complying with rohs smta workshop1990s 2003 2005 2006 2008-2012 2015-2020 sustainable manufacturing...

© 2005 The GoodBye Chain Group LLC All rights reserved

Complying with RoHS

SMTA Workshop

Complying with RoHS

SMTA Workshop

October 27, 2005

Harvey Stone

[email protected]

505 989 8943


GoodBye Chain Group

� Based in Colorado Springs

� Specialists in RoHS and WEEE

� Developers of compliance processes utilizing services, software and training

� Target customer: Small-to-Medium Sized Enterprises (SMEs)


RoHS and WEEE Compliance

X

X

X

X

X


Partial Client List� Alliance Systems� Avid� Bausch and Lomb� Cascade Micro� CyberOptics� Entegris� Maxtor� Pinnacle Systems� Plantronics� PSC� RadiSys� Telex� VanguardMS� ZeroMax


Purpose of this Workshop

� Provide perspective and experience

� Within a collegial environment, share what’s worked and not worked within your companies

� Accelerate your compliance activities

� Save you time, $$$ and migraine headaches


Understanding the Context for RoHS


1950 1990 2010

Cost of addressing health and environmental problems

Cost of not addressing health and environmental problems

Spiraling Health and Environmental Costs


On the Legislative Level: Extended Producer Responsibility Directives

� Products� Process

� Where products are sold� Where products are made

EPR Focus:Focus in the Past:


Directives Impacting Electric and Electronic Companies

Restrictions on the Use ofHazardous Substances (RoHS)

Waste Electrical and Electronic Equipment (WEEE)

Batteries Packaging


Who is Spearheading EPR Legislation?European Union

1990s 2003 2005 2006 2008-2012 2015-2020

Sustainable Manufacturing

ELV

IPPWEEE

RoHS

REACH

EuP

?

?Battery

Precautionary Principle

Packaging

Essential Requirements


Other Geographies with EPR Legislation Already Enacted or Proposed

� China� California� Plus:

− Switzerland, Australia, NZ, Taiwan, Hong Kong, Norway, Ontario, Alberta, Japan, S. Korea

m >50% of US states have introduced WEEE-like legislation, including CA, ME and MD

Altogether, markets for >90% of electronic finished goods


Japanese Environmental Legislation

Basic Law on the EnvironmentBasic Law on the Environment

Basic Plan for the EnvironmentBasic Plan for the Environment

Basic Framework Law for RecyclingBasic Framework Law for Recycling--based Societybased Society

Basic Plan to Promote Recycling Based SocietyBasic Plan to Promote Recycling Based Society

Waste Management LawWaste Management Law Law for Promotion of Efficient Use of ResourcesLaw for Promotion of Efficient Use of Resources

Containers and Containers and Packaging LawPackaging Law

Home Home Appliance Appliance

Recycling LawRecycling Law

Construction Construction Materials Materials

Recycling LawRecycling Law

Food Recycling Food Recycling LawLaw

Containers and Containers and Packaging LawPackaging Law

Green Purchasing LawGreen Purchasing Law


China’s RoHS/WEEE Legislation

� Draft form

� Submitted to World Trade Organization, Sept. 2005

� Expected to: − Be more restrictive than EU version− Finalized December, 2005− Enacted July 1, 2006

© 2005 The GoodBye Chain Group LLC All rights reserved17.0LG

Electronics

18.9Cisco

27.1Motorola

29.9Canon

30.4Mitsubishi

36.5Philips

36.6Samsung

37.0Nokia

38.5Fujitsu

39.8NEC

41.4Dell

47.2Toshiba

68.3Sony

73.1HP

89.1IBM

2003 Revenue: US billions

Company On the Corporate Level

• All:• Have legal liability and business risk

• Understand the legislative roadmap

• Telling their suppliers:“Comply or goodbye”

* Electronic Supply & Manufacturing, 8.1.04


General Electric

� Most widely held public company

� CEO staking company’s future on its ability “to define the cutting edge in cleaner power and environmental technology” (Washington Post, May 11, 2005)

� By 2010: $20B in environment-friendly product sales


How Big is the Environmental Market?

