ENVIRONMENTAL COMPLIANCE, RISK AND PRODUCT STEWARDSHIP

H O W T O S T A Y O N T O P O F C O N F L I C T M I N E R A L S , R E A C H , P R O D U C T T A K E B A C K , A N D O T H E R

E M E R G I N G G L O B A L I S S U E S

W e d n e s d a y, M a r c h 3 0 , 2 0 11

Copyright © 2011 IHS Inc. All Rights Reserved. 2

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Meet the Speakers

Paul E. HagenPrincipleBeveridge & Diamond, P.C.

Scott Wilson Content Solution Strategist

IHS

Environmental Compliance, Risk

and Product Stewardship

March 30, 2011

Paul E. Hagen

Beveridge & Diamond, P.C.

(202) 789-6022

phagen@bdlaw.com

www.bdlaw.com

The purpose of this presentation is to provide you with current information on product law

policy and regulatory developments. It is not intended as, nor is it a substitute for, legal

advice. You should consult with legal counsel for advice specific to your circumstances.

55

Overview

• Product-Focused Environmental Requirements and Trends

• Conflict Minerals and Sourcing

• Ensuring Compliance and Market Access

• Expanding Extended Producer Responsibility (EPR) Mandates

• Tracking New Requirements

66

Product-Focused Environmental

Regulations: Overview

• New generation of environmental laws aimed at products rather than ―end-of-pipe‖ pollution

– New product design mandates

– Substance restrictions

– Energy efficiency

– Take-back mandates

• Emerging sourcing/CSR legislation

• Keeping pace with new and evolving requirements in multiple jurisdictions

• Identifying and managing risks

77

Expanding Regulation Throughout

Product Life-Cycle

RoHS, Energy Efficiency, Safety Standards, Chemical Notifications

Raw Materials Sourcing

Manufacture and Design

Market Access

Collection, Reuse, Recycling

Material Restrictions, Energy Efficiency, Supply Chain

Dangerous Goods Rules Packaging / Labeling

Take-back Laws, Export Bans, Basel Convention

Conflict Minerals

Distribution / Logistics

88

Key Drivers of Product-Focused

Environmental Requirements

• Governments

• RoHS, REACH, Material Bans, GHS, Green Chemistry

• NGOs

• Greenpeace ―Scorecard‖ and the ―SIN List‖

• Retailers

• TESCO - Carbon Labeling

• Customers

• Green Awareness and Preferences Increasing

• Environmentally Preferable Government Procurement

(e.g., EPEAT)

99

Materials Sourcing Requirements

• New focus on materials sourcing

– Conflict minerals

– Timber and plant products

– Conservation concerns (e.g., Palm oil in Indonesia,

proposed Pebble Mine)

• New supply chain management challenges and

public expectations

1010

“Conflict Minerals” Law

• Dodd-Frank Act, section 1502

• SEC to promulgate regulations requiring annual

reporting for manufacturers if

– ―conflict minerals‖ (or metals derived from them)

– are necessary for functionality or production of product

• Not a prohibition, but disclosure and transparency in

supply chain

1111

U.S. Conflict Minerals Legislation

• Concern: Funds from mining of certain minerals providing

financial support to conflict in Democratic Republic of Congo

• Goal: Use market power of downstream users to limit financing

for conflict through supply chain transparency and disclosures

• New U.S. law: Section 1502 of the Dodd-Frank Act imposes

reporting requirements on SEC-reporting companies that make

products containing certain minerals, if they are necessary for

functionality or production of products

– Columbite-tantalite: Tantulum

– Cassiterite: Tin

– Wolframite: Tungsten

– Gold

• SEC to promulgate rules by April 15, 2011, although delay is

possible following an extended comment period

1212

Conflict Minerals - Requirements

• Description of measures

to exercise due diligence

on source and chain of

custody of minerals

• Any products that are

not ―DRC conflict free‖

(i.e., products that

contain minerals that

finance or benefit armed

groups)

