SIDEBAR: Preparing for the Supply Discontinuities of REACH

Five essential steps that companies must consider in preparing their own REACH strategy


REACH and similar global regulations challenge companies to prepare their supply chains for potential disruptions. Yet, based on extensive research and analysis conducted over the past year by Supply & Demand Chain Executive and IHS, most organizations are woefully unprepared to deal with the impact of REACH. In this respect, Schneider Electric is a leader in tackling REACH and its implications. Schneider's initiative, led by Alain Digeon, who has himself been recognized for his thought-leadership around REACH strategy, offers a role model for enterprises looking to mitigate the impact of REACH and similar regulations. Based on Schneider Electric's experience managing REACH, companies must consider the following essential steps in preparing their own REACH strategies:

1. UNDERSTAND your supply chain location and REACH identities and exposure. Schneider Electric quickly determined that its top areas of risk exposure were due to its role as a producer of commercial products potentially containing SVHCs.

Bottom line: Your company must identify its role in the supply chain, its proximity to the EU, and upstream/downstream connections with the EU. These are determining factors for obligations under REACH, and you must realize — as Schneider did — that your company may have multiple roles in this context. This also will allow your company to establish which chemicals, materials and articles it must focus upon and to what extent each is exposed to supply chain risk or legal obligation.

2. MOBILIZE cross-functional stakeholders, linking supply and demand. Like Schneider, many companies have recognized that product, sourcing and supply chain stakeholders must be engaged to work with suppliers in assessing materials compliance and responding to requirements for REACH. However, at Schneider, sales, marketing and support teams have been brought into the REACH process. These teams have been briefed on REACH and the way it is handled within the company, and sales people receive support when they must respond to customer requests.

Bottom line: It's critical that both supplier- and customer-facing organizations are engaged and collaborating with one another on an ongoing basis as part of the REACH process. On the downstream side, handling customer requirements around REACH calls for educated and enabled sales, marketing and support teams. By better preparing these teams to meet customer requirements now and into the future, companies can ensure they themselves are viewed as responsible suppliers, helping to protect or grow market share and revenue.

3. EVALUATE the impact, regulatory obligations and source of supply risks. Schneider Electric has built a sustainable process for managing REACH that brings together product designers and architects, material experts, purchasing, advanced manufacturing staff and even lawyers to look at the implications of REACH's impact on, for example, surface treatments, which could necessitate the redesign of parts.

Bottom line: Cross-functional stakeholders must be enlisted and engaged for the long haul. Very diverse and skilled resources are required to manage REACH effectively on an ongoing basis, and the associated tasks require continuous focus over time. Stakeholders must work to assess the requirements that REACH will impose on the company, vulnerabilities in terms of the company's ability to meet requests for information, preparedness of the company to meet those requirements, and preparedness of the company's supply chain to assist the company in meeting the requirements.

4. PRIORITIZE and expedite your data strategy. Schneider Electric prioritized a matrix of urgent needs and important capabilities to approach REACH and realized that it required not only a lot of good data, but new and changing data. They also realized that they had immediate customer and consumer obligations that required comprehensive information on materials used across hundreds of thousands of global businesses, product lines and commercial SKUs. They made information content their top priority, followed quickly by a system of record to store the information. They also put in place a Web-based database at the corporate level to ensure that customers had a near-zero-cost means of accessing REACH-related material disclosures and documents.

Bottom line: REACH's core principle of "No Data, No Market" was formally written into regulatory legislation for a reason, highlighting the critical nature of data collection, management and reporting on substances in the supply chain. Companies must ensure that they have the people, processes and technology in place to manage REACH-related data.

5. ALIGN goals/objectives with appropriate funding needs. At Schneider Electric, the company has made a broad commitment to sustainability, and REACH is included among a series of initiatives that focus on CO2 footprint reduction, energy, eco-design and eco-production. Digeon explains that Schneider Electric has made the strategic decision to be a responsible corporate citizen, adding, "We want to facilitate the life of our customers, and in that context complying with laws and standards is a big step in this direction."

Bottom line: Companies must align their REACH strategy with other enterprise-level priorities and goals, putting in place the people, processes and technology to support a long-term, ongoing initiative in a way that ensures top-to-bottom synchronization across the organization. Metrics used to measure and support the initiative should, ideally, be linked to overall supply chain performance, customer satisfaction and profitability, financial performance and shareholder value, since a company's ability to successfully manage REACH will be linked to all these performance indicators.

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