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News Release from: Strategic Environmental Management
Edited by the Electronicstalk Editorial Team on 13 April 2004

Automotive lessons aid WEEE/RoHS
implementation

Malcolm Fox, AJ Guikema, Chris Harden and Will Martin of MDSMap contend that electronics companies can learn from the automotive industry's experience in implementing the WEEE and RoHS Directives.

As the electronics sector experiences the first implications of the WEEE and RoHS Directives with the institution of substance-use restrictions later this year, it is useful to reflect on the lessons learned from the automotive industry's response to the ELV Directive What follows frames the major organisational challenges likely to be faced and suggests some means to minimise what may cost the electronics industry hundreds of millions of dollars

The ideas presented are the result of our work since the institution of the ELV Directive with hundreds of affected entities - automakers, suppliers, material manufacturers, government bodies and trade bodies.

The European Union's ELV Directive came into force in 2000.

Its first major hurdle, compliance with the heavy metal restrictions, began in July 2003 and together with recyclability and recovery aspects of the legislation triggered a massive data-gathering effort throughout the global supply chain.

The scale of effort is enormous: an estimated 50,000 parts per vehicle, hundreds of models, thousands of materials and chemicals in use - all of which is highly dynamic as parts and vehicles change.

Primary among the ELV's challenges is the difficulty most companies have in assigning responsibility within their organisation for ELV compliance.

In fact, producer responsibility involves a team often including sales, purchasing, IT, design, engineering, materials, quality, environmental and others.

Most companies place limited responsibility on a single department unsupported by others or assign the programme to the wrong department altogether.

Companies where management clearly delegates responsibility, authority and resources are the most successful - many indeed turning their performance into a competitive advantage.

Companies with foresight quickly place the ELV data collection mandate within their quality management system, recognising it as simply another element of the parts approval process and allowing it to be supported by the entire organisation.

The automakers' ELV Directive compliance approach is generating what is probably the world's largest ever product-components-materials-chemicals dataset - an attempt to describe the physical and chemical composition of much of the world's automotive products.

This massive collection and distribution effort involves tens of thousands of individuals and companies.

Establishing workable standards therefore was and remains of paramount importance.

The ELV data collection effort is dominated by the International Material Data System (IMDS) with the majority of the world's largest automakers, and many smaller ones, subscribing to it.

The centralised nature of IMDS is its great strength, being free and accessible online worldwide for manual data entry and accessible for electronic uploads for a fee.

However, a number of automakers collect data independently of IMDS (eg Honda, Renault).

Collectively, these systems are insufficiently flexible for the marketplace resulting in a number of other reporting formats and tools being instituted.

These fall broadly into two categories: those which facilitate business-to-business communication (eg the AIAG Compliance Connect spreadsheet) and those that allow in-house ELV data management (eg Centor's Compliance X-Sight, SAP's solution and others).

The number of reporting media has caused significant confusion and frustration among the users, particularly when the media are incompatible and electronic data transfer is difficult or impossible, and when different customers request similar information in different media.

The lessons learned here for the electronics industry are simple: first, rather than impose a reporting format, an industry-wide reporting standard should be agreed on (ie a definition of the data fields and field types); and secondly, all reporting media should be easily distributed and 100% compatible with the electronic generation and transfer of data into and from the common standard.

IMDS accepts data that meet the common standards of the IMDS consortium members.

Some members have supplemented this one-size-fits-all system with quite detailed additional user additions and even customised certain portions of IMDS to their ends (eg Ford and Toyota).

Many suppliers, often those with multiple customers, impose their own standards to ensure that any received data is of an acceptable quality to pass onward.

The sheer number of differing requirements creates enormous confusion in the supply chain and has contributed significantly to data quality issues and poor response rates.

Although this situation is inevitable where multiple companies are using a single system to address their own unique needs and each should be able to act autonomously, all efforts in the future should be to consolidate individual requirements wherever possible and ensure that the reporting data standard and reporting media are compatible with these requirements - even if optional - to avoid the independent collection of data.

At the core of all producer responsibility reporting lies the list of chemicals or materials to report.

Thus far, the automotive industry has struggled greatly with this issue.

At the two ends of the spectrum, Ford mandates the collection of a very large dataset (both in terms of their list of restricted substances and designation of application codes), whereas other manufacturers allow far simpler declarations of ELV Directive conformance (eg to the absence of heavy metals or conformance to the heavy metal restrictions).

In the middle, other companies have required heavy metal reporting, VDA reporting, or their own proprietary lists.

This poses problems for suppliers with multiple customers and hence reporting against multiple substances of concern lists.