• Facilities used to

process conflict minerals

(i.e., smelter)

• Country of origin

• Information on efforts to

determine mine of origin

• Reports audited by

independent auditor

• Audit must be

certified

• Report posted on

company website

• Option: label

products ―DRC Conflict

Free‖

1 2 3

Determine whether

products contain

―conflict minerals‖

produced in DRC or

adjoining countries

Reasonable country of

origin inquiry

Annual SEC Disclosure

If Yes or Cannot Tell,

Report / Identify: Other Key Provisions:

1313

Supply Chain Example

Tin mining

Product production

Solder paste production

Tin refining

PCB production

Connector production

Gold plating solution production

Gold refining

Gold mining Gold recycling

Gold bonding wire production

1414

Implications

• Minimum due diligence standards still unclear, but:– Will require assessment of products that contain conflict minerals, and

engagement with suppliers

– Will generally require traceability to ―approved‖ smelters that use audited/certified supply chains

– Industry-wide efforts (EICC and ITRI) to adopt sectoral standards for smelter validation

– OECD Due Diligence Guidance

• Labeling, marketing and competitive differentiation: – Companies can label products ―DRC conflict free‖

– Customers likely to demand ―DRC conflict free‖ products

– Government procurement – California

• Companies must disclose/report on first fiscal year after promulgation of rules

1515

RoHS and Substance Restrictions

• Concern among governments, NGOs, and public re hazardous substances in products

• Proliferation of substance restriction requirements for electronics, toys and other products (e.g., mercury-containing products)

• Emerging Green Chemistry Initiatives

• Rapid, global expansion of requirements presents market access and supply chain challenges

• New international initiatives: SAICM and Mercury Convention

1616

EU RoHS Directive

• Imposes concentration limits on 6 substances in wide range of electronic products

– Mercury, 0.1%

– Lead, 0.1%

– Cadmium, 0.01%

– Hexavalent chromium, 0.1%

– Two types of Brominated Flame Retardants (BFRs), 0.1%

• Very influential – directly incorporated into many non-EU legal regimes, and clearly the model for many others

• Exemptions by product application

• Exclusions based on scope, e.g.

– Batteries (but see EU Batteries Directive)

– Spare parts (for pre-July 1, 2006 equipment)

1717

EU RoHS II

• RoHS Recast agreed

– Approved by Parliament Nov. 2010

– Council expected to approve in 2011

– Binding when transposed by Member States, by late-2012

• Recast will not expand the list of restricted substances

• But will streamline process for future amendments

• Monitoring & control instruments, medical devices and cables in scope

• New open scope covers all EEE unless specifically exempted

• New mandatory disclosure obligations will require ―immediate‖ reporting of non-compliant EEE

• New CE-marking requirements for manufacturers

• Not superseded by REACH: must be ―coherent‖

1818

RoHS Worldwide

19

US RoHS Laws

• RoHS in government procurement standards– Federal EPEAT

– NYC Procurement Standards

• State RoHS Legislation– California RoHS

– New Jersey RoHS

– Various RoHS reporting requirements

• State-level substance-specific restrictions

20

U.S. State-Level Materials Restrictions –

Total Enacted Laws

Source: EIATRACK (http://www.eiatrack.org/p/416)

0

20

40

60

80

100

120

140

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010/2011

2121

Comprehensive Mercury Legislation

2222

BFR Restrictions

2323

Toxics in Packaging

24

Batteries Restrictions

25

DOT Rulemaking on Transport of

Lithium Batteries

• U.S. DOT engaged in rulemaking that is likely to impose

substantial new requirements on transport of lithium

batteries, especially by air (including if shipped in

products)

• Draft final rule now at OMB for review

– Final rule expected soon for part of proposal (bringing rule in line

with international standards)

– New proposed rule will re-propose controversial issues (e.g.,

dropping exemptions for small batteries)

