REACH will be the next supply chain regulation challenge

By Jim Carbone -- Purchasing, 5/1/2008 1:30:00 PM

The global electronics supply chain will be affected by a European Union regulation aimed at the chemical industry.

The Registration, Evaluation, Authorization and Restriction of Chemicals (REACH) actually went into effect June 2007. It requires all chemicals of one metric ton or more in volume that are manufactured in or imported into the European Union each year to be tested for health and safety and registered with the European Chemicals Agency in Helsinki, Finland.

REACH encourages manufacturers and importers of such chemicals to pre-register them during the six-month pre-registration period of June 1-Dec. 1, 2008. This will allow the companies time before they have to test and fully register the chemicals.

The law will affect the electronics industry because many substances are used in electronics products and OEMs will have to make sure those substances are registered if they bring the substances into the EU for manufacturing.

“If you are a manufacturer or importer of a substance or substances in preparations of more than one metric ton/year in the EU you need to register,” says Michael Kirschner, president of Design Chain Associates, a consultancy in San Francisco.

“Most electronics equipment companies won't have to register, but they should make sure that companies in their supply chains register if they need to,” he says.

“REACH is going to present a challenge to the industry,” says Kirschner, “Awareness is very low among European and American managers.

He says OEMs need to be concerned about their supply chain because it costs “a lot of money to register.”

For instance to register a 1-10 metric tons of a substance would cost about $2,500 to register while the fee for registration a 1,000 tons of a substances would be $48,000. “Many substance suppliers are pruning their substances product lines because of this. They don’t want to pay the money.”

Jim Simpson, director of supply chain management and engineering services for Celestica, says the registration part of the law will be challenging because there are thousands of substances coming into the supply chain that are going to be addressed, he says. In some cases a company may have to get approval for use of a certain substances. In other cases, a company may have to show documentation concerning the substance.