Supply Chain Management in the Era of Growing Sustainability Demands

Transcription

1 Supply Chain Management in the Era of Growing Sustainability Demands Michael Kirschner President

2 Fact: New Environmental Regulations Will Keep Coming

3 Fact: SEMI Kept EU RoHS At Bay EU RoHS: Large Scale Industrial Tool exclusion Applies to larger systems REACH: Article 33 applies, primarily to accessories, due to weight May change if Once an article, always an article approach is decided on by EU Court of Justice Few fabs in EU China: Many environmental (and social) issues, lots of fabs ROW: Plenty of Me Too regulations

4 But Business Risks Continue! There may be hundreds of environmental/social regulations that technically apply to any one of your products across your markets With more coming seemingly daily The brand owner/product designer/manufacturer is ultimately responsible for compliance of your products to regulatory and customer requirements, for instance You directly or indirectly select materials/batteries/packaging/etc. You determine energy use, directly or indirectly You decide which markets to sell into The company must be able to demonstrate why a product is believed to be compliant An enforcement authority can request this information, and customers may as well

5 Prepare for the Inevitable! New requirements will occur They will impact your products They will impact your supply chain GOAL: Be fundamentally proactive, not fundamentally reactive

6 Long-Term Environmental Regulatory Trajectories are Predictable Chemicals (e.g. RoHS, ELV, REACH) FROM a few bad actors in specific applications TO all chemical substances in all applications Energy Use (e.g. Energy Star, ErP) FROM use phase only TO all lifecycle phases from extraction thru manufacture thru disposal Waste/Reuse/Recycling (e.g. Producer Responsibility/WEEE) FROM basic recycling of bottles/cans/ paper TO full responsibility for all products through their entire lifecycle Greenhouse Gas Control, Reporting & Management FROM voluntary corporate reporting TO products and supply chains with regulatory caps and taxes

7 Internal Compliance Best Practice: Define a Framework Put a compliance framework in place; don t address each regulation from scratch as you become aware of them There are many common elements across regulations that can be addressed by common systems and approaches Address new requirements within the context of your framework Make it about parameters: definable and measurable This is ultimately what the regulations address This is how engineers think Precise requirements of future regulations are unpredictable Preparing for known trends and issues can get you 80% or more of the way there for each new requirement Integrate this framework into your Product Lifecycle Process

8 Bring Environmental Requirements Into the Product Development Process Make it as straightforward as possible for engineers They don t have time or interest to research environmental compliance They want simple yes/no guidance Can I use this part/material or not? If not, and there are no viable options, what is the process to follow?

9 The Safe Design Space Process Acceptable Safe Design Space Definition Analogous to Preferred/Approved Supplier List What makes a supplier/part/material acceptable for use, from an environmental compliance standpoint? Most Manufacturers Already Have Such a System in Place Expand it to include Environmental Compliance Requirements Permission Required Acceptable (Design In Here) Permission Required Gray Areas: Be Careful Here

10 Supply Management & Environment Does Your Supply Base Understand and manage materials? Define substances and materials? Control substances and materials? Have programs/systems in place? Manage upstream suppliers? Have the ability to report this to you? Update Your Corporate Supplier Approval Procedure Supplier Assessment Procedure Supplier Scorecarding & Reporting Supplier Contracts Technology Capability, Quality, Roadmap Alignment, Etc. Business Validation: Cost, Capacity Planning, Supplier Management, Etc. Environmental Compliance: Material and, Source Control, Energy Use Tracking, Reporting Etc. Social Compliance: EICC Code, Of Conduct, Conflict Mineral Tracking, Reporting Etc. Supplier Selection & Management Business Processes

