When an organization is on the lookout for a new chemical supplier, it is essential that it first verifies that the company meets regulatory requirements. In fact, it is important to carry out this check even for purchases from existing sources because of frequent changes in the applicable rules and regulations.
Manufacturers are responsible for the chemicals that are used in their plants. If a supplier is non-compliant, the manufacturer may bear the brunt of the negative outcomes that result from products that can cause harm to consumers.
Multiple sets of regulations can be confusingWith chemical supplies being sourced from locations thousands of miles away, the process of verifying that they meet the rules imposed by various authorities can be even more difficult. In many instances, a particular batch of chemicals may be subject to statutes made by several countries or states. For example, suppliers based in the US need to adhere to federal requirements and also comply with the rules made by certain states like New York and California who have passed their own laws for chemical safety. Overlapping regulations lead to higher compliance costs, voluminous documentation, and the need to deploy additional manpower. This can result in inflated manufacturing costs, lower sales volumes or even business losses.
Regulations can spur innovation
Regulations governing the chemical industry serve a useful purpose. They prevent the use of chemicals that are known to be harmful and can prescribe mandatory testing for other chemicals. But laws restricting the use of chemicals have other benefits too.
Research conducted by the Center for International Environmental Law (CIEL), an organization that promotes environmental causes, has found that regulations force companies to take up research that can lead to the development of alternatives to harmful chemicals.
CIEL’s study titled, Driving Innovation – How stronger laws help bring safer chemicals to market, points out that when a new regulation is introduced, manufacturers file a number of patents for alternative products. The study’s author, Baskut Tuncak, says, “It creates a market for green chemistry.”
Non-adherence can prove to be costly
Those organizations that do not pay attention to the chemicals that go into their products can be made to bear a heavy price for their negligence. If a product sold by a company leaches harmful chemicals when it is discarded, the responsibility lies with the seller.
A report titled, The Business Case for Knowing Chemicals in Products and Supply Chains, states that over a three year period Walmart, Target, Walgreen Co., CVS Pharmacy, and Costco Warehouse paid $138 million in fines because the products sold by them contained chemicals that had the potential to cause environmental damage. Similarly, Project TENDR notes that everyday chemicals found in food, plastics, furniture, food wrap and cookware can prove to be toxic. While they can harm everybody, they are especially dangerous for infants and young children.
Although there may not be specific regulations in place for certain chemicals, it is advisable for companies to be fully aware of the composition of the materials that they are using. This will allow them to be one step ahead of the competition in the event that restrictions are imposed on the type of chemicals permitted to be used in the manufacturing process.
Compliance in an essential part of a purchasing department’s function
Organizations that do not pay adequate attention to regulatory issues, do so at their own peril. While tackling compliance issues can be an expensive and burdensome process, non-adherence to rules and statutes is simply not an option.
Companies that ignore directives issued by various authorities risk facing high penalties, negative publicity, and even closure of their manufacturing plants. Commercial prudence dictates that every organization should pay the highest degree of attention to regulatory matters.
If you’re interested to read more, click here to read the new ebook: