In June 2007, the Registration, Evaluation and Authorization of Chemicals (REACH) regulation became law. REACH requires companies to disclose to the European Chemicals Agency (ECHA), Helsinki, Finland, documentation regarding processing and content details for chemicals manufactured in or shipped to the European Union (EU). Replacing 40 existing pieces of legislation, REACH encompasses around 30,000 substances and will impact companies throughout the supply chain, including manufacturers, importers and downstream users.
REACH addresses three specific areas: registration of substances; compliance with safe-usage conditions following receipt of substance permits; and verification of proper usage of substances throughout the supply chain. To satisfy these requirements, a best-practices approach to REACH compliance focuses on:
- gathering and storing substance information and tracking revisions/changes to documents;
- registering and tracking proper usage of substances in the supply chain;
- tracking substance volume;
- supply-chain collaboration and information integration; and
- organizational alignment into substance information exchange forums (SIEFs) to control registration and testing activities and reduce registration costs.
The overall success of these steps depends on the structuring and positioning of information. Data management is key. Because of the extensive documentation involved, REACH requires a significant increase in information sharing, not only between individual companies and the ECHA but also among companies, their supply-chain partners and SIEF peers. To adequately account for the reactivity, flammability, usage content and other details of each chemical produced in or shipped to the EU, companies must devise solutions for sourcing and storing large volumes of data.
To satisfy the initial REACH phase-in deadline beginning November 2010 as well as other deadlines over the following eight years, companies must submit a technical dossier to the EU for each chemical produced or imported in excess of one tonne annually. Substances with volumes greater than10 tonnes per year require an additional chemical safety report. Further data regarding risk factors must be supplied for any chemical whose volume surpasses 100 and 1,000 tonnes per year. In general, the higher volatility of a substance, the more documentation is necessary. This accounts for the "Registration" element of REACH. (The "Evaluation" stage consists of the ECHA checking documents and clarifying impact on human and environmental safety.)
Inability to adequately handle the volume of data involved with registration will result in higher operational costs and redundant work. Also, without a solid collaboration tool, companies run the risk of delayed submissions. With such a vast amount of information to manage and prioritize, companies require a reliable system for identifying which substances must be registered and in what order. To do this, companies must know the location of their data and be able to attest to its accuracy.
Tackling The Data Issue
Automated documentation-management software provides an effective solution for handling the data. It creates centralized locations for data, which allows for the storage and integration of information in an organization's logistical processes. On an operational level, this software enables users to check in, check out, manage revisions and merge documents. For example, during the shipping and manufacturing processes, users can store and reference material safety data sheets (MSDS) and product formulations. On a wider level, automated solutions lay the foundation for a REACH-compliant streamlined enterprise.
Documents involved in REACH registration evolve dramatically as companies undergo the necessary testing and preparation activities. These efforts include definition of exposure scenarios, generation of predicted no-effect concentration and derived no-effect level, definition of risk-minimizing measurement, and preparation of chemical safety reports — just to name a few items on the pre-registration checklist. Automated solutions accommodate the dynamic nature of the submission process by tracking the changing status of documents (e.g., "draft," "submitted for review," "approved," etc.); this functionality also proves beneficial when collaborating with supply-chain partners and SIEFs.
Because the chemical industry constantly changes based on the demands of other industries, the need for particular substances ebbs and flows. As a result, a given organization at any given time might have a wide array of substances in any number of stages in the REACH registration process. To avoid confusion, automated systems provide enterprise-wide vision into the product portfolio. Users can see at a glance the status of registered chemicals, submitted documents and ECHA approvals. Automated reports on a given substance's business relevance (based on volume, revenue, classification, composition, etc.) allow companies to quickly vet chemicals for registration, without investing an inordinate amount of time in substances that don't require ECHA attention.
The dynamic nature of the chemical industry also underscores the importance of adaptability in software solutions. Accommodating current REACH registration needs is a given but flexibility to adjust to changing demands is essential, too.
REACH registration requirements center on production levels, which makes substance volume tracking essential. Using enterprise resource planning (ERP) software, sales personnel can check substance volume before creating new sales orders. After warehouse workers create corresponding deliveries, system administrators can monitor updated product volumes. This allows companies to discern which substances require REACH registration based on tonnage and also provides long-term oversight for volume tracking. The key to monitoring volume and controlling threshold limits is the ability to observe and then document volume fluctuations in real time.