� Globally: $500B today*

� Japan:m 1990: $55Bm 2010: $238B

� EU*: 5% YOY growth since mid-90’s

* Stavros Dimas, Member of the European Commission Responsible for Environment: speech, February 25, 2005


Does the Financial Community See Long-Term Value?

*CSR Europe, Deloitte and EruonextSurvey of fund managers, analysts and investorrelations officers

Question: “How does social andenvironmental risk management impact on a company’s short-term vs. longer-term market value?”*


Are Companies Generating Revenue?

� 3M− 2002: US resource recovery activities = >$53M

in sales


LTK Cable

� 2002 – Sony Green Partner− Doubled business “overnight”* − Now using eco-credentials "to crush the

competition“*

*BusinessWeek online, 1.18.05


Upshot

� “The Environment” is emerging as a full-blown market

� Will continue to grow as the solving of environmental problems goes increasingly mainstream


TQM – The Better MousetrapFasterSmallerCheaper TQEM – The Greener Mousetrap

Less energy and materialsLess packagingFewer toxins/negative impactsLess waste/more recycling

What do Proactive Companies Understand?


Identifying the RoHS-related Risks and Challenges


What is RoHS?

� EU-wide law that:− Mandates restrictions on 6 toxic substances

− Imposes same restrictions in every EU country

− Is aimed at design stage of the product life-cycle


On the RoHS Legislative Level…

� All but several EU member states have transposed RoHS into national law

� Initial linkages between RoHS and WEEE, e.g. Ireland:

− After January 1, 2006, WEEE renewals or first-time applications must include a statement that products will be RoHS-compliant

� While RoHS substance thresholds are fixed across EU countries, it is highly likely that countries will develop their own enforcement requirements


What Products are Covered?m Virtually anything with a battery or plug

m B2C and B2B

m Some product and application exemptions


What Product Categories?

Product Categories

1. Large household appliances

3. IT & telecom

equipment

5. Lighting equipment

2. Small household appliances

4. Consumer equipment

6. Electrical & electronic

tools

8. Medical devices

10. Automatic dispensers

7.Toys, leisure & sports

equipment

9. Monitoring & control

instruments


Exemptions

− > 1,000 volts AC and 1,500 volts DC

− Strictly military equipment

− Large-scale industrial tools – in Category 6

− Category 8: Medical equipment

− Category 9: Monitoring and control instruments

− Components of exempt products

− Spare parts for re-use, refurbishment of non-exempt products


Overall, Exemption Confusion

--Disagreements between EU Parliament and Commission--Current stakeholder consultation

--For 23 new exemptions--Open through October 28th

--e-mail to [email protected] --Postal mail to:

European Commission DG Environnent, Unit G4 – Consultation Directive 2002/95/EC B-1049, Brussels, Belgium


Relying on Exemptions is a Risky Strategy

� “Permanent exemptions are out of the question.”

--Timo Makela, Environmental Director General, European Commission, Sept. 21, 2005

� Current exemptions will likely be reviewed every 3-4 years


Furthermore…

� Exemptions will be removed when technically and economically-feasible alternatives are found

− Many organizations working on alternatives− Risk that competitors will:

m Find alternatives firstm Press advantage with customers

� As a result:− Fewer companies relying on exemptions− More companies adopting “breathing room” approach

� Emerging attitude:“Your competitor is your compliance officer”


Concern about Non-Compliant Parts for Military, MRO and Categories 8 & 9

� “…the components industry is going through such a massive switch to lead-free parts, you may find that the replacement part for your refrigerator is lead-free, even though it doesn’t have to be.

And soon, if you want that non-compliant leaded version -- because you’re in the defense industry and don’t trust lead-free parts -- it may cost you more than the new lead-free part.”

--”Even MRO is Affected by RoHS”, Electronic News, 9.5.05

� iNEMI High-Reliability Task Force calling for continued availability for tin/lead-compatible components for exempted products


On the Surface, Straightforward Legal Requirements for RoHS

1000Mercury, lead, hexavalentchromium, PBDEs, PBBs

100 Cadmium

Parts Per MillionSubstance

So What’s the Big Deal?