11 Incorporating Environmental Requirements Product Lifecycle Procedures and Phase Gates Material requirements Recyclability requirements Energy efficiency requirements Validate New supplier capabilities New parts Existing parts New & existing materials Phase Exit: parts/materials/ suppliers approvable? Series production under control WEEE registration CE Mark/ DoC/TDF/ Documentation WEEE reporting PHASE 0: Concept PHASE 1: Design PHASE 2: Prototype PHASE 3: Production PHASE 4: Use PHASE 4: EOL/Support PHASE 5: Disposal PHASE 5: Take Back Incorporate review into: Marketing requirements doc Product requirements doc/design spec Phase Exit: are environmental requirements identified? Are there any showstoppers? Component-level compliance Material compliance Supplier assessment Put it all together Documentation EPR requirements Spares planning Phase Exit Importers/ distributors Documentation done Suppliers/parts all approved? Supplier management Sustaining engineering support PCN process Compliant field spares Management Maintenance

12 A Word On Software Tools Note the process does not START with tools; tools are not the solution. If you don t have a way to weave them into how you operate on a daily basis they will not deliver Tools are part of a solution If you start by saying OK, we ll get XYZ software, start collecting data and we ll be all set! You won t. Consider: What information do you need? Why? What will you do with it? How will you get it? Which tools are available to support what you need to do? Which is best for your specific needs?

13 Chemical Sustainability Alternatives Assessment: the Next Big Thing? Not necessarily for SEMI members but for your customers Make human health and environmental impacts of candidate substances part of the selection process A methodology for getting ahead of chemical regulations? All guidance so far comes from governments and NGOs BUT inemi working on an Alternative Materials Assessment project; so is ASTM E60

14 The Other Area of Concern Industrial Leadership Awareness and understanding Being effective with governments and regulators Environmental NGOs (Non-Governmental Organizations) and Governments drive and define the requirements for product environmental performance today! Industry is not proactive and aggressive in this space We are reactive Why are we not owning an increasingly important aspect of our products performance?

15 The Challenge Industry has nearly 200 years-worth of implementing volume production capacity with limited consideration of long-term environmental impact We design for functionality and cost; environment, if considered, is a business risk, rarely (but increasingly) a customer requirement Result: Massive inertia, lousy infrastructure for progress in unmeasured areas Governments (and NGOs) that have little understanding of industry or manufacturing E.g. RoHS bans lead in electronics; cost the industry >$30B to remove it (and a few other substances) and still requires many exemptions to allow its continued use Electronics represents a relatively small percentage of total Pb use Are the most important, meaningful or practical environmental performance issues being address in a manner that enables solutions that are more than simply a bandage?

16 The Silo Problem: Address it Separately Discrete Product Manufacturing Industries tend to Address Common Challenges Separately Electronics Industrial Automotive Aerospace Furniture Textiles Toys Chemicals (e.g. RoHS, REACH) Energy Use/GHG Footprint Waste/Reuse/Recycling (e.g. Producer Responsibility/WEEE) Many Common Supply Chain Elements & Issues

17 The world will not evolve past its current state of crisis by using the same thinking that created the situation. - Albert Einstein

18 Expanding Cross-Industry Collaboration on Environmental Performance Common and coherent approach to regulators and the public and to addressing structural environmental performance issues NGOs and governments are defining product environmental performance! Cross-industry environmental performance-focused industry association/think tank Many common challenges and issues across industry addressed piecemeal due to silos How to project a credible manufacturing sensibility into the process? In the early stages of bringing disparate manufacturing industries together to discuss these challenges

19 Closing: Corporate Implementation Tips Integrating compliance is a substantial project treat it that way! Identify an internal owner Build a cross-functional core team Get buy-in from management and the product teams They must understand why this is necessary and how it will impact, and benefit, them It may require significant education across your company and your supply base Fund it, measure it

20 Final Thoughts Governments are getting smarter about chemicals in products and putting more resources toward the goal of improving environmental and human health performance; manufacturers and industry as a whole must as well

21 For More Information Michael Kirschner President & Managing Partner Design Chain Associates, LLC San Francisco, CA