26

EU REACH Regulation

• Regulation on Registration, Evaluation, Authorisation and Restriction of Chemicals

• Not just chemicals: has implications for electronics importers:

– Registration of substances if >1 tpy and intended for release

– Notification of substances of very high concern (―SVHCs‖) in articles, if >1 tpy, and >0.1% (6 months after SVHC listing, beginning June 1, 2011)

• Electronics ―suppliers‖ (includes retailers) must communicate to recipients (other than consumers) regarding SVHCs in articles, if >0.1%, effective upon listing

– Must include name of substance and info on safe use when provide the article

– Must provide info to consumers within 45 days of request

• Authorization requirements for certain high-risk substances

• Effect is to broaden supply chain management requirements beyond RoHS, because companies need content and concentration information for broad range of substances

• Currently 46 SVHCs, 15 of which have been recommended for authorisation, including several in electronics (4 phthalates, HBCD, diarsenic trioxide & pentaoxide, short-chain chlorinated paraffins, and tributyltin oxide)

2727

END-OF-LIFE AND

PRODUCT TAKE-BACK ISSUES

28

Product Take-Back

• European Union – EU Directive 2002/96/EC on Waste Electrical and Electronic

Equipment (WEEE) (recast currently underway)

• United States– 24 distinct state laws

• Canada– Provincial laws create take-back obligations

– No mandatory federal law

• Latin America– Rapidly expanding federal, state, or municipal laws

• Asia / Pacific– China (China WEEE)

– South Korea (Resource Recycling Act)

– India (Draft E-Waste (Management and Handling) Rules 2010)

2929

Product Take-Back

• Targeted Products– Batteries

– Waste Electrical and Electronic Products (WEEE)

• Common Elements – Condition for sale of new products

– Registration (manufacturers, collectors, recyclers)

– Administrative and/or implementation fees

– Labeling and consumer information

– Collection programs

– Performance requirements & reporting

3030

U.S. State E-Waste Legislation

31

Key Elements of EPR in

Latin America

• E-Waste Focus, Increasing to WEEE

• Manufacturer/Importer Responsibility

• Limited Government/Distributor Role

• Management Plans (Permit)

• Consortia/Individual Entity

• Hazardous Waste Presumption

• Registration/Certification Requirements

• Free of Charge to Consumer

• Take-Back Quotas

• Waste Minimization/DfE

32

EPR in Latin America, Enacted

• Brazil – National Solid Waste Policy (Aug. 2010): framework law, establishes ―reverse

logistics‖ requirements

– National Solid Waste Policy Regulation (Dec. 2010): establishes rulemaking process

– CONAMA Draft WEEE Resolution: status unclear

• Colombia– 3 Producer Take-back Resolutions (July/Aug. 2010): Batteries, Computers &

Fluorescent Lamps: take-back quotas

• Costa Rica– E-Waste Management Regulation (May 2010): comprehensive producer take-

back program

– National Solid Waste Law (July 2010): proposed hazardous waste regulation potentially overlaps with e-waste regulation

• Mexico– General Waste Law (2003) and Regulation (2006): framework for take-back of

special management wastes, including some e-wastes

– Pending regulations on management of hazardous and special management wastes, expected in 2011

33

EPR in Latin America, Pending

• Argentina – Several proposed WEEE-RoHS bills on national & provincial

levels

• Chile– National Waste Bill in draft from includes e-waste take-back

• Ecuador– Hazardous waste regulation proposed in 2009 included some e-

wastes; little progress in 2010

• Peru– E-waste regulation, with producer take-back, proposed Feb.

