How-To Leverage MSDS and EHS Data for Greener Product Supply Chains
AMR Research / Gartner recently published a report stating that a foundational component of a green supply chain is:
* immediate access to granular information on product chemical composition
* detailed information on the environmental effects of substance and mixtures
"Green supply chains are here," the report says, "with product-specific environmental information transparency expected to increase dramatically in the next three years. Environment, health, and safety (EH&S) plays a crucial role in delivering key information content."
-- AMR Research, February 11, 2010 ("EH&S Content: A Foundational Component of Green Product Supply Networks" by Simon Jacobson)
Leveraging MSDS data for greener product supply chains
Environmental, Health & Safety -- or EHS -- data may not be the whole story in greening a supply chain. But the analysts agree: EHS data management is certainly a good start. Visibility into product ingredients allows companies to analyze risk exposure. The ability to analyze risk exposure is a signature trait of Best-in-Class companies, says Aberdeen.
Aberdeen: "Best-in-Class companies are 60% more likely than all others to have the ability to analyze the current level of supply chain risk exposure." "Best-in-Class companies are 55% more likely than Laggards to be at a proactive or resilient stage of Supply Chain Risk Management." - Aberdeen Group
Both Aberdeen and AMR / Gartner say product supply chain visibility into details is key to:
- risk management in operations and product development
- mitigating brand risk
- using environmental compliance as differentiator
- not losing competitive advantage because of lack of product information transparency
Using chemical-substance data for competitive edge
"Products on American store shelves now contain a whopping 89,000 chemicals, with a core group of 3,000 making up about 95 percent of the chemicals in use," says the article, "Chemicals In Toys, Furniture May Face Tighter Standards," from ABC News, February 22, 2010.
Soon, regulations around chemicals will make it impossible to evade chemical-level data management and product stewardship. Analysts suggest that Business-leading companies use Standards such as Chemical Standards as a competitive edge.
Chris Nowak, pictured right, is the Director of Business Development at Actio, a company that makes software for EHS data management. "At the beginning of 2010, Office Depot sought green certification for stores," says Nowak, speaking from his Boston-area Headquarters, "their stock rose immediately.
Office Depot in fact reported on Monday, Feb, 22 that it plans to open more environmentally friendly stores. Right on the heels of the announcement, BusinessWeek and Associated Press reported that shares of Office Depot rose 2 cents to $6.59 in morning trading."
Exhibit A- cadmium and brand damage
In early 2010, cadmium was found in jewelry on the market in U.S. stores -- causing recalls, revenue loss, and brand damage. Cadmium is toxic. It's almost common knowledge. While retailers and importers seemed to shrug with an attitude of, "Well, we didn't know there was cadmium in there," the presence of cadmium -- even the amount -- should have been indicated in the accompanying product information or materials data from suppliers. Let's not make suppliers the bad guys, either, because they have suppliers, too. Let's just start talking about centralized, accessible, real-time-updated ingredient data.
WalMart - for all its admirable efforts and good intentions in greening its supply chain - was one of the retailers selling the cadmium-rich items. This was very embarrassing for the retailer and for the company supplying its supply chain regulatory software. But again, let's focus on solutions, possibilities, and positive results.
Green and ri$ing
Companies like Whole Foods and Bed Bath & Beyond, even now Sara Lee, are enjoying the market traction from Greener efforts. Nike, Timberland, and REI are finding gold in green. Hearing the names of those companies makes most people relax a little, feel more comfortable spending money there. Newspapers report that even during a recession consumers are spending more on Eco.
The safe route these days: find out what chemicals, substances and mixtures are coming into your facility and products. Keep a chemical-substance inventory.
The competitive edge
Leverage that information: Move ingredient-chemical-substance-inventory information into a structured database. Keep data replenished with up-to-date, "live" data; and keep cross-referencing it with current regulatory lists. Suddenly there's nothing separating you from Best-in-Class -- you're keeping track of substances suppliers are sending you, maybe not all of them, but certainly the hazardous ones. As AMR Research says: this is a foundational component of a green supply chain.
How?
Use a SaaS system. They're relatively inexpensive and infinitely capable. Start small and scale as you get more data and more comfortable. Only pay for what you use, as most are priced on a per-user or per-msds type of basis. For instance, for reference, here we've provided an example of how a SaaS system looks on your screen:
You'll notice it doesn't look much different than traditional software. But SaaS is up and running quickly because there's nothing to install. There are only data-checks and basic set-up -- so companies are using the easy-to-learn interface within weeks.
Within weeks (!) it's possible to:
- get MSDS data into a structured database
- validate / update data
- cross-reference the parsed data against real-time Environmental regulations
It's exciting! After that, the sky's the limit in terms of what you do with your data. For example, next, you can roll data into software modules that:
- provide an aggregate view of enterprise-wide chemical and substance inventory – so you could know in an instant how much cadmium you’re working with and specifically where
- roll-up data to form simulated parts, components and finished goods - and test replacement scenarios or alternate suppliers
- view, track and analyze the amounts and life-cycles of hazardous (and non-hazardous) materials
Reactive environmental, health and safety data management and reporting are no longer enough -- reactive measures will turn a company into what Aberdeen calls a "Laggard" in the arena of environmental compliance. Proactive data management is necessary to be competitive.
EHS data management software should deliver the following:
With today's technology, expect a lot, ask for a lot. The minimum to ask for? EHS data management software should deliver the following:
- Support for an unlimited number of environmental standards including: REACH, RoHS, WEEE, Halogen Free, JIG, GADSL, CONEG, Lacy Act, 21 CFR, CalProp 65, TSCA, ODS
- Supply Chain Assurance through the automation and centralization of supplier information requests so that supplier responsiveness in meeting your evolving environmental standards can be tracked and measured
- Proactive BOM Management - the ability to "pre-screen" multiple layers of BOMs down to the substance level to isolate substances of concern so that risk is mitigated early in the product life cycle
- Ability to function as a stand-alone platform or integrate with your existing ERP and PLM applications to leverage existing supplier, material and product data
- Ability to "roll-up" data for enterprise-wide view
- Ability to create simulations: for substitution and evaluation models
EHS software solutions, for example
Actio Corp. is a 15-year-old software company that provides companies with a proven web-based automated supply chain materials management platform. The Actio solution creates and maintains a single source of accurate substance data. 
It also serves as a collaborative infrastructure for suppliers, internal stakeholders, and customers. The infrastructure allows companies to quickly adapt and react to current global market conditions. Such agility in an increasingly complex and globally-regulated supply chain is key.
A note: Actio has been working closely with AMR Research, now Gartner, to glean the most current market data. (Visit the Gartner web site to learn more about their research and services.) Please take a moment to view testimonials from companies who have tried Actio for materials information management and see media coverage of Actio solutions also.
Additional resources
Visit the Supply Chain Data Management library: where third-party articles are indexed.
Sign in here to join a LinkedIn Environmental, Health & Safety group with over 4500 Environmental, Health, & Safety (and Product Stewardship) professionals.
To learn more about Actio's solution, click here to schedule a demonstration.
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