Any business objective - whether it be managing regulatory compliance, mitigating chemical hazard risks, answering customer requests, reaching sustainability goals, documenting your carbon footprint, publishing sustainability reports, or participating in the circular economy - starts with needing access to materials data in your supply chain. With reliable supply chain data, each one of these objectives will function more smoothly when built on the foundation of full material disclosure.
Product Compliance is Foundational to Your Supply Chain
Although regulatory compliance can be handled in an exclusionary rather than inclusionary approach, gathering full composition data unlocks many advantages such as future proofing against a changing regulatory landscape and expanding your competitive objectives.
If you buy or sell physical goods, no matter whether you’re a fortune 500 company selling globally or a shopify start-up, a basic set of truths apply: in order to protect yourself and your business, at a minimum you must be aware of, and up-to-date with, state, federal and international laws or regulations relevant to your operations.
Compliance touches every industry and has become the foundation of operational viability. The sheer number of regulations, laws, standards and guidelines has increased dramatically in the recent past and doesn’t show any signs of slowing down. Being compliant is a moving target, just when you’ve achieved full product compliance, a chemical regulatory list gets updated or a new guideline gets passed as law and your process must begin again. This can be tedious and cumbersome but it doesn’t have to be. I’ll dive deeper into these scenarios shortly.
Reduce Costs by Staying in Compliance
It probably goes without saying, but the stakes are high for failing to comply. Take the international regulation EU REACH as an example, here is a document listing the penalties enacted by respective European countries; France enforces two years of imprisonment and a fine of 75,000 EUR. Another common regulation is California’s Proposition 65, commonly referred to as Cal Prop 65. According to the California Attorney General, a business found in violation of Cal Prop 65 can be subject to civil penalties of up to $2,500 per day. In 2017, companies paid a total of $25 million for selling a product containing excess amounts of Cal Prop 65 chemicals. A Dollar Store was fined $935,000 because they sold a flip flop that had exceeded the acceptable levels of DEHP. These are regulations you want to take seriously by regularly ensuring you are within the lines.
Future-Proof How You Manage Product Data
The best way to future-proof yourself against these ever changing compliance targets is to take an inclusionary rather than exclusionary approach to composition data gathering. In other words, instead of asking a supplier whether the product they sell contains any chemicals on the current Cal Prop 65 list, or in other words, does it contain this list of 5 chemicals, if you ask for an inclusionary list of all the materials and substances composing a product, you are setting yourself up to pivot with any future change.
Company Example using Toxnot
Let me describe the differences between a company that uses an exclusionary approach and spreadsheets to manage product compliance (let's call them Company S for spreadsheets) versus a company that uses an inclusionary approach and automated system such as Toxnot (Company T for Toxnot). Company S sends direct emails to their 100 suppliers asking if the products they buy are compliant with EU REACH and Cal Prop 64. Suppliers respond (via email) with yes or no answers. Those answers get manually imputed into the master compliance spreadsheet. 1 year later, a new chemical is added to the regulatory list. Last year’s work is no longer credible and the whole process must begin again.
Now let’s look at the same scenario for Company T. Company T used Toxnot to send surveys to their suppliers and asked for full composition data. Let’s take the best case scenario, and all suppliers communicated full material disclosure. From that data, Company T was able to determine compliance status as well as disclose other information, taking one step closer to its sustainability goals. When the regulation changed one year later, Toxnot screened the existing material data and highlighted which products were no longer compliant with the updated regulation. Realistically not every supplier was willing to disclose full composition data, so new surveys would be sent to those specific suppliers. This is one example of how compliance can be tedious and cumbersome but doesn’t have to be. Complex issues don’t always need complex solutions.
How to Create Sustainable Supply Chains
Your first step on your journey to developing sustainability across your supply chain is having a clear strategy to incorporate and manage your product compliance! Read our Steps to Product Compliance whitepaper to help you get started.
Start Creating Safe & Sustainable Products Today
WIth Toxnot you can get supply chain data and streamline compliance and sustainability reporting all on one platform. If you're looking to scale your supply chain solutions, Toxnot can help! Save time and countless hours of manual data management by transitioning to a fully automated platform. Start delighting customers and internal stakeholders with timely customized reports today.
One of the best business decisions we've made was to move our data and supply chain outreach from spreadsheets into Toxnot. All product information is in one place and easily accessible to all business units, internal resources, and third party organizations.
Sustainability Director, ASSA ABLOY