2011

• Venezuela– National Solid Waste Management Law (Dec. 2010): framework

law, includes e-waste take-back; regulation due by Dec. 2011

3434

Latin America – E-Waste Take-

Back Initiatives

35

EPR in Latin America: Conclusions

• E-waste take-back here to stay

• Dynamic regulatory atmosphere

• Key final (or near final) initiatives– Brazil, Colombia, Costa Rica, Mexico

• Key pending initiatives, possible advance this year– Argentina, Chile, Ecuador, Peru, Venezuela

• Infrastructure key regulatory compliance barrier

• Export logistics can be challenging

• Allow significant lead time for compliance

36

Compliance Challenges

• Challenges in Tracking & Managing Disparate Programs:

– Where are there laws?

– What products are covered? • WEEE, Computers, Monitors (> 9‖ or > 4‖ in size), Televisions, Printers . . .

– How does the program work? • Manufacturer-operated? Shared Responsibility? Advance Recovery?

• What level of collection is required?

– When are requirements ―due‖? • Each law operates on its own timeline - effective date, registration, fees,

reporting, program year

– Who must the recovery program serve? • Consumers, businesses, non-profits, school districts

– Additional Requirements?• RoHS-like provisions

• Responsible Recycling Provisions

3737

Exports of Used and EOL Products

• Basel Convention parties moving to classify more used/end-of-life products as hazardous wastes

• Draft technical guidelines on electrical and electronic waste to be considered at COP-10

• Increased logistical challenges, trade bans and compliance costs for managing used and end-of-life electrical and electronic equipment world-wide

38

New E-Waste Guidelines

• Draft Technical Guidelines on Transboundary Movement

of Used Electronic and Electrical Equipment and E-

waste, in Particular Regarding the Distinction Between

Waste and Non-waste Under the Basel Convention

(comments due June 30, 2011)

• Draft PACE Overall Guidance Document on

Environmentally Sound Management of Used and End-

of-Life Computing Equipment (forthcoming)

3939

Refurbishment, Reuse,

Warranty Returns

• Parties to the Basel Convention are deciding whether

exports of used electrical and electronic equipment for

repair, refurbishment and reuse are products or wastes

– Wastes subject to control and trade bans?

– Used products outside Basel?

– Warranty returns, refurbishment, off-lease equipment?

• Risk of new export bans on shipments for legitimate repair

and refurbishment from the U.S. and EU to non-OECD

40

Risk Mitigation: Regulatory Tracking

• EIATRACK http://www.eiatrack.org/

– Web-based regulatory tracking tool

– Directed by leading electronics manufacturers

– Product-related environmental measures in key

markets world-wide

• Facilitates communications and compliance:

– Internal teams (global, regional, country, product)

– Trade and business working groups

– Technical consultants and legal counsel

40

Beveridge & Diamond, P.C.

• Largest firm focused primarily on environmental law and

litigation

• Longstanding product stewardship practice

• Counsel to leading IT companies and trade associations

• Global network of local environmental counsel

• More at www.bdlaw.com

41

Copyright © 2011 IHS Inc. All Rights Reserved. 42

Scott WilsonContent Solution StrategistMarch 2011

Copyright © 2011 IHS Inc. All Rights Reserved. 43

• Founded in 1959, IHS is a leading source of information and expert analysis in pivotal

areas shaping today’s global businesses

• Employs 4,400 colleagues in 30 countries who speak 50 different languages

• IHS customers include nearly 70% of the US Fortune1000 and 80% of the Global

Fortune 500

• Tens of thousands of customers and hundreds of thousands of end-users in over 100

countries

• Public (2005) NYSE: IHS

• FY10 revenue $ 1,075 million

About IHS Inc.A Leading Information Provider

Copyright © 2011 IHS Inc. All Rights Reserved. 44

Compliance needs are Explicit and Implicit a disruptive shift in the market changes supply chain behaviors

•Demonstrate Sustainability

•Comply with Regulations

•Prove Ethical Supply Chain Management

•Meet Contract Obligations

•Design and Redesign the Supply Chain

e.g. Regulations Standards Parts

e.g. EU ROHS IPC IPC 175x

•Navigate Constrained Supply

•Mitigate Obsolete Part & Manufacturing

•Manage Rising Price & Lead Times

•Avoid Counterfeit Parts

Explicit Needs

Customer Requirements

Explicit

Requirements

Implicit Needs

Implicit

Requirements

Indirect Materials, MRO and Chemicals

Design Methods

Obsolescence Management

Counterfeits Management

Semiconductors and Components

Standards & Regulations

Copyright © 2011 IHS Inc. All Rights Reserved. 45

Client Scenario(s) : “How will this impact my supply chain?”