Risk of Unprecedented Financial Loss…

Landmark event:� October, 2001: Sony shipment

of 1.3M units halted by Netherlands because of excess cadmium

� “Sony Corporation estimates an impact on sales of approximately EUR 110 million and on operating profit of approximately EUR 52 million, including costs of rework”

(Press release, 2.18.02)


…Tremendous Vulnerability…

Sony didn’t put the cadmium in the cable.

1/4200th of its supply chain did.


…and Unprecedented Requirements that Make it Easier than Ever to Be Non-Compliant

Compliance is based on substance as a percentage of homogenous material – not component

Example of Homogenous Materials:Surface-mount IC chip structure

Lead-frame (Cu)

Lead-frame plating (Cr)

Silicon chip

Die attach adhesive (silver epoxy or high

lead solder)

Bond wire (Au)

Plastic encapsulation Solder bump

(Sn-Pb)

Adapted from Paul Goodman, ERA


As A Result: Brand-Owners Face Tremendous $$$ Risk

A single non-compliant homogenous material in a single part from a single supplier

anywhere in the supply chain could result in: � Multi-million dollar revenue losses

and re-work costs

� Loss of customers and market share

� Damage to distributors, retailers and suppliers


Understandably, They are Driving Compliance Down the Supply Chain

� Contract manufacturers and suppliers have business risk

− ”Starting 1/1/05, (Samsung) plans to avert suppliers that use hazardous substances beyond the permissible density level.”

Creates a great deal of tension and issues to be resolved


Issue: Post-RoHS Product Mix

“What do we do with our New Product Intros (NPI) between now and July 1, 2006?”

Revenue loss due to non-compliant product

$ R

even

ue

time

revenue curve for compliant, on-

time market entry

revenue curve for denied

market entry

market window

grow

th with

access to

all m

arke

ts

= lost revenue

growth

without

access

to all

mark

ets

Revenue loss due to late compliant product

$ R

even

ue

time

revenue curve for compliant, on-

time market entry

revenue curve for late market

entry

market window

= lost revenue

product made

compliant

compliancedelay


� How do we revise our NPI process?

� What do we obsolete? In what priority?On what basis?


What are Companies Doing?

� Conducting cost/benefit analyses re: introducing/delaying new products

� Proactively incorporating RoHS and other environmental parameters into their NPI process

� Training new product teams in RoHSrequirements


Defining Key Compliance Dates _______ Stop Buying non - RoHS component parts

_______ Stop building non - RoHS Products for EU

_______ Depleted non compliant product at Turnkey Supplier

July 1, 2006 RoHS European Directive becomes effective


2005 2006 2007 2008 2009 20xx

RoHS Compliant DesignRoHS Compliant Design

Design Transition ReleaseDesign Transition Release

Future ProductsFuture Products

Existing ProductsExisting Products

Products Under-

Development

Products Under-

Development

Supply Base Transition (Active)Supply Base Transition (Active)

CM Process QualificationCM Process QualificationComposition Data CollectionComposition Data Collection

Design Tools, Libraries, BOM analysis

Design Tools, Libraries, BOM analysis

Supply Base Transition (Passive)Supply Base Transition (Passive)

CM ManagementCM Management

Assurance of Supply ManagementAssurance of Supply Management

Take Off MarketTake Off Market

Standard ReleaseStandard Release

RoHS ReleaseRoHS Release

RoHS ConversionRoHS Conversion

Determining Post-RoHS Product Mix

Source: Source: AgilentAgilent TechnologiesTechnologies


Inventory Issues

� Excess inventory: companies made life-time buy and may have to absorb the cost

� Compatibility− Some Pb-free parts are backwardly compatible

− Often means re-designing boards – not just switching components

− Importance of keeping parts separate

− Mix-up could shut down a production line


Estimated Costs for Shutting Down a Production Line

CostHours Impact Who

$2,20040Finding enough obsolete parts to retrofit into existing boards

Purchasing

$1,50020Qualifying new part Engineering

$4,800160Rush inspection of work-in-process inventory

Production

$23,450670Rework Production

$39,95040Other

Source: PCN Alert, Feb. 1, 2005


Plus…

“…the window of opportunity for conversion is slowly getting squeezed. This could result in unprecedented demand for ‘lead-free’ components literally overnight, creating a supply chain imbalance.”

