Impact of RoHS Legislation and Resulting Customer Requirements on Industry

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Impact of RoHS Legislation and Resulting Customer
Requirements on Industry

• Anne Johnson
• Regulatory Affairs Associate
• 3M Optical Systems Division
• June 24, 2007

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Agenda

• Background
• RoHS
• 3M and Optical Systems Division
• Actions that 3M took to verify compliance
• Scope of compliance
• Unexpected effects
• Customer requirements
• JIG/JGPSSI strategies help
• Effects of a new/different RoHS law

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RoHS Restriction of Hazardous Substances

• European Union Directive on the Restriction of
  Hazardous Substances (RoHS) in Electrical and
  Electronic Equipment, 2002/95/EC
• Prohibits six hazardous substances above certain
  de minims levels
• Four heavy metalslead, mercury, cadmium,
  hexavalent chromium
• Two polybrominated flame retardant classesPBBs
  and PBDEs
• EXCEPT for certain exempt applications
• De minimis levels
• Cadmium 0.01 (100 ppm)
• All others 0.1 (1000 ppm)
• De minimis thresholds apply to any homogeneous
  material
• E.g., a material that cannot be mechanically
  disjointed into different materials

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3M Background

• 3M is a diversified technology company with a
  worldwide presence in the following markets
• Consumer and office
• Display and graphics
• Electro and communications
• Health care
• Industrial and transportation
• Safety, security and protection services
• All 3M businesses have been impacted by RoHS laws.

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3M Optical Systems Division

• Tier 3 supplier to the electronics industry OEMs
• Manufacture optical films to increase brightness
  of LCD displays
• Work with all tier levels of the electronics
  industry
• Our suppliers are chemical manufacturers and
  article manufacturers

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Activities 3M Completed to Ensure Compliance

• 3M developed a new RoHS General Specification
  that is required for all new materials
• Involves
• Legal
• Sourcing
• Supply Chain
• Raw Material Coordinators
• Regulatory

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Activities 3M Completed to Ensure Compliance

• Modified chemical data management systems to
  allow for RoHS Certifications and created
  additional databases to store supporting data and
  for compliance tracking
• Involves
• IT
• Software company
• Legal
• Regulatory

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Activities 3M Completed to Ensure Compliance

• Created a supplier questionnaire to request RoHS
  certifications and additional information.
• Involved
• Legal
• Regulatory
• Sourcing

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Activities 3M Completed to Ensure Compliance

• Researched and evaluated 3rd party analytical
  labs that would be approved for 3M to use for
  RoHS testing when supplier information can not be
  gathered or for high risk materials
• Involved
• 3M Environmental Science and Assessment Lab
• 3M Corporate Analytical Research Lab
• Regulatory

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Activities Divisions Completed to Ensure
Compliance

• Establish list of products sold in Europe or
  components sold for equipment that may be sold
  into Europe
• Involves
• Business management
• Export services
• European business teams
• Regulatory

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Activities Divisions Completed to Ensure
Compliance

• Determine all homogeneous inputs to product and
  the suppliers for those inputs
• Involves
• Product development
• Manufacturing
• Regulatory
• Raw material coordinators
• Sourcing
• Supply Chain

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Activities Divisions Completed to Ensure
Compliance

• Send Compliance letter to suppliers of each
  input, review responses, follow-up, and store
  information
• Involves
• Regulatory
• Sourcing
• IT

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Activities Divisions Completed to Ensure
Compliance

• Identify non-compliant and compliant materials.
  If materials are non-compliant determine if
  supplier will re-formulate, if 3M needs to find a
  new supplier or 3M will discontinue product
• Involves
• Regulatory
• Sourcing
• Business teams

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Activities Divisions Completed to Ensure
Compliance

• Establish a control plan to maintain compliance.
  
• Involves
• Raw material coordinators
• Sourcing
• Manufacturing
• Supply Chain
• Quality engineers
• Regulatory

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Activities Divisions Completed to Ensure
Compliance

• Communicate RoHS Status of products when
  requested
• Involves
• Marketing Communications
• Customer Service
• Tech Service
• Regulatory

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Reality Check

• All of these activities had to be done by 3M
  Optical Systems Division to ensure compliance.
• 3M Optical Systems did not have any film products
  that were out of compliance with RoHS to start
  with.

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Additional Impacts Due to RoHS

• Adding staff to verify and manage
• Increased factory costs- experimental costs
• Additional inventory /Scrap costs
• Supplier/ raw material costs
• Customers prefer the cost of RoHS compliance NOT
  to be passed on to them!
• Manufacturing costs new equipment
• Product numbering/ naming changes
• New requirement for new products
• Resources from new product development
  re-distributed to re-formulation teams
• Long lead times to get compliant raw materials
• Supplier challenges- hard to get information!

