The theoretical procedure to create a Compliance Product Structure as described in the previous part of this blog post series is widely followed in the Discrete Industries. However, many companies struggle with practical challenges when it comes to embed product compliance processes into existing operating principles and tools. In the following, I describe five of these challenges and how to solve them.
Dealing with incomplete master data
Let me start this one with pointing to a viewpoint recently published on SAP INSIGHTS by my colleague Jim Sullivan: Sustainability Data Isn’t Perfect, but Its Benefits Will Be, summarized in the statement “The data you use to manage sustainability could be better. That shouldn’t stop you from taking action that will generate material gains for your company and the planet.”. Note that “Sustainability” is implying “Product Compliance”, which is in line with SAP’s decision to include Product Compliance in their SAP sustainability solution portfolio.
So, when you detect you are for example missing weight information on material master level in order to calculate substance concentration values on lowest article level, don’t let this disturb you on building your compliance product structures according to best practices. Collect all issues that you find with regards to master data and have regular sync points with your colleagues from Master Data Management. Probably they will be thankful to hear about the issues from a Product Compliance perspective because it gives them further munition to make a case for improving master data quality – which the whole company will profit from. Align the activities for the improvements of master data quality with the Product Compliance activities.
Availability of internal data sources for self-declarations
A self-declaration is the best way to declare a component is compliant. You don’t need to reach out to suppliers, you have all information already available in your company. But the deciding question is often: Where is this information? Often product compliance experts don’t even know that such information exists inside their company. Laboratory test results or drawing documents are some typical data sources which, made available to product compliance experts, can help a lot to build a compliance product structure. Sometimes this information can be found in ERP systems (e.g. in a field on the material master), sometimes in PLM systems, sometimes on file shares. Talk to your colleagues from engineering, and probably they will show you where to find a treasure that contains hundreds of drawing documents where the basic materials used in hundreds of components are specified in detail. For many of these basic materials, the substance composition is fully defined – full material declarations for free.
Determination of suppliers of purchased components
If you cannot declare a component by yourself, you need to reach out to your supplier(s) of that components. But how to know who is/are the relevant supplier(s)? The best source for such information is an ERP system. In SAP ECC and SAP S/4HANA, the following data sources contain the relevant information:
Approved Manufacturer Parts Lists (AMPL)
Purchasing Info Records
SAP Product Compliance is considering these three data sources to identify the relevant supplier(s) for a certain component. Check the quantity and quality of this data in your ERP system and then decide if you can stick to these data sources or if you need to consider other sources.
Requesting and receiving data from suppliers
Until now, no cross-industry standard platform for product compliance supply chain collaboration has become established. Hence don’t make the mistake and believe any software provider who claims that their solution enables you to collect data from all your suppliers. Instead, analyze your suppliers, group them, and identify the best communication channel for each group. There might be a perfect portal to gather product compliance data from large manufacturers of electronic parts. But you will probably never convince the small garage supplier to register, upload, and maintain their product compliance data on such a platform. You should have tools and processes to cover both these cases.
Handling missing declaration data from suppliers
There are different activities you can perform when your suppliers are not able or willing to provide you the information you are requesting, Firstly, you can establish an automated reminder and escalation process. Software can support that. Secondly, a manual escalation process can help to get the information you need by directly contacting the supplier and explaining to them what exactly you need from them and for which reasons. Helping the supplier to compile the information is time-intensive but can be effective. Thirdly, a process for assessing the impact it would have to change the supplier can help you to judge if it makes sense to look for alternative suppliers. But probably the most important activity is to enlighten the supplier on your requests before you request the actual information. If you use a software solution for this, this should include a guided onboarding process and related training material.
Stay tuned for the next parts of this blog post series.