--Component Obsolescence Group, April, 2004 newsletter


“We completed our manufacturing conversion a few months ago and have since been working to clear the supply chain of lead products so we can assure supply of only RoHS/lead-free compliant products…"

--Frans Scheper, Senior Vice President, Philips Semiconductors, Oct. 24, 2005



� Large companies like IBM demanding suppliers change numbers

� Most adopting a hybrid numbering scheme,depending on size of company/# of parts− Organizing “summits” to resolve

Quality/Engineering differences− Instituting flags in ERP systems


Issue: Converting to Pb-Free Manufacturing

Many, many technical issues to solve

30 – 50 degrees

Celsius higher

temperatures


Potential for Multiple Problems


� Worse, product reliability and warranty issues

� Few components tested at higher temperatures

� Might fail post-sale



� Implementing Pb-free conversion pilot programs

� Testing impact of substituting other chemicals as well

� Lining up 3rd-party specialists, including bi-lingual lead-free specialists


State of the Industry Today?

� Trends

� Progress

� Problems


Trend: More Companies Adopting a Corporate Environmental Policy

� Reflects corporate understanding of:− Regulatory roadmaps− Corporate directions− Way the world is going

� Provides umbrella for multiple compliance activities

� Reduces costs and severity of fire-drills


Example: SanDisk Integrates RoHS Into Its Environmental Management System (EMS)

Internal: IntranetExternal: Website

CommunicationSystems

Engineering:§ Lead Free§ RoHS Free§ Packaging§ Recycling

EnvironmentalSupport Systems

Audits

Training

Documentation

ISO 14001Prog. Mgmt.

Supplier:§ Selection§ Qualification§ Audit Survey

Maintenance

EH&S

Certification

Directives:§ RoHS§ WEEE§ Others

Facilities:§ Internal Recycling § Chemical Control§ Energy Conservation

Customer Inquiries:§ EMS Information§ MDDS § Product Information

SEMS Project Model


Trend: Growing # of ISO 14001 Implementations

“Suppliers of goods are expected to have an environmental management system in accordance with ISO 14001 or equivalent. The EMS must be implemented and functioning.”

--Richard Guidmond, VP, EH&S, Motorola*

* Environmental Systems Update, May/June, 2005


Trend: More Suppliers Changing Part Numbers and Labeling

� Part Number Changes− Last year: <60%− This year: 72%

� Lead-free labeling− Last year: 37%− This year: 60%

Source: TFI/Avnet study

Source: Technology Forecasters, Inc. study, summer, 2005Source: Technology Forecasters, Inc. study, summer, 2005


Greater Acknowledgement of Supply/Demand Challenges Ahead

� “The component market will go into unknown territory in the next few months as some component suppliers quit producing leaded parts.”

-- Electronic News, 6/29/2005


Other RoHS-Related Facts

� 82 percent of parts suppliers do not expect the RoHS transition to extend delivery times

� 70 percent do not foresee the need to charge higher prices for compliant parts

� 34 percent of component suppliers have more than a 25 percent demand for lead-free parts

Source: Technology Forecasters, Inc. study, summer, Source: Technology Forecasters, Inc. study, summer,


Progress Being Made

� Panasonic− Analyzed specific chemical substances in all

product components and materialsm Approximately 1.32M items m March 31, 2005: Non-use of specific chemicals in

96%m October 31, 2005 goal: 100%


Trend: Daily Launching of RoHS-Compliant Products

� “Lambda intros Dual-Output, RoHS-Compliant DC-DC Converters”

--ECN Asia, May 31, 2005


� “Dell Rolls Out Pb-Free Chassis to Meet RoHS Goals”

