REACH Compliance: 7 'must do' steps for auditing suppliers

The European Union's REACH (Registration, Evaluation and Authorization of Chemicals) Regulation places requirements on manufacturers and importers which often can only be managed by ensuring that the manufacturer / importer's supply chain has complied with REACH.

One method for ensuring supply chain compliance is to conduct audits of the REACH compliance programs for suppliers. This article discusses seven 'must-do' steps for designing and implementing an audit of the supply chain to ensure REACH compliance. These recommendations are based on precedents and lessons learned from supply chain audits for other regulatory requirements.

STEP 1: Prioritize audits by selecting the most critical suppliers first. Identifying the key suppliers who provide the most critical materials and focusing the initial audits on them provides a safeguard against REACH-related supply chain disruptions in materials that could lead to delays in delivery.

These delays could lead to interruptions in production if manufacturing is being done in Europe. A survey of materials purchasing professionals should be tasked to identify those products which would be most likely to present these types of problems. Seeking out suppliers of these materials first makes sense as the risk is highest, thus the benefit of risk mitigation is greatest.

STEP 2: Focus audits on suppliers where past problems have occurred. Suppliers with an excellent track record of environmental compliance may not present the same level of risk as suppliers who have historically presented issues. Taking the approach the purpose of audits is to reduce the risk of REACH noncompliance it makes sense to focus the searchlight of the audit toward suspected problem areas. This provides a rationalization of the effort and should lead to the best allocation of resources for auditing programs.

STEP 3: Adapt existing supplier auditing processes for REACH. Re-inventing the wheel can be costly.  Many existing processes, for example, PPAP (Production Part Approval Process), can be adapted by adding in a component of the audit to cover REACH compliance. This assumes the existing process is sound and internal competence for conducting the added scope of the audit exists.

STEP 4: Budget up-front for audit costs. Steps 1 through 3 are helpful for selecting a targeted, cost-effective approach. These costs must then be accounted for, and budgeted.  Allocating a particular cost per-supplier is an intelligent way of defining a scalable cost for your REACH auditing efforts.

For example, a product launch involving 100 suppliers may need to budget for an auditing cost that would be twice the amount of a product launch involving 50 suppliers.  This type of pre-defined, up-front metric allows for quick incorporation of costs into bids. Costs might also be shared proportionally between internal profit centers if a supplier overlaps business areas. This reduces inefficiencies and can mitigate internal ‘tugs-of-war' over who pays for auditing.

STEP 5: Encourage direct suppliers to take responsibility for sub-tier suppliers. For complex assemblies, thousands of suppliers may be involved in a multi-tiered approach to manufacturing. Not having direct business relationships with most sub-tier suppliers you might exert very little influence over them. In these cases, encouraging your direct suppliers to take ownership of their supply chains extends your capacity for managing the risk posed from those upstream suppliers you will likely be unable to audit.

Of course, one action you could encourage would be that your suppliers establish their own REACH auditing program.  Sharing some information about your processes may be helpful if the supplier doesn't know where to begin.

    

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