leverage investments to improve processes and reduce the risks and associated costs of overall compliance initiatives.

Richard Kubin is a vice president at E2open, chairman of iNEMI and a member of the IPC 2-18 Declaration Process Management Subcommittee. This article originally appeared in Electronics Supply & Manufacturing, and is used with permission.