--Friday, 03 June 2005


Source: Maxtor website


“By the end of 2005, all Fujitsu Siemens Computers business products will be RoHS-compliant. By spring 2006, all consumer products will have been converted as well”

--Fujitsu Siemens website


Problem: Companies are Being Squeezed

Jan. 03Jan. 03 1010/27/05 07/01/06/27/05 07/01/06

nn Time is running outTime is running out

nn Many customers demanding far more than Many customers demanding far more than RoHSRoHS

nn Very difficult technical issuesVery difficult technical issues

nn Very few companies have substanceVery few companies have substance--level datalevel data


Problem: SMEs

Raw Material Companies

Large OEMs, Large OEMs, CMsCMs and Suppliersand Suppliers

SMEsSMEs

Texas:

Texas: Nearly 99% ofmanufacturing firms have<500 workers;

Arkansas: nearly 98%


Issue #1: Most SMEs are Still Unprepared

Source: Design Chain Associates


“A recent survey in Britain to assess readiness for RoHS produced a particularly shocking result: Some 57% of (small to midsize tech manufacturers) didn't even know what ROHS was.”

--BusinessWeek, January 18, 2005


“A survey by the Taiwan Electrical and Electronic Manufacturers Association showed that only 5 percent of electronic makers conform to the WEEE regulations, while only 3 percent have come up with products that are in accordance with the RoHS standard.”

--Taipei Times, June 20, 2005


Similar in the US

� Vast majority of SMEs lack resources, roadmaps, tools

� Compliance efforts lagging

� Lots of denial, defiance, despair


RoHS Perot


“We’re not even going to try to comply. There’s no way we have the money to do it.”


“5 customers screamed at me last week”


Assessing Your Risk/Readiness Ratio


3 Major Areas of Risk

� 1. Legal liability

� 2. Business risk

� 3. Competitive risk

Common denominator: $$$


Legal Risk

� Only if you are a “producer”: OEM, EU reseller or EU importer

� Major risk: being “Sony-ized”

� Catastrophic risk: Being “Sony-ized” in 5, 10, 15 or more countries

� Lesser risks: fines and penalties, depending on:

− Volume of products− Toxicity of products− Degree of due diligence taken


Business Risk: Determining At-Stake Revenue from Loss of Markets and/or Customers

� For OEMs: total EU revenue minus revenue from products:

− Out-of-scope− Exempt − To be discontinued

� For CMs and suppliers - total contract revenue from customers who have:

− RoHS obligations− Customers who have RoHS obligations


Plus, Everybody has an Additional Competitive Risk

Sorry. We’re not renewing your contract. You’re the same as your competitors on price and quality. But their products are compliant, and your products aren’t.

All things being equal…


Levels of Risk for Non-Compliance

HighCompetitive

HighBusiness

Depends on your “producer” status, levels of toxicity and volume of product

Legal


What’s Critical: Your RoHSRisk/Readiness Assessment

Virtually no companies

Large OEMs, CMsand Suppliers

Small-Medium Sized Enterprises (SMEs)

R E A D I N E S S

R

I

S

K

Low High

High


Issues

� No RoHS “how-to” manuals

� Companies think RoHS is only a Manufacturing, Quality or Purchasing issue

� Lots of:− Missed implications− Delays− Avoidable costs that blow budgets


Purchasing

Manufacturing & Assembly

Sales

Marketing

ServiceSourcing

Companies that are the Most RoHS-Ready Look at All the Functional Implications

Engineering Design &

Evaluation

Legal / EHS / Quality / Risk Management / Financial / Government Relations / IT


Customer Examples

� Several have had corporate lawyers involved from Day 1

� Use of sales staff to negotiate substance requirements from customers

� HR and AV key to corporate training

� Early involvement of IT to determine data collection requirements/limitations


Key Risk/Readiness Assessment Questions

� How thorough has your risk/readiness assessment been?

� If incomplete or haphazard:− What areas have you missed?− What avoidable costs have you already had and

are likely to have?− Who else do you need to involve?