Companies can optimize their documentation-management systems so that when a given chemical ships to a customer the relevant documentation is automatically sourced and sent with the shipment. These forms can physically accompany shipping orders or arrive electronically, without the need for manual generation. An output can be created within the system to automatically send the forms via hard copy, fax, email or other means, based on customer preferences.
Automated solutions also help integrate new substances into the product lifecycle. Users can engage the documentation-management system to ensure accurate reporting of product development while managers and shippers can oversee the logging of all pertinent logistics information. By providing a single centralized source of information, the system help manage ever-changing product portfolios. Users can efficiently locate substances and generate relevant up-to-date documentation.
Centralization establishes a "single truth." Regardless of their geographic locations, all authorized users access the same documented information. Among its other benefits, this single truth enables users to confidently pull data for various needs, not just REACH-related ones. Because of the universal availability of information, controlled access plays a dominant role in documentation management. Individuals or even whole departments can be given editing privileges while others are restricted to read-only access.
The influence of REACH extends beyond how individual organizations structure internal data. To ensure successful registration, companies must directly involve their supply-chain partners. During the pre-registration phase, the sales department contributes to the REACH process flow by requesting via questionnaires use-and-exposure information from customers. Processed customer responses make their way to production staff, who use the information to re-evaluate use and exposure.
A similar process exists for upstream supply-chain communication. The purchasing department sends questionnaires to suppliers, requesting information on the registration status of chemicals bought. Equipped with supplier responses, production personnel can recheck the actual status of use-coverage.
The dissemination and retrieval of questionnaires fits within the larger process of material management. These specific instances of upstream and downstream supply-chain communications allow companies to evaluate customer material-information records and create new customer specifications for salable products while similarly evaluating supplier records for purchased products.
This pre-registration process flow requires a fluid structure and underscores the importance of integrating and prioritizing data. In addition to the extensive number of dossiers and data sheets needed for registration, companies also must manage questionnaires and related forms throughout the supply-chain to guarantee safe footing within a network of REACH compliance. A sophisticated automated documentation-management system will include a supply-chain collaboration component that can prioritize and define tasks relating to requests for information.
REACH registrants must submit all documents to the ECHA via the IUCLID5 database. An automated documentation-management system — when supported by a comprehensive ERP solution — can interface with IUCLID5. The system fills IUCLID5 with data on chemical substances; alternatively, it can retrieve complementary data from IUCLID5 to round out internal documents. In addition to saving time and preventing redundant work, this seamless push/pull capability helps ensure that information within the organization accurately corresponds with data used by the ECHA during the evaluation phase.
Following successful registration, the organization relies on the automated solution for oversight of continued compliance throughout the supply chain. The ongoing exchange of up-to-date documentation (MSDS, exposure scenarios, etc.) ensures that supply-chain activities run smoothly, perhaps even more smoothly than before the advent of REACH. Compliance checks allow the company to make sure supply isn't disrupted due to missing registrations on the supplier side and that overall business operations adhere to REACH standards throughout the supply chain.
Having built a strong base of collaboration with partners, chemical companies can proceed to track and trace substances. At-a-glance determination of a substance's location establishes who's responsible for maintaining the integrity of the substance throughout each step of the product lifecycle. As automated solutions generate MSDS and other relevant information for suppliers and customers during the procurement and sales processes, a discrete identity for the substance in question begins to build. This identity develops seamlessly as the system integrates shipping and safety information. Should a product become compromised, internal personnel can quickly determine which supply-chain partner had possession of the product and the manner in which procedures fell beneath REACH standards.
The Impact of REACH
The effects of REACH will be wide ranging and long lasting. Companies that can properly organize information will achieve the obvious goal of obtaining substance permits — but REACH compliance is not an end in itself. While establishing a documentation-management system will certainly help satisfy REACH requirements the alignment and integration of data also will allow organizations to function more efficiently. The registration process is demanding; continued compliance requires determination and possible system upgrades. However, during this initial pain period companies will set up the kinds of efficient practices that ultimately present opportunities to achieve greater prominence in the chemical marketplace.