What are my regulatory obligations and

exposure to U.S. or California conflict

minerals positions?

Which commodities do I use that rely on

tantalum, gold, tin, or tungsten? What

products do I use these in?

Where are my raw materials,

manufacturers, and suppliers located? Was

any Japan production ceased or

compromised?

What shortages should I expect? Will price

and lead time increase? Should I buy parts I

need immediately to mitigate risk?

If needed, where can I locate and secure

alternate sources of these parts? Should I

redesign my product?

What parts will be discontinued by

manufacturers? Have any been discontinued

already? Which ones?

How do I avoid counterfeits? Do I have any

today that I don’t know of? What specific

lots of parts are counterfeit?

If a highly constrained supply chain

persists – or parts were discontinued – what

safer open market part sources exist?

Example: Japan scenarios addressed by IHSWhat are the supply chain impacts of the Japan earthquake?

Conflict Minerals Origin: Conflict-free tantalum.

Supply Flow: Tantalum capacitors, have already

been in short supply now for over 12 months.

Likely Rise in Counterfeit Part Activity:

Just prior to Japan quake, the senate launched

congressional investigation counterfeit parts risk.

Among reasons, a 2010 study by the Commerce

Department found the problem of counterfeit parts

touched nearly 40% of the DoD's parts supply

chain, and was getting worse.

Impact and Implications of Global Production:

• Global Reaction to Crisis will See Panic Buying

Creating Shortage and Pricing Issues

• Rolling Power Outages and Logistical Issues

Expected for the Next Several Weeks

• Production Disruption of Critical Materials such

as Poly Silicon, Photo Resists & Resins

• Components Impacted Include

NAND

DRAM

Standard Logic

Filters

Inductors

High-Value and High-End Aluminum and

Ceramic Capacitors

MOSFETs

Explicit: Conflict

Minerals Tracking

Implicit: Risk of

Counterfeit Parts

Copyright © 2011 IHS Inc. All Rights Reserved. 46

Client Scenario(s) : “How will this impact my supply chain?”

What are my regulatory obligations and

exposure to U.S. or California conflict

minerals positions?

Which commodities do I use that rely on

tantalum, gold, tin, or tungsten? What

products do I use these in?

Where are my raw materials,

manufacturers, and suppliers located? Was

any Japan production ceased or

compromised?

What shortages should I expect? Will price

and lead time increase? Should I buy parts I

need immediately to mitigate risk?

If needed, where can I locate and secure

alternate sources of these parts? Should I

redesign my product?

What parts will be discontinued by

manufacturers? Have any been discontinued

already? Which ones?

How do I avoid counterfeits? Do I have any

today that I don’t know of? What specific

lots of parts are counterfeit?

If a highly constrained supply chain

persists – or parts were discontinued – what

safer open market part sources exist?

We’ll Show You: Free Offer for Attending TodayMust email ProductMarketing@IHS.com or our exit survey to qualify.

Conflict Minerals Origin: Conflict-free tantalum.

Supply Flow: Tantalum capacitors, have already

been in short supply now for over 12 months.

Likely Rise in Counterfeit Part Activity:

Just prior to Japan quake, the senate launched

congressional investigation counterfeit parts risk.

Among reasons, a 2010 study by the Commerce

Department found the problem of counterfeit parts

touched nearly 40% of the DoD's parts supply

chain, and was getting worse.

