Make sure that your supply network understands REACH and its need to pre-register otherwise your company may face a potential supply disruption.

By Michael Kirschner, president, Design Chain Associates, LLC EETimes Supply Network (09/18/2007 2:40 PM EST)

The new European Union-wide law entitled "Registration, Evaluation, and Authorization of Chemicals", or REACH¹, went into effect on June 1, 2007. The title would make one think that it's a chemical-related law, so why do manufacturers of electronic products, termed "articles" in REACH-speak, need to worry about a chemical substance regulation?

Here's why: electronic products are manufactured with and from literally thousands of chemical substances. Most substances will be subject to registration under the REACH legislation, and certain substances of very high concern will be subject to authorization, which could eventually result in their restriction.

While RoHS made us think about only six hazardous substance groups , which ultimately equates to about 100 substances when materials such as oxides and the various congeners of the flame retardants are considered, there are still many toxic and otherwise hazardous substances used in electronic and electromechanical products as well as in their manufacture today. Some are delineated in the electronics industry's Joint Industry Guide, JIG-101 and automotive industry's Global Automotive Declarable Substances List (GADSL), for instance, but many are not. The risk of non-compliance and exposure to supply network disruption could be significant, since most electronics manufacturers (EOEMs) have focused only on understanding risks due to RoHS substances.

Since most article manufacturers at the OEM level tend not to directly use individual substances or import them into the EU, the legal obligations most article companies will face under REACH are not so extensive, but the regulatory obligation back up the supply network could in fact be quite significant. Your supplier's failure or desire not to register a substance used in your product could potentially result in your company being locked out of the EU market or, worse yet, having no product to ship.

So an important non-regulatory obligation is to determine where the risk of disruption lies in your supply network if you are an article manufacturer, and that's really an obligation to your key stakeholders including employees, investors, and customers.

Disclosure requirements

Substance disclosure requirements could be the most significant issue for article manufacturers and their suppliers to be aware of. Article 33 of the REACH regulation says that information regarding any substance that is on the Substance of Very High Concern (SVHC) Candidate List (to be issued in late 2008 or early 2009), must be communicated by suppliers to their customers and, upon request by a consumer — and not necessarily a customer. At minimum, article manufacturers must provide the name of these substances. This becomes effective on the date the candidate list is issued then you have 45 days to respond to your customer, prospect, or Greenpeace's request.

This could require that you start taking action very soon to understand what it is that you may have to disclose. The Chemical Reaction consortium, a group of Non-Governmental Organizations (NGOs), has already composed a form letter for its constituents to send out; one major aerospace manufacturer has told us that one of their customers says it will be requesting this information as soon as it is able to.

Design Chain Associates has been recommending that EOEMs try to acquire full substance composition data since early 2004. REACH and the prospect of REACH is the reason why. While obtaining full disclosure is still nearly impossible for the entirety of most products, it results in your company being more prepared for REACH's near-term disclosure requirements and gives you an idea of the next set of difficult questions to ask your supply base. For instance, if you can get full disclosure, then you'll be prepared to compare the list of candidate SVHCs to your product's material content. If you can't, you should find out why your supplier is unwilling to share this information and determine a course of action.

So at the very least, and since nobody knows exactly what SVHCs will be on the candidate list², getting as much information about what substances comprise your product is a very good idea. One other area to be aware of is in the case of substances of very high concern that are present in articles above tonnage and concentration thresholds (generally 0.1%), where exposure to the substance cannot be excluded during normal use, and more importantly, disposal, and where the substance has not been registered for this use, the Agency should be notified as defined in Article 7.

The Commission Working Group is currently awaiting a response from the Commission Legal Service on whether the 0.1% threshold is for homogeneous material, the entire article, or something else. Until this is addressed (This is expected shortly.) it is an unknown. And for the record, industry is for the entire article, while NGOs are for homogenous material.

In addition to SVHCs, the other, equally pressing requirement is pre-registration. Companies that are "producers" (defined much the same way as it was for RoHS) and sell or use substances or preparations in the European Union should pre-register their substance between June 1, 2008 and December 1, 2008. This will allow companies to take advantage of the extended timeline out through 2018; otherwise immediate registration is required to allow the substance or preparation to continue to be placed on the market.

And while most EOEMs won't need to pre-register, many suppliers and contract manufacturers doing business in the EU will. Make sure that your supply network understands REACH and the need to pre-register. This is the primary source of potential supply network disruption. By inquiring about pre-registration plans, you may find out a whole host of interesting things, such as the fact that the company no longer plans to produce the substance in question.

One of the many bottom lines of REACH is that communication throughout the supply network will have to change. It will no longer be unidirectional, with downstream requests resulting in upstream actions. Communication will have to take place in both directions and flow through the disaggregated and fragmented mess that is today's supply network.

Conceived without environmental considerations in mind, today's supply networks have proven nearly incapable of handling the flow of RoHS information downstream in a timely manner. Without significant supply network retooling, as well as development of software tools and standards that are useable, lightweight, and practical, the communication requirements of REACH may bring many supply networks to their knees.

Footnotes:

1. Please see Keith Huckle's excellent articles for more information on the basics of REACH ( Preparing for REACH: The first step is to understand its implications and Will REACH really be like RoHS on steroids?). Visit the European Chemicals Agency for the latest information on REACH.

2. Annex 1 of the Dangerous Substances directive, 67/548/EEC, will contribute those substances indicated to be CMRs (Carcinogenic, mutagenic, or reprotoxins) level 1 or 2. Toxicologists may be able to guess at many of the rest.