Organizing Resources


Issue� Executives:− Don’t know the strategic implications− Don’t understand the risks− View RoHS as a minor nuisance

“Not meeting (RoHS requirements) could cost companies millions. They must be taken seriously and be an executive-

level priority.” --AMR Alert, 1.14.05

� Mid-level staff:− More likely to understand the issues− Have trouble getting the ear of executives− Are left in a very frustrating position


Issue: Do Companies Have What They Need to Comply with RoHS?

� Organizational structure

� Staff

� Budget

� Tools


Organizational Structure

� Core Team

� Extended internal team

� Extended external team− Consultants− Software vendors− Contract labor

SuppliersCMs

MFG

Marketing Sales

QA

Engrng

GCG

Purchasing

ComponentEngrng

Upper Management

ProcessEngrng

RoHS TEAM


RoHS Costs

“Based on hundreds of interviews with electronics companies, their contract manufacturers, suppliers, and our colleagues, we at TFI estimate that meeting RoHS requirements requires a one-time investment of 2% to 3% of cost of goods sold.”

--Pam Gordon, President, Technology Forecasters


RoHS Budgets

Source: “10 Steps Toward Source: “10 Steps Toward RoHSRoHS Directive Compliance”, Directive Compliance”, Holly Evans and Joe Johnson, Feb., 2005Holly Evans and Joe Johnson, Feb., 2005


Issues

� Core team members:− Already have full plates− Haven’t read the Directive or Guidance

documents− Often settle for half-truths or “prayer”

statements: “Oh, Quality is taking care of that.”

� Companies don’t budget for all the costs− Capital equipment− Software tools− Additional staff or consultants− Hidden operational costs (time = money)


What’s Needed?

� Sense of urgency

� Raising “RoHS-compliance” to the level of a corporate goal to send right message to:− Employees− Suppliers− Customers− Regulatory authorities

� Assigning resources



� Briefing senior execs

� Bringing Certificates of Compliance for executive signature

� Holding multi-functional kick-off meetings

� Determining detailed vis-à-vis ad hoc budgets

� In public companies, preparing execs for:− Financial analyst calls − Shareholder meetings− Sarbanes-Oxley implications


Developing a Roadmap to RoHS-Compliance


Issues

� Even when companies have a Risk/Readiness assessment, they lack knowledge of:

− What RoHS-compliance would look like− How to move forward

� Lack of a roadmap costs time, dollars and stress


2004 2005 2006 2007 2008 2009 2010

Supply Base ChangesSupply Base Changes

CM ProcessesCM Processes

Product QualificationsProduct Qualifications

Supply Base StabilizationSupply Base Stabilization

Process StabilizationProcess Stabilization

Product StabilizationProduct Stabilization

Consumer Electronics – IN SCOPEConsumer Electronics – IN SCOPE

RoHS Supply Base EngagementRoHS Supply Base EngagementPossible Timeframe for RoHS CompliantLeverage Industry Experience and Data

Possible Timeframe for RoHS CompliantLeverage Industry Experience and Data

Actively Move Supply Base, CM Assembly ProcessesActively Move Supply Base, CM Assembly Processes

Customer and Regulatory ReportingCustomer and Regulatory Reporting

RoHS CM ProcessesRoHS CM Processes

Material Composition Item DataMaterial Composition Item Data

RoHS Strategic RoadmapComponents – RoHS compliant

IT and Telecommunications Equipment – Pb ExemptionsMedical Devices / Monitoring and Control Instruments – OUT OF SCOPE

RoHS Strategic RoadmapComponents – RoHS compliant

IT and Telecommunications Equipment – Pb ExemptionsMedical Devices / Monitoring and Control Instruments – OUT OF SCOPE

What Companies are Doing: Building a Roadmap


Pinpointing Details

Pb-free specialists

Training

3rd-party testing

$0Mike Brown

60 daysInclude env. parameters in Stage 0

4NPI process

CostsOwnerTimelineRecomm-endations

RiskGap


Driving and Tracking Progress: Core Team Meeting Agenda/Minutes

Wait til“final” form goes to ballot

HarveyGCGWhich form and classification to use

IPC form for pilot project

Data Collection

Team revised figures and approved preso

NatalieTeamGet team approval on preso

Preso to Exec Team

Budget

OUTCOMEDRIVERDECISION-MAKER

SPECIFIC DECISION/ACTION NEEDED

OPEN ISSUES

AREA


ROHS Daily War Room

� Mondays− MDF Updates: Assigning owners, updating

status, managing suppliers

� Tuesdays− Process Development: Creating and revising

forms, flowcharting− Material Changes: Managing part changes,

connecting RoHS with PAR process


Key Questions

� Does your company have a roadmap?

