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issue: March 2006 APPLIANCE Magazine

RoHS Compliance
Seven Steps Toward RoHS Compliance

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by Bijan Dastmalchi, president of Symphony Consulting, Inc., and Richard Vermeij director of product marketing, Arena Solutions

When it comes to the RoHS Directive, good things do not come to those who wait.

About the Authors

Bijan Dastmalchi (left) is the co-founder and president of Symphony Consulting, Inc., a Silicon Valley supply chain consulting firm. Symphony Consulting offers one a one-day educational workshop across the U.S. on "Transitioning Your Products and Supply Chain for RoHS/WEEE Compliance," which provides companies with the tools and methodologies to manage their transition. The consulting firm can be found online at www.symphonyconsult.com/workshops. Richard Vermeij (right) is the director of Product Marketing at Arena Solutions, a leading on-demand product lifecycle management (PLM) vendor. If you would like to contact Dastmalchi or Vermeij please e-mail: editor@appliance.com.

The Restriction of Hazardous Substances Directive (RoHS) bans the use of six hazardous substances, most notably lead, in products shipped to the European Union (EU). It is set to take effect in July 2006. Similar requirements will go into effect in Asia and several U.S. states in the near future.

While July 2006 may still seem far away, the scope and magnitude of this transition leaves no room for error. Companies that are unprepared, or under-prepared, will risk getting caught in the supply chain "perfect storm" named RoHS.

Electronics manufacturers are fully accountable for ensuring compliance. With the EU deadline only months away, it is alarming to find that only a small percentage of manufacturers, mostly the large brand names, are executing a plan that will bring them into compliance.

Based on our experience in this area, we believe that electronics manufacturers and their suppliers must take the following seven steps towards RoHS compliance.

1. Don't pass the buck to your suppliers
With the pervasive use of outsourcing in the electronics industry, OEMs have relied heavily on their contract manufacturers to manage day-to-day operations. This, combined with the economic downturn of the last few years, means that OEMs have fewer resources. The natural inclination is to assume that suppliers will take care of planning for the RoHS transition.

However, it is important for you to realize that RoHS is a transition for which you, the appliance producer, must take the leadership role, even if you delegate some activities to your suppliers. Remember that non-compliance can result in the removal of the producer's product-your product- from the market, impacting revenues and brand image.

If you are an OEM, you must own the issue. If you are a supplier, you must realize that a non-compliance event attributable to your component or any doubt about your RoHS-readiness may be the end of your relationship with that customer.

2. Allocate cross-functional resources
Developing and executing a plan for migration to RoHS compliance cannot become the sole responsibility of one department. It is not uncommon to see companies assign a component or quality engineer to spearhead the activity in a bottom-up fashion.

Normally, these engineers struggle to gain the mindshare of the rest of the organization. You must recognize the need for the active involvement of your executives, product management, marketing, operations, data management, and sales in ensuring that a robust plan is in place.

3. Validate component availability
In addition to a non-compliance event leading to loss of revenues, you must also consider the availability of electronic components that will no longer be available in their legacy form. Component manufacturers throughout the electronics supply chain are revamping their product offerings, discontinuing non-compliant products and replacing them with those that are RoHS compliant. Poor awareness of supply conditions of compliant or non-compliant components can lead to spot shortages that can shut down your production line, impacting your product shipments.

4. Understand the "fine print" of the legislation
The RoHS legislation is very complex and requires that you understand the "fine print." For example, some telecommunications companies believe that they can continue to use lead in their products, due to a perceived lead exemption. In evaluating the legislation in further detail, it becomes apparent that this exemption applies only to the use of lead in solder for telecommunication infrastructure products that are used in mission-critical applications.

Such exemption provisions have misled many companies to believe that they do not need to take action with certain products, components and subassemblies. Even when exemptions can be leveraged, don't forget that your exempt products share many of the same components that will be transitioned to RoHS-compliant.

5. Audit your key suppliers
The due diligence requirements of RoHS make it necessary that you establish, document and follow a policy that ensures you have addressed the risk points in your supply chain. Collecting certificates of compliance from your suppliers and storing them may not be enough by itself. You must demonstrate that you have exercised reasonable business judgment.

One way to do this is to segment your suppliers based on the risk that they pose to your compliance plans. For medium-risk and high-risk suppliers, you should take concrete steps to validate compliance through on-site audits.

6. Manage your compliance data
In conjunction with identifying compatible and RoHS-compliant part substitutes and collecting compliance evidence, you must establish a robust compliance data management system.

Because RoHS is a self-certifying directive, you must be able demonstrate that you had good reason to believe your products were compliant when shipped to the EU after July 2006. Producers are required to keep compliance records for up to 4 years after the product is "put on the market." If and when you have an issue, you do not want to find yourself in the position of searching through old spreadsheets and poorly organized files to find the necessary information. In order to protect your revenue stream and customers who depend on your product, it is important to have a well-organized, centrally available set of compliance data.

Compliance issues will only become more complex as countries like Japan and China implement their own legislation with their own reporting requirements.

7. Start now
As mentioned earlier in the article, time is not on your side. Some companies hope that the EU will extend the deadline or that additional exemptions may be offered.

"Hope" is not a sound business strategy. Considering the cumulative lead-time for your sales channels, your internal manufacturing lead-time, your contract manufacturer's lead-time, and your component supplier's lead-time, it becomes clear that the time to act is now.

It is important to realize that RoHS is here to stay and its scope will only expand. In fact, China, Japan, Taiwan, and 27 U.S. states are developing similar legislation that will ban the use of hazardous chemicals in electronic products.

The impact of RoHS may cause the "perfect storm" in the supply chain, and ultimately, it will delineate those companies who embrace it from those who resist it—that is, those who can weather the storm and those who cannot.

This article is condensed from a longer paper, Transition to RoHS: The Seven Common Pitfalls to Avoid. The full-length paper is available on the APPLIANCE magazine Web site at www.ApplianceMagazine.com.


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