(The IMDS Steering Committee is currently instituting a common list from which its members can draw - the International List of Reportable Substances).

More significant perhaps is the problem of materials.

Although not always readily available, most suppliers have bills-of-materials systems that house the customer-parts-supplier data connection, but the parts-materials-chemical datachain is inadequate and requires the creation of much "new" data within the sector.

Data related to alloys exist but formulations of plastics, composites and many other automotive materials are either heavily controlled due to intellectual property concerns or require significant research.

Although there is no choice but to collect these data if they are necessary for ELV compliance and compromises are required from both the automotive and materials industries, the manner in which they have been collected thus far remains extraordinarily inefficient.

Namely, each user of a material is expected to gather the information independently of all other users.

This results in massive duplication of effort, delays, breakdown when materials suppliers refuse to submit information and low quality when harried suppliers submit information on materials about which they know nothing.

The solution which has been adopted somewhat in the ELV sector is to encourage materials manufacturers to publish, without restriction to the entire sector, materials composition data of sufficient accuracy and completeness to support producer responsibility directive compliance while protecting intellectual property concerns.

Absent this information, the companies at the top of the supply chain and the manufacturers themselves should build and publish generic material composition data that represents many of the common industry materials for all suppliers to use.

The ELV experience has demonstrated that compliance with the growing number of producer responsibility directives requires more than the easy aggregation of available data.

Just the first step in ELV compliance - that of data collection - has caused widespread organisational change within the industry as companies struggle to collect, manage and disseminate high quality information.

In fact, expectations have proven too high, with the more demanding automakers supplementing their data collection mandates with supplier certifications of ELV-conformance just prior to the 2003 heavy metal deadlines.

(Sadly, because of the major knowledge gap, many of these certifications reflect reality less than they do the desire of suppliers to assuage their customers).

Without question, all supply chains bear the responsibility to support their industries' compliance programmes but experience thus far suggests that the manufacturers should establish the minimum possible expectations at the outset until the necessary organisational changes have taken place to optimise the system.

The most obvious technique here is to focus initial reporting (over time the level of detail can be increased) to the following regime: phased reporting according to regulatory deadlines; chemical reporting limited to regulated hazardous substances; materials reporting only so far as it fosters recyclability and recycled content requirements; and declarations of conformance, rather than full data submission for nonregulated components.

Expectations need also to be realistic in other areas of the reporting process - decision makers in the regulated industry need to work to keep reporting formats and standards common and provide libraries of data where possible.

Finally, manufacturers need to be brutally realistic regarding the general lack of understanding and resources (in both number and expertise of their staff) within their supply chains, regardless of the suppliers' willingness to support conformance.

In the ELV experience, companies in this category quickly showed themselves as bottlenecks in the information flow to everyone's disadvantage in general and the automakers in particular: many thousands of parts are delayed due to a single "node" in the system.

Some robust, nonpunitive and fast-acting remedial action system is a necessary part of any producer responsibility compliance programme.

Successful implementation of a component and materials reporting programme on the scale of the ELV and WEEE/RoHS Directives involves co-operation among all connections in the supply chain.

Good communication is fundamental to this goal.

Unfortunately, knowledge and awareness of the ELV Directive throughout the automotive supply chain is still incomplete even three years on; many organisations are unaware of the direct (fines and penalties) and indirect risks (loss of business) that nonconformance and nonengagement present, particularly among smaller elements of the supply chain or in organisations in which automotive business represents only a small proportion of their total business.

Raising awareness of the importance of compliance reporting is therefore fundamental, as is the approach taken to disseminate information and guidance.

The most effective ELV compliance programmes make use of dedicated supply chain management, awareness-raising seminars, provision of guidance and access to additional support to aid suppliers in meeting their reporting requirements.

The format and means by which guidance is disseminated is also an important factor in obtaining good quality data from the supply chain.

Posting guidance in electronic form, in accessible locations such as websites and supplier portals, maximises the distribution of guidance and information throughout all levels of the supply chain.

Finally, manufacturers and suppliers must develop highly effective lines of communications between each point in the supply chain and ensure that their expectations are crystal clear, understood and committed to.

Thus far, there are encouraging signs that those affected by the WEEE/RoHS Directives understand some of the strengths and weaknesses of the automotive response - this perhaps because many electronics companies are heavily engaged in ELV compliance.

We hope, however, some of our recommendations with respect to standards, communications and expectations are adopted, enabling a more effective response and optimising data quality.

MDSMap, an international alliance between Strategic Environmental Management in Europe and Tetra Tech - Industrial Division in the USA, represents a team of experts in the gathering, management and use of product data for sustainable design and extended producer responsibility programmes.

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