REACH establishes a strong precedent. Regardless of whether regions outside the EU decide to follow suit, commerce of all varieties recently has experienced increased government intervention, e.g., recent high-profile recalls within the process-related food industry. With REACH now in effect, future regulations and government oversight seem more likely than not. REACH-compliant companies will position themselves to meet demands going forward. These companies not only will have compliance solutions in place but also will have cultivated a progressive organizational culture in which personnel collaborate across all departments to fully capitalize on those solutions. REACH prompts companies to commit to tracking and tracing, as well as to adopting streamlined processes throughout the supply chain.
SIEFs are perhaps the most intriguing way that REACH has impacted the chemical industry. These forums have become increasingly popular as companies seek to offset the costs of REACH registration. (Cost estimates range from €2.8 billion to €12.8 billion over the next 11 years. According to KPMG, there is a one-time cost increase of 6–20% per product.)
By sharing testing information participating companies can save themselves a great deal of effort and money versus acquiring all the necessary information individually.
Automated documentation-management systems enable companies to substantially contribute to SIEFs by keeping pertinent information easily accessible and up-to-date. Moreover, as other members share testing information, an organization can quickly update internal documents. However, in this environment, automated solutions shouldn't be construed as tools for gaining a competitive advantage. Mutual benefit and group-wide cooperation stand as the constant bywords for SIEF interaction.
REACH places a premium on internal documentation standards. This in turn creates the need for communication throughout the supply chain. With the formation of SIEFs REACH's impact broadens to encompass collaboration across disparate — even competing — companies. As the initial November 2010 deadline approaches, chemical organizations find themselves entering into a new marketplace where the ability to access information and efficiently integrate data across the entire span of the enterprise will determine success.
Take Ten Steps for Success
These pointers can make your path to successful compliance easier:
- Understand your organization's role in the supply chain. This is the first important thing to address in REACH compliance. For example, is your company a downstream user or the "main manufacturer" of the chemical? Downstream users typically don't face registration requirements — the main manufacturer or importer is responsible for registering the chemical.
- Develop a strategy on the overall registration process. REACH requires a lead registrant for any chemical subject to registration. Develop a strategy where companies within a SIEF share the responsibility (and cost) of being the lead registrant. Designate the organizations with the most information on a chemical or the highest use of it as the lead registrant. This approach will help the organization focus on minimizing the amount of information it will must develop for registration and simplify the registration effort and cost.
- Adapt REACH-specific data to customer's requirements. REACH will force an organization to submit and collect data for chemicals in a specific manner. However, these data may not suffice for a customer or necessarily match its exact information needs. So, manage and deliver chemical information (such as MSDS) in the form the customer wants.
- Leverage information available in the marketplace. Existing information systems such as EINECS (European Inventory of Existing Commercial Chemical Substances) or CAS (Chemical Abstracts Service) can provide a portion of the information required for compliance. Proper leveraging of this information will help organizations obtain data required for REACH.
- Align business processes and "get your house organized" prior to undergoing REACH registration. Preparing the organization for REACH registration is as important or more important than the registration process itself. Essential preliminaries include making sure the company's vision, mission and operational execution are correctly aligned and clear.
- Plan how data will be stored internally and used in your organization. It's essential to centralize information and ensure that every company unit requiring access can locate and update data.
- Evaluate the cost/benefit of the registration process. Registration fees for each substance are published and are defined upfront based on tonnage level. An organization should optimize its business/operational processes so it only pays the appropriate registration fee based on the tonnage requirements.
- Focus on integration of information. It's very important for a company to be able to collect purchasing and manufacturing information throughout the year so it can "prove out" usage requirements in case of an audit. Tightly integrated purchasing and manufacturing processes make that easier.
- Leverage use of the IUCLID-5 database. This database is the key vehicle for transmitting information to the ECHA. Construct the organization's infrastructure so information can interface directly with IUCLID-5 (if not stored there). REACH-compliant workstations can allow for proper management of information and a "single entry point" for data entry to IUCLID-5.
- Continually monitor and review regulation requirements. Adjustments or revisions to registration and submission of information are likely. So, establish a REACH "subject matter expert" in the organization.
Brian Everett is chemical industry solutions manager for itelligence, Cincinnati, Ohio. E-mail him at [email protected].