� How detailed is it?

� What areas are not covered sufficiently?

� What are the financial and emotional costs of implementing RoHS haphazardly?


Training, Training, Training


Issues

� Most people don’t understand RoHS’:− Requirements− Costs− Level of commitment

� High-risk of non-compliance due to one mistake

� Pervasive half-truths

� Training perceived as “soft”


What Companies are Doing

� Extensive training of staff, e.g.:− 90 minutes for Core Team and other key people− 60 minutes for Extended Team and others− 30-minute video on Intranet for remainder

� Developing FAQs for employees

� Special training for suppliers− RoHS requirements and risks− Walking them through a Material Declaration Form


Key Training Questions

� How well does your staff understand RoHS’ requirements, costs and risks?

� What would be the most time-efficient and cost-effective way to get people up to speed?

� What are the costs of not training staff?


Data Collection Management


Is One of the Most Serious of All RoHSIssues

¡ Is Y/N enough?

¡ Do we collect at ppm level?

¡ On how many substances?

¡ Using what format?

¡ Aggregating into what database?

Tier 1 Supplier

Tier 3 Supplier

Tier 4 Supplier

Tier 2 Supplier

Distributor

OEM

Contract Manufacturer


Why?

� Til recently, no company had substance data at the material level

� Lack of standardized requirements

� Testing verification difficulties


Customer vs. RoHS Requirements

100100----1000PBB/PBDE

1001001001001000Cr6+

105570100Cd

100100--1001000Hg

10010010001001000Pb

Company D

Company C

Company B

Company A

ROHS

Maximum Permissible Amounts (PPM)

Source: Dupont, 9.30.05


“100 Customers/100 Forms” Syndrome

� All sizes and shapes− From associations, e.g. INEMI, JGPSSI− From other industries− From individual customers


Need to Complete Massive Customer Forms


No Consistent Requirement re: How Much Data to Collect

¡ At least, 6 RoHSsubstances

¡ Often, JIG “A” List

¡ Sometimes,full disclosure


Difficulty of Getting Certifications and Data

� Where will the certifications come from?− >48% of customers expect to get RoHS

certification from their distributors, who:m Don’t control manufacturing processm Are unable to offer certification*

Source: TFI/Avnet study, August, 2005


Y/N Accuracy on Certification

Statements

“We have collected about 98% of our supply chain declaration information. We started this process with a simple yes/no formatand found over 50% errors in responses where suppliers were claiming to be compliant while they were not. … If folks think that a yes/no declaration is sufficient or even helpful, I would suggest they do their own investigation into the accuracy. Our experience in asking the supplier for more details is that it becomes easier for us to spot inaccuracies, whereby a yes/no leaves us in a situation of not showing due diligence”.

Mobile phone manufacturer, May 5, 2005


Plus, Other Data-Collection Issues

� Determining data collection process− Who makes initial call− Who follows up− How are suppliers trained on software/MDF

� Segmenting supplier communications vs. “one-size fits all”

� Amount of follow-through needed

� Escalation paths


On the Positive Side: Streams Converging

Supply Chain Management

CommerceNet eCoRosettaNet

PDX

Joint Industry

Guide

Materials D

eclaratio

n

Management

IPC 1751 / 1752


1752 Standard is at the Heart of a RoHS-Compliance Business Process

� Determining data collection requirements� Assigning roles and responsibilities� Developing a project plan� Building a Supplier Communications

Package� Conducting a pilot program� “Going Live” with data collection� Strategically using 3rd-party testing


• Low Cost DesktopSoftware Tools

• Import/Export IPC1752 XML Files

SME Tools: Importing 1752 XML files


• SME ProductLibrary

• Easy to UseMaterialDeclarationWizard

Generating 1752 Class 1-6 Material Declarations


What are Customers Doing?

