3 Ways to Compliance Management with Supplier Material Disclosure
We’ve recently discussed the compliance management imperatives that call on manufacturers to improve the business value associated with product sustainability using PLM, and key ways to improve supplier collaboration throughout the product lifecycle.
At first blush, it all seems simple. Yet aligning people, processes and technology within and without the four walls of your organization is more complicated in execution than it is in concept. Like a shepherd, an OEM needs to find the right ways to round up suppliers and shepherd them in a way that will culminate in getting critical data needed to meet compliance and customer-based requirements accurately and efficiently. Product stewardship has roots in so many different areas of business performance. And from supplier to supplier, there are many moving parts, so it can be challenging to coordinate with suppliers effectively, let alone meet aggressive compliance requirements.
Challenging, yes. Impossible? No. We don’t want to harp on conflict minerals requirements too heavily, but we can look at companies like Intel. This manufacturer of semiconductor chips and microprocessors was one of the first to state that it would not rely on conflict minerals that are not responsibly sourced to develop parts for key products—some of which are probably in the very device you are reading this article on. It was an aspirational goal for the company, and in line with its commitment to become conflict-free, Intel was able to creditably report that all consumer processors it manufactured in 2014 used materials sourced from conflict-free mines.
Let’s now take a look at a few key strategies market-leaders like Intel often leverage in order to get their supplier material data in order and respond to social responsibility requirements progressively.
- Reconcile Compliance, Customer and Business Requirements
From a compliance-based standpoint alone, we have an array of different local, regional, national, and global compliance requirements we need to meet in order to do business and avoid the punitive consequences of noncompliance. Add to this list a variety of customer and business requirements, with a wide cross-section of different responsibilities, across the extended enterprise, and you could miss opportunities to reach your compliance objectives if these requirements are not managed efficiently.
Fortunately, there are PLM-based technology solutions that are capable of not only reconciling various types of requirements into one system, but also tying the requirements to the right projects, roles, and data. Compliance requirements can be efficiently communicated to responsible parties across the enterprise, and in turn communicated to the right suppliers.Knowing what you need to get from the suppliers and communicating this to them is fundamental to reaching your compliance goals.
- Automate Processes to Gather Supplier Material Disclosure Data
When managing 1000s of suppliers and 100s of products, material disclosure efforts can be overwhelming.
It would be senseless or at the very least inefficient to establish a supplier integration process that called for highly manual collection, validation, and management of supplier material information. Rather, an automated and streamlined approach to collect supplier material disclosure data should be in place where suppliers are notified by their customers of requests for material declaration data, and are able to easily submit requested information back to their customer using industry standard formats (like IPC-1752A) or via integration to 3rd party databases (like BOMCheck and IMDS). The right protocols need to be in place to effectively ensure the supplier is submitting accurate disclosure data at the right time.This can be achieved with a PLM-based solution that automates and validates declarations for approval, parses data and then aggregates it with bill of materials (BOMs), provides notifications back to suppliers on status, and more.
- Adapt to and Foresee Changing Rules and Requirements
In one of my previous blogs addressing product compliance and organizational profitability, I mentioned recent news around the mineral cobalt and how it may be considered as a candidate to add to the list of 3TG (tin, tantalum, tungsten and gold) minerals for the US conflict minerals regulations.Imagine how the addition of cobalt could affect current processes in place at companies to collect 3TG supplier material data.Companies that do not have a flexible system in place to easily adapt to changing regulations and standards could be at risk of not only failing to comply with regulations, but also failing to reach their goals of supply chain transparency and social responsibility.
Technology solutions should be able to support variations of industry standard data formats and incoming updates to regulations, instead of having those standards and regulation definitions hard-coded into the solution. An effective solution is flexible to allow companies to look-ahead and proactively engage their suppliers, giving them the right tools to continue collaboration and meet compliance requirements.
Supplier material disclosure is at the heart of achieving your environmental and social compliance objectives. The right technology, along with the right processes in place will lessen your burden in achieving these important goals.
To find out more about solutions to help with your supplier material disclosure processes and product sustainability challenges, please go to:
Teamcenter Environmental Compliance and Sustainability
About the blogger
Matthew Littlefield co-founded LNS Research in 2011 and is now President and Principal Analyst. In this role Matthew oversees LNS’s coverage of the industrial value chain, including EHS, MOM, APM, and QMS. His personal coverage includes digital transformation and the Industrial Internet of Things. As a recognized industry expert he contributes to the widely read LNS Research blog as well as many other industry publications. Matthew is also a sought after public speaker and continually advises manufacturing executives on how to best leverage technology in their operations.