Impact and Implications of Global Production:

•Global Reaction to Crisis will See Panic Buying

Creating Shortage and Pricing Issues

•Rolling Power Outages and Logistical Issues

Expected for the Next Several Weeks

•Production Disruption of Critical Materials such as

Poly Silicon, Photo Resists & Resins

•Components Impacted Include

NAND

DRAM

Standard Logic

Filters

Inductors

High-Value and High-End Aluminum and

Ceramic Capacitors

MOSFETs

Explicit: Conflict

Minerals Tracking

Implicit: Risk of

Counterfeit Parts

EXPLICIT: FREE ACCESS TO

IHS EIATRACK REGULATORY

TRACKING SOLUTION.

IMPLICIT: FREE ANALYSIS OF

ELECTRONICS FOR EXISTING

COUNTERFEIT RISK.

Copyright © 2011 IHS Inc. All Rights Reserved. 47

Dynamic Nature of Extended Supply ChainsYour supply chain operates in the dynamic context of external forces…

Material

Mfrs.

Component Mfrs. Product Mfrs.

(OEMs and EMS)

End Users

Supply

Products

Components

Demand

Materials

Product Trends:

• Technology

• Features

• Cost

• Energy Efficiency

• Competitive

Dynamic Context

Regulations:

• RoHS

• WEEE

• REACH

• Conflict

Minerals

Part Trends

• Technology

• Demand

• Supply

• Obsolescence

• PCNs

Economy

• Market volatility

• Product demand

Application Markets

Unique Trends & Pressures

• A&D

• Consumer

• Medical Dev.

• Telecom

Supply

• Natural Disasters

• Raw Materials

• Regulated Materials

Costs

• Supply

• Energy and Shipping costs

Product Stewardship and

Extended Producer

Responsibilities

Copyright © 2010 IHS Inc. All Rights Reserved. 48

Electronics Example: EU RoHS TransitionContinuity of product lifecycles, supply chains, and markets

Business Pressures Influencing

ProductsDrivers of innovation and lifecycle decisions.

Product Lifecycle Stages

Products

Parts/Materials

The Supply Chain ProblemOptimizing supply to meet demand.

Introduction

Growth

MaturityDecline

Phase-Out

Obsolete

Copyright © 2010 IHS Inc. All Rights Reserved. 49

RoHS Transition Forced Lifecycle Changes2M+ new parts, major part changes, and over 20% of EOL in ‘06-07

2003 2004 2005 2006 2007 2008 2009

End of Life (EOL)

Specific to RoHS/Pb-free Environmental Compliance

2003 2004 2005 2006 2007 2008 2009

New Product Introductions (NPI)

Specific to RoHS/Pb-free Environmental Compliance

2003 2004 2005 2006 2007 2008 2009

Product Change Notices (PCN)

Specific to RoHS/Pb-free Environmental Compliance

Transition to RoHS

NPI

EOL

PCN

RoHS in Force July 1, 2006

Copyright © 2011 IHS Inc. All Rights Reserved. 50

2003 2004 2005 2006 2007 2008 2009

End of Life (EOL)

Specific to RoHS/Pb-free Environmental Compliance

Product Lifecycle Planning,

Predict Obsolescence

KPI: Increase in EOL,

Indicate Shortages

KPI: Rise in

Price/Lead Time

KPI: Rise in Counterfeit

Incidents

The Ripple Effect of RoHS was Costly Ripple effect of product trimming to shortages and counterfeits…

Ripple Effect

…mission failure!