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Part Number/ Product Name Challenges

• Changing part numbers for compliant products/
  parts may be many part numbers for one item
• Need to change all prints and documentation
• Involves IT, supply chain, marketing
  communications groups
• Resistance by some Businesses to do this but...
• In some cases, customers demand this.
• Changes are needed to make documentation clean.
• Helps differentiate between non compliant and
  compliant product line.

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Product Launch Challenges

• New Product Development
• Resource issue for labs
• New product teams are being slowed down or
  cancelled
• The same engineers, designers, and chemists are
  pulled off new product teams to work on RoHS
  compliance for existing models.

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Supply Chain Challenges

• Long lead times to get compliant inputs
• May have to find alternate suppliers
• Inventory management- compliant and non-compliant
  part separation
• Can slow down supply chain compliant parts may be
  provided later than expected

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Supplier Challenges

• Suppliers do not understand RoHS or do not
  response to requests for information
• Process steps may involve
• Following up with suppliers this may require
  weekly or daily communication
• Simplifying requirements or requests
• Visiting the supplier
• Escalating the response up the management chain
  and involving sourcing organizations

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Scope Question Seen by 3M as a Supplier and a
Customer

• Companies often get requests for products where
  the intended use is not intended to be WEEE-
• What are the legal responsibilities by responding
  to RoHS requests for these types of products?
• What is the affect on competitiveness not to
  respond?

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Additional Outcomes of RoHS that have Impacted
Optical Systems Division

• RoHS and the introduction of regulation in the
  electronics industry has caused our customers to
  develop their own EHS requirements far beyond the
  requirements of RoHS legislation
• Complying with the law is not enough to
  participate in the electronics industry

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Additional Customer Requirements

• Green agreement and auditing programs from
  customers
• These programs are very extensive and require a
  full time person to complete and manage
• Alternately, many are developing their own
  environmental management systems to avoid a
  multitude of customer systems

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Additional Customer Requirements

• Increased customer requests to respond with
  information about products, manufacturing,
  packaging, internal systems, etc.
• Customer requirements go beyond RoHS Chemicals
  and RoHS Threshold limits
• Banned/ Restricted/ Investigation lists
• Can include hundreds of materials
• Typically, 3-10 a day reach Optical Systems
  Regulatory and Legal for customers that will not
  accept standard responses

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Additional Customer Requirements

• Customers are requiring testing for RoHS
  materials and others as frequently as every 6
  months
• Not required by law
• Customers are requiring RoHS status
  identification on packaging, packing slips,etc.
  for all materials
• Not required by law
• China Law now requires for final EEE placed on
  the market

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Additional Activities Optical Systems Completes
based on Customer Requirements

• Increased regulatory staff 300
• Developed a new database for product EHS
  information
• Developed a database for handling, tracking, and
  monitoring customer requests
• Test all products for 50 chemicals of interest
  when launched
• Re-test all products for RoHS, halogens, and new
  chemicals of concern every 6 months

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Additional Activities Optical Systems Completes
based on Customer Requirements

• Added a 3M Environmental Marketing Claims
  Committee approved RoHS Directive Compliant Label
  to product packaging
• Require a customer EHS requirement review of all
  products in development
• Developed a Chemicals of Interest Team to monitor
  customer EHS requirements and evaluate their use
  in our products

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Current Activities to Help Manage the Customer
Requirements

• Optical Systems is active in Joint Industry Guide
  (JIG) / JGPSSI activities
• JIG sets a list of EHS requirements for products
  in the electronics industry
• If more companies will use this list of
  requirements management of EHS issues in the
  industry will be much simpler
• It is highly recommended to support this and
  other harmonization efforts

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Impacts of Future Regulations

• If new laws add a chemical, lower a limit for
  existing RoHS chemicals or change the scope, the
  entire process for compliance will start over
• New supplier requests
• New reformulation efforts
• New communication efforts
• If new laws add labeling requirements, this will
  add an extra dimension. Different labeling
  requirements by different countries may become
  very difficult to manage.

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Impacts of Future Regulations

• Adding packaging to the RoHS scope adds another
  replicates the process for compliance as adding a
  chemical would.
• However, packaging suppliers are most likely
  different than product raw materials suppliers so
  supplier education may be required and lead to
  long lead-times for compliance

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Summary

• There has been an incredible amount of work
  completed and money spent by industry to be in
  compliance with EU RoHS.
• Customer requirements are having a significant
  impact on industry and harmonization of
  requirements is encouraged
• Additional RoHS laws or changes to the EU RoHS
  law would have a heavy impact on industry

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Questions?