Chemical manufacturing has always been a volatile industry, with ongoing pressure from product commoditisation, material volatility, fluctuating markets and, now, coronavirus (COVID-19).
As supply chains are disrupted and new systems put in place, it’s vital that your operational methods are watertight in order to meet the changing complexity of regulatory requirements.
Here, we look at the challenges in integrating traceability data systems across the business, and solutions to ensure that you submit quality data for inspection for different regulatory bodies.
Be ready for regulatory change
Chemical manufacturing is highly regulated, and it’s a day-to-day challenge to ensure your business is both following and up to date with regulatory change.
Government regulatory bodies with strong enforcement capabilities continue to mandate new processes and procedures. You’ll need to comply with many of these if you want your business to avoid punishment.
If your business is operating in different countries, you must be ready to meet with evolving industry standards and agreements created by regulatory bodies. These include:
Global harmonised system (GHS)
The GHS is a global system for classifying and communicating the hazardous properties of industrial and consumer chemicals.
Although the GHS isn’t a legally binding international agreement, many countries have created local or national legislation to implement its criteria.
Registration, Evaluation, Authorisation and Restriction of Chemical Substances (REACH)
REACH is a European Union (EU) regulation that asks businesses to identify and manage the risks linked to the substances they manufacture and market in the EU.
To comply with the rules, you must demonstrate that you safely use materials, as well as show evidence of communicating risk management measures,
Strategic Approach to International Chemicals Management (SAICM)
SAICM is a global policy framework to foster the sound chemical management of chemicals throughout their lifecycle.
Depending on the size and location of your business, regulations will differ. Still, you’ll know that regional standards and regulatory compliance have become a basic necessity for any chemical manufacturer.
Product labelling regulations mandated by governments can mean the difference between market entry and exclusion.
It’s also becoming more common for the public, customers and lawmakers to raise environmental issues, with plastics in particular pinpointed as an area of concern.
These regulations are likely to increase, with more pressure on your business to reduce, recycle and innovate in the name of the circular economy.
Process manufacturers in general report risks in not having supply chain traceability, with serious concerns around incidents hitting the value of the brand in addition to not meeting regulations.
Complying with regulatory change through traceability
Regulations mean you’ll have to capture and store data from operational processes, for example, in case there is a quality audit or recall.
This will also allow you to flag errors in the method of manufacturing your chemical products. After all, with complicated manufacturing processes, it can be easy to introduce issues that can impact the quality of your product.
Only by analysing processes end-to-end can you truly track how effective they are.
At a challenging time, it’s not enough to rely on assumptions or guesswork in any decision making. You need to understand the real cost of your operations.
The only way you can build an argument for organisational change is through the visibility of operational inefficiencies.
Then you can gain the upper hand over your competitors, who may be holding back on investment in the technologies needed during tough times.
You will have to integrate traceability data systems across the business so you can submit quality data for inspection for different regulatory bodies.
As regulation complexity grows, the challenge is to ensure data can be made available and traceable across the business. You may have to implement new technology to integrate a traditionally siloed workplace.
What technology do you need?
For better traceability, you should look for technology that you can apply in a VUCA (volatile, uncertain, complex and ambiguous environment), ensuring it can seamlessly fit into your business model and is not just a one-off solution.
You’ll want to bring all your critical data together across enterprise resource planning (ERP), customer relationship management (CRM) and manufacturing operations to achieve better outcomes, and reduce inefficiencies in your supply chain manufacturing and financial systems.
When it comes to traceability, ask yourself questions such as:
- Do I have visibility of my core manufacturing processes?
- Can I fully trace products quickly and efficiently?
- Do I fully understand how much production is costing?
In addition to transparency and traceability, look for technology that provides:
- A complete view of your global operation. It would help if you had an understanding of worldwide distribution to third party supply chains across borders with ever-higher levels of competition. Look for a complete view of your ecosystem, extending into supply chains.
- Optimisation to help you achieve environmental responsibility. Look for the insight and capabilities you need to manage renewable raw materials, source responsibly and improve production methods.
- A way to focus on innovation where it matters. You’ll want to use business insight to see where investment will deliver the best return, adapting quickly to meet specific customer needs ahead of the competition.
- The ability to better tailor your offerings by market. This will help you fight against stiff competition from local markets who may charge less.
- Product and process consistency. It would be best if you looked for robust single and multi-level bill of materials management to ensure the highest levels of product consistency, quality and collaboration.
Final thoughts on why traceability can improve your whole operation
Through the visibility afforded by traceability, you can significantly improve your operation. Compliance issues can lead to unhappy customers, damaged reputations and significant fines.
Traceability helps to avoid those problems, leading to a capability that is particularly important for process manufacturers – the ability to recall products.
With the right information, you can promote efficiency and improve decision-making through traceability. You can:
- Monitor for regulatory compliance – avoiding compliance issues that leads to unhappy customers, damaged reputations and significant fines
- Support product recalls
- Promote efficiency and improve decision-making
- Better manage materials
- Monitor a need for new materials
- Improve demand planning
- Better manage logistics
- Arrange better terms with suppliers.
Recommended Next Read
How CFOs can rebuild their businesses post-pandemic
Never miss an episode
Subscribe by email and get Sound Advice delivered to your inbox every two weeks with the Sage Advice newsletter with a ton of related articles, templates and problem solving guides for small businesses so you can put our sound advice into practice.