Economic downturn…

… RoHS compliance…shortage… …fake parts…

Introduction

Growth

MaturityDecline

Phase-Out

Obsolete

As Shown By Key Performance Indicators (KPI)

Copyright © 2011 IHS Inc. All Rights Reserved. 51

EU REACH is Expected to be MORE CostlyEuropean Commission roadmap includes 106 priority SVHC by 2012

Source: “EU and industry REACH different conclusions”, Jane’s, September 2009

“Airbus UK’s director of operations and compliance, said the cost of REACH had

been evaluated at several million Euro over three years, with provisions up to hundreds

of millions of Euro over five years”…

“…[He] said there is a level of ambiguity because it will depend ‘on the substances that will finally be added to the candidate list and in Annex XIV’. Airbus UK has set its

2009 REACH budget at some EUR12 million.”

Copyright © 2011 IHS Inc. All Rights Reserved. 52

Explicit: Fines for REACH non-complianceby country and type (administrative vs. criminal)

Copyright © 2011 IHS Inc. All Rights Reserved. 53

2004 2005 2006 2007 2008 2009

Gross EOL by YEAR ENDING 2004 - 2009Gross EOL by MONTH 2008

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

0

206

619EU REACH SVHC PublishedLehman files

Chapter 11

EOL by MFR due solely to demand/sales forecast.

Economic Recession and Chemical Restrictions: The two most dominant factors in the 300% increase of End of Life (EOL) for electrical components exiting 2008.

Implicit: REACH supply implications felt alreadyMaterializing within manufacturer EOL decisions

4

Source: IHS Component Insight, 2010

Copyright © 2011 IHS Inc. All Rights Reserved. 54

EU RoHS Recast

EU REACH & SVHCSIN List - Substitute It Now!

US California Proposition 65

EU Battery DirectiveENERGY STAR

ISO 14064 GHG Standards Norway PoHS

Carbon Disclosure Project (CDP)

Electronic Product Environmental

Assessment Tool (EPEAT)

Japan Green

Priority Declarable Substances List

(ASD PDSL)

Environmentally Preferred Products (EPP)

Regional Greenhouse Gas Initiative (RGGI)

PCF - Product Carbon Footprint

UN Stockholm Persistent

Organic Pollutants (POPS)

US FDA

China RoHS

Thailand’s ―RoHS‖

US EPA Executive Orders

Toxic Substances Control Act (TSCA)Health Canada / Canada’s Chemical

Management Plan

Customer RFP

Full Material Disclosure

Product Content Disclosure

Lifecycle Assessment (LCA)Water

Hazardous

Substances

Energy

Waste

DEHP-Free

Bisphenol-A “BPA Free”

Volatile Organic Compounds

Air Safety

Health

Security

Natural Resources

Argentina RoHS

Greenpeace

EU Medical Device Directive

EU RoHS and WEEE

Directives

But… This goes way beyond RoHS & REACHDisruptive ripple effect throughout global supply and demand balance

Conflict Minerals

Copyright © 2011 IHS Inc. All Rights Reserved. 55

Product Implications: Redesign & InnovationSupply Chain, Lifecycle, Engineering, Sales, Operations

RoHS Directive

Requirements Start

REACH

Phase 2 Reg. Deadline

20122011201020092008200720062013

REACH

Pre-Registration

REACH

SVHC Reporting StartsREACH

Phase 1 Reg. Deadline

RoHS

Recast

Existing Product

Portfolio

Analysis of existing portfolio products with respect

to:

• Environmental Compliance

• Supply Chain

• Product Sustainability

Design / Redesign with respect to

• Environmental Compliance

• Supply Chain

• Product Sustainability

• Brand

• Social Responsibility

• Inventory optimization (avoid E&O)

• Risk Avoidance and Management

Future Product

Portfolio

Today FuturePast

Copyright © 2011 IHS Inc. All Rights Reserved. 56

What to do: Regulations Tracking with EIATRACKCurrency and P-D-C-A change management are essential

• What regulations affect your products?

• Proposed, pending, enacted legislation?

• Challenge:

• What regulations must your products comply

with?

• What are your state’s take-back requirements?

