As regulations tighten around the automotive industry, OEMs will have to push these increased regulatory requirements down to suppliers in order to keep up. Regulations like REACH that prohibit manufacturers from including chemicals and substances of very high concern in products made in the EU or imported to the EU have forced OEMs to request more information from suppliers about their products. In essence, OEM standards are setting the pace for the rest of the supply chain.
Hewitt Packer created a web-based software used by the automotive industry that archives the materials used to manufacture an automobile, known as the International Material Data System (IMDS). The IMDS system ensures that OEMs and their suppliers can more easily follow standards regulating chemicals and products through better communication. IMDS requires suppliers to:
- Create data sheets for parts and materials in the IMDS
- Coordinate with suppliers in other tiers to receive IMDS data submission
- Update and correct IMDS and SDS data
IMDS also requires suppliers to share information about their components for the smallest components of each part including every screw, gasket, and bearings. Due to increased regulatory scrutiny and increased OEM demand to offload compliance data management, the popularity of the IMDS has grown in recent years. Now some manufacturers have begun requiring suppliers to have an IMDS number before delivering parts. Suppliers should take steps to ensure that their products align with manufacturer’s growing demands using software tools to simplify the process.
Organizing Chemical Suppliers with SDS information
The deeper tiers of the automotive supply chain suppliers (for individual components and single parts) often don’t disclose exact chemical information on parts and components to Tier 1 suppliers. Understanding the chemical composition of your parts or components can be easily streamlined with software enabled for chemical tracking and compliance. Businesses can achieve this level of chemical accuracy with SDS tools. SDS software can provide suppliers with all regulations and easily upload data from ERPs or third-party software providers like IMDS. SDS software can also maintain a comprehensive list of all product revisions and changes. This enhanced benefit of high-level SDS software is the add-on benefit of regular SDS upkeep. This functionality helps suppliers track, review, and approve of new Safety Data Sheets that are authored in your facility. With enhanced clarity, OEMs can achieve compliance with regulations regarding chemical safety in products. In the event of a banned chemical or shift in regulatory changes, you can easily pinpoint that chemical and link it to the product automatically. SDS information is an invaluable tool that can be extremely helpful for suppliers to adapt to product changes.
And if you’re a supplier who needs to author or transmit SDS data, an SDS software can automate your authoring tasks and even share select composition information with your clients.
How To Manage Chemicals and Supplier Data
Automotive parts suppliers cannot ignore IMDS; OEMs may begin rejecting suppliers that cannot provide an IMDS number for their components. Suppliers must implement proper chemical management to save their future and their bottom line with their automotive clients.
Suppliers and companies that have effective chemical management typically have:
- Automated and digitized chemical information.
- Created and maintained banned substances lists.
- Clear, documented regulations for the banned chemicals.
- QAQC of data entry of the chemical records and products
- An approval process of all flagged chemical records.
Having a system to ensure each company purchase complies with any applicable regulations or directives is worth the investment of time and money. Typically, automakers make large investments in product cycles and development, with the usual car having a 4-5-year lead time, 6-7-year production run, and spare parts available for at least 10 years after the product is released. Suppliers must keep chemical legislation in mind, as legislation is beginning to put significant responsibility on suppliers to phase-out substances of concern throughout the supply chain. You can monitor the candidate list of substances of very high concern (SVHC) through the European Chemicals Agency. It gets updated frequently and gives a strong forecast of which materials are or will be strictly regulated in supply chains.
Without an organized system in place, suppliers may get left behind in the face of OEM standards and regulatory changes.
Best Practices: Chemical Management for Suppliers
Suppliers who are being asked to keep up with new or changing OEM chemical standards are looking for some reliable best practices to start following to help them deal and manage the changes coming down the pipeline. While there's no single set of golden rules to follow here are some best practices for chemical management to help suppliers to the automotive industry out:
- Ensure your chemical data is stored in a digital format which can be effectively shared. In most cases today, chemical manufacturers store and manage their chemical data in spreadsheets, which can work as long as your columns and headers are easily parse-able. However, if you're sharing product data via SDSs (which are typically a PDf file or other format which can't be parsed by a computer) then you're forcing your OEM clients to do extra work to extract chemical data for their in-house reporting. Instead opt for a chemical management software or file format which can be electronically sent in tandem with paper-style SDSs.
- The more data you can provide, the better. OEMs are hungry for data, particularly data around sustainability or industry-specific regulations like Automotive Protocol. The more data you can provide the better, which also includes getting more specific with your data by providing more precise chemical composition ranges, the more preferred you'll be as a vendor. You can also use a sustainability tracking software to provide additional information about your products to show that you support the green efforts of your clients.
- Get involved with the automotive supply chain community and open up the channels of communication with your clients. For example, ERA is a member of the Suppliers Partnership for the Environment, an automotive workgroup that brings together automotive OEMs and supplier members to discuss joint projects. The projects and goals that get discussed in these groups (like collaborating on new sustainability bench marking protocols for chemical suppliers) are invaluable to the supplier link in the supply chain and can give you a measurable leg up on the competition.
Summary: Chemical Management and OEMs
Automotive manufacturers are increasingly incorporating chemical inventory systems like IMDS to make their cars more recycling friendly and compliant with growing regulations. As more and more suppliers find themselves measured against an IMDS requirement or banned chemical request that they must fulfill to ship their goods, it is a sign that the industry processes and procedures are shifting, and your practices may need an upgrade.
Managing the chemicals in your products is one of the first steps to ensure that you as a supplier demonstrate your willingness to comply with your OEM chemical standards. The transition to digitizing your chemical information can be lengthy and time-consuming, but it’s worth it. Accurate chemical data sharing throughout the supply chain is here to stay, and suppliers must take steps to simplify and align with OEM demands.
This Blog Was Co-Authored By:
May 15, 2020