� Licensing software appropriate to their needs and budget


� Issuing/revising Material Declaration Forms

� Adopting a “marketing” approach to suppliers

� Developing web-based trainings for suppliers

� Outsourcing the actual data collection


Customer Example: Wire Harness & Cable Supplier

� Motorola required full disclosure for 82 assemblies or lose $3M in business

� Company implemented Material Declaration Management program utilizing services and software tools

� Program began in summer, 2005; Currently 40% complete; Motorola satisfied with progress


Key Data Management Questions

� Have you clearly defined your requirements?

� Have you developed a data collection process and plan?

� Do you have the right data collection tools?

� Do you intend to assist your suppliers?


Building a “Reasonable Steps” Defense


Why Bother? Penalties are Costly� Directive says penalties “shall be effective,

dissuasive and proportionate”

� Spectrum of penalties possible: product bans are at one end

� Lesser penalties possible


First Step: Understanding the Legislation

Presentation on the Legal Aspects of RoHS

by

Ken Rivlin and JP BrissonAllen and Overy


What Constitutes a “Reasonable Steps” Defense?

� Various levels of “prove it” documentation


Other “Reasonable Steps” Issues: Testing

� Isn’t a legal requirement

� No uniform standards

� $$$

� Range of decisions to be made:− How much testing?− Which suppliers?− In what priority?− At whose cost?


What Companies are Doing

� Developing a priority testing strategy, e.g. suppliers who:

− Provide components for high-revenue products sold into EU

− Provide custom parts− Are relatively unknown− Are overseas− Provide data that doesn’t seem right


Key Testing Questions

� What is your company’s testing strategy?

� Do you require test reports from your suppliers?

� Can you provide test reports to your customers?


Building Exemption Documentation Folders

Photograph or diagram

XYZ Equipment is highly specialized equipment used for cleaning semi-conductor wafer boxes in semi-conductor fabrication plants.

Product Description and Typical Application


Human Issues


Running the RoHS Marathon

� Toughest corporate “race” since TQM

� Mounting pressure

� Three very big hills− Initially: figuring out the route− Mid-race: Collecting substance-level data− At the end: Manufacturing product


How Do We Stay Sane?

� “Am I going to be crazed for the next 15 months?”

� “What toll is this going to take on:− My health?− My family?”


O.K, O.K, you’re nolonger in charge of RoHS compliance.



� Providing resources

� Acknowledging milestones achieved, e.g. 1st fully-compliant product and 25% of supplier data received and aggregated

� Training both corporate andmanufacturing staff

� Paying attention to positiveaspects of compliance, e.g. potential for competitive advantage


Key “Human” Questions

� Are people being pushed beyond what they can do?

� What happens if key people get sick or leave?

� What kind of “rewards” plan could you put in place?


Cautions and Recommendations


Cautions

� Wishful thinking: don’t underestimate the impact of RoHS on your business

� “One Mid-west OEM: clinging to interpretation that “placed on the market” refers to new models –not any new unit


Other Cautions

� Under-staffing and under-funding

� Under-estimating the complexity

� Procrastinating

� Thinking you can do it all in-house

� Relying on UK guidance documents


Recommendations

� Build a very strong internal/external team

� Adopt a “Ready! Fire! Aim!” approach

� Talk with colleagues

� Participate with SMTA and other associations

� Know that “this, too, shall pass”

� Look forward to the “I survived RoHS” tee-shirt


Summary

� Compliance with RoHS is very challenging

� More challenging Directives are on the way

� There will be a market shake-up

� Leverage compliance activities to:− Open up revenue opportunities− Gain competitive advantage


Thank you for participating

Harvey [email protected]

complying with rohs smta workshop1990s 2003 2005 2006 2008-2012 2015-2020 sustainable manufacturing...

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