Can compliance reporting really revolutionize business and increase sales? Compliance is often perceived as an expensive nuisance, and sustainability as a topic du jour, to be managed until it passes. Is a paradigm shift appropriate and needed in our thinking about compliance, sustainability, and our ongoing businesses’ health and vitality?
There are historical examples of comparably unpopular paradigm shifts. When Henry Ford developed the first assembly line to build automobiles, his contemporaries thought he had lost his mind—that unskilled labor could never build something as complex as an automobile. It took a while to resolve the major kinks, but it led to affordable products, standardized tooling and products, work process and product instructions, and worker and environmental safety.
Similarly, the space program was first seen as a technology with military applications, and the U.S. was lagging behind. There was much resistance in the U.S. to the space initiative, yet it gave birth to many technologies we take for granted today, including personal computers, cell phones, improved battery technologies, broad-use ceramics, and foam insulation.
In the 1990s and 2000s, automotive end-of-life (ELV) legislation focused upon reduction of heavy metals in vehicles. How much did ELV push us to consider using new materials that led to progress in other areas, such as lightening our vehicles, gaining fuel efficiency, improving operator and passenger safety (crumple zones vs. solid metal), increasing product life (less rust), etc. New regulations and compliance continue to compel us to better understand our products and to delve deeper and broader into our products. Regardless of your position in the supply chain, you need to be keeping track of what is in your product and how it is being used.
Compliance and sustainability generate new opportunities. A current example is the Toyota Prius. Back in the 1980s, the U.S. EPA began pushing OEMs to have fleet mile-per-gallon (MPG) improvements. Toyota was a leader in compliance with these legal regulations in the U.S. When the first Prius was released in 1997, the vehicle had less than universal acceptance, but now approaching its 20th year in production, the Prius has long since secured a strong position in the market. The Prius is a solid example of turning compliance into sustainability.
These examples indicate there is evidence that new regulations and new product innovation have some correlation. RoHS and REACH are hitting electronics heavily, and the electronics industry has made huge strides in new display technologies, wearables, flexibles, etc. REACH is also hitting polymers and pigments. These regulations create opportunities, and we’ve already seen substantial changes in insulators, flame retardants, coatings, and textiles.
A Real Difference
Is there a real difference between compliance and sustainability practices? From a business process perspective, both compliance and sustainability require the same types of current information and well-established formal communication channels between suppliers and customers. Yet most companies have a process for compliance and a process for sustainability. Compliance and sustainability have the potential to change how product management is viewed, and they share objectives as well: Both need to reduce operational costs and increase revenue, productivity, quality, and profitability. The objectives are to strengthen employee engagement; minimize environmental, social, and resulting reputational risks; establish reliable supply chains; enhance relationships; and increase levels of trust with customers, suppliers, and the broader community.
Compliance is beneficial throughout and beyond the enterprise and should be embraced by all aspects of the business. Successful enterprises will be those that embrace compliance, leverage compliance reporting tools to help better understand products, and work to improve the lives of all their stakeholders — because compliance is an indicator of where industry is going and what our clients are going to buy.
Compliance is a powerful agent for change and improvement. Plan for compliance. Let it help you grow your business. Embrace it.
Chuck LePard and Marelle Fogel are Americas Representatives for IMDS and CDX, and product engineering, manufacturing, and compliance consultants at DXC Technology. DXC Technology was created April 3, 2017, through the merger of HPE Enterprise Services and CSC, and was a Platinum Sponsor of the 2017 AIAG Corporate Responsibility Summit. Chuck is a member of AIAG's Conflict Minerals and Chemical Management & Reporting Workgroups, the Chemical Management & IMDS Summit Planning Committee, and co-chair of the Chemical Management Recommendations and Documentation Subgroup. Chuck and Marelle support over 50,000 IMDS and CDX users throughout the Americas.