Copyright © 2011 IHS Inc. All Rights Reserved. 57

Internal or 3rd Party

Internal or 3rd Party Sourcing

What to do: Mitigate Risk—Parts and MaterialsContent Sourcing or Assessment of parts and materials

Internal

Database Corp

Parts

Reference Databases

(3rd Party and

Consortiums)

www.url.com

Mfr.

Web Sites

Direct

Sourcing

Processing

and

Clarifications

PLM, BOM

Mgmt.,

Compliance

Mgmt.

Information Flows Physical Flows

Parts Lists

Product

Mfr.

XRF

Incoming

Inspection

Part

Mfr.

Info Sync,

Mfr. Trending DB

Copyright © 2011 IHS Inc. All Rights Reserved. 58

What to do: Mitigate Obsolescence and Design Risk Track and manage risk due to material composition changes, EOL Notices

IHS® PCNalert Summary Index for Mar 29, 2011 ( 9 Notices )

Manufacturer Alert Type Affected Parts DocumentID Action Date Countdown From

Mar 29, 2011 (days)

Vishay Dale

Electronics

PCN -Assembly

Process Product

Families

40PCN-DR-003-2011

Rev 0Sep 04, 2011 159

Description

1) Resistive Ink Material obsolescence: Replace Dibutyl Phthalate with Dibutyl Sebacate as the solvent; and replace Antimony

with Titanium as the TC modifier. 2) Dielectric Glass material change: Continuous Improvements for improved acid-resistance.

REASON FOR CHANGE:1) Resistive Ink Material obsolescence driven by RoHS and SVHC initiatives. 2) Continuous

Improvement on the dielectric glass (passivation over the resistive layer) for increased acid-resistance during plating.

International

Rectifier Corporation

Suspected

Counterfeit Notice1 20110321-01 ,

Description

IHS & ERAI would like to inform you of reported substandard or suspected counterfeit part activity in the market concerning

the part.

EPCOS

PCN -

Molding Other

RoHS/WEEE

Compliances

48 110315IN1e Jul 31, 2011 124

Description

Discontinuation of present molding material in yellow color announced by the material supplier. Switch over to new, black molding

material to ensure continuous supply of products to customers. New molding material has halogen content level below 900

ppm and black color.

Copyright © 2011 IHS Inc. All Rights Reserved. 59

What to do: Mitigate and Avoid Counterfeit RiskTrack and Manage Counterfeit Part Risk

Copyright © 2011 IHS Inc. All Rights Reserved. 60

What to do: Electronics ComplianceSteps to take to mitigate implicit and explicit risk

• Regulations Tracking with EIATRACKCurrency and P-D-C-A change management are essentialTrack Regulations

• Mitigate Risk of Non-Compliance —Commercial Off the Shelf (COTS) PartsInformation Sourcing

Mitigate Compliance Risk for COTS Parts

• Mitigate Risk of Non-Compliance—Custom Mechanical PartsInternal Specification; Industry Standard or Branded Sourcing

Mitigate Compliance Risk for Custom Parts

• Mitigate Obsolescence and Design Risk Track and manage risk due to material composition changes, EOL Notices

Mitigate Obsolescence & Design Risk

• Mitigate and Avoid Counterfeit RiskTrack and Manage Counterfeit Part RiskAvoid Counterfeits

Copyright © 2011 IHS Inc. All Rights Reserved. 61

• What is industry’s role in this?

• ―We must all hang together, or

assuredly we shall all hang

separately‖

• —Benjamin Franklin

• Why the supply chain?

• ―Ninety percent of leadership

is the ability to communicate

something people want‖

—Dianne Feinstein

In Summary: Manage Explicit and Implicit It is critical

Well-known public quotes referenced to reinforce

themes in this presentation. They should not be

construed as agreement or endorsement.

Copyright © 2011 IHS Inc. All Rights Reserved. 62

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Questions & Answers

Paul E. HagenPrincipleBeveridge & Diamond, P.C.

Scott Wilson Content Solution Strategist

IHS

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