Why should we manage chemical risks?
Supply chain management is now not only about deliveries, lead times, logistics, optimisation, stock replenishments and prices, but also managing possible chemical risks that may surface in the product or a production process.
In a report by Frost and Sullivan on Chemical & Material Practices, one of the Megatrends identified for companies to focus on (besides functionality, low carbon economy and globalization) is ‘Health and Wellness’. (Megatrends are long-term global transformational processes and arise at the interplay between what is happening to us as individuals and changes happening to the world at large). There is a growing trend of Consumers wanting companies to be ‘transparent’, that is, provide more information on what is in a product and how ethically it has been made. “Being Green” is the new mantra for apparel brands to make a cutting- edge differentiation in today’s competitive market.
Our world is rapidly changing. There has been more information produced in the last 30 years than in the last 5000 years. The internet has revolutionised the way we work, travel and connect with people. The world of chemicals is also changing fast with new new toxicological findings. What was used freely till yesterday is identified as a Substance of Very High Concern (SVHC) – based on its toxicological study – and its usage is banned or restricted. Developing countries are recognising that chemical- intensive products and the negative impacts of their production processes is reaching alarming levels and are tightening the regulations and pollution norms. Keeping up with global regulations such as REACH, CPSIA and GB Standards will be an enormous challenge for Brands and their supply chains. NGO and Social Media campaigns about chemical ‘transgressions’ by responsible Brands can make or break a Brand’s corporate reputation. The recent ‘Detox Now!’ campaign by Greenpeace to highlight hazardous chemicals used and discharged in the supply chains and products of several global apparel brands is a case in point!
There are 4 main reasons that companies manage chemical risks:
- Brand & Reputation enhancement: Several global apparel brands have built a reputation of ensuring consumer safety by ensuring conformance in their supply chains to chemical restrictions through their ‘Restricted Substances Standards’, which was a list of substances subject to a usage ban for production of their articles. Minimising chemical risks enhances a Brand’s image and its reputation.
- Gaining a competitive edge: In order to differentiate their product offerings, some Brands have built-in the principles of sustainability in their Business Strategy. ‘Eco’ or ‘Green’ or ‘Organic’ are the new buzz words that help to drive up consumer trust in products against other competition
- Innovation: Some Brands have used sustainability and chemical compliance as a tool for innovation. Patagonia’s “Because denim if filthy business” or Levis’ Water<Less jeans” are a case in point.
- Saving costs: Managing chemical risks can – many times- drive down costs since using ‘green’ or ‘bio’ chemicals can help to reduce costs of effluent treatment as well as resources such as water and energy that go into making a product. Use of enzymes to replace hazardous chemicals in bleaching and finishing of garments are increasing due to this fact.
How can Brands manage chemical risks?
Brands can adopt the “SEAM” Approach to manage chemical risks in their supply chains. SEAM stands for:
Measure & Monitor
- Set-Up Program: A Brand can set- up a ‘Working Group’, with defined responsibilities, that drives the commitment to manage chemical risks. The Working Group should define the Program Scope, timelines, milestones and budgets. An important aspect is to map the supply chain and document vendor data such as organization structure, volume of business, level of influence, long- term relationship, vendor capabilities, geographical locations, type of product sourced, etc. It is important that there is a ‘Buy-in’ to the program by all stakeholders involved.
- Evaluate: This step involves evaluation all tiers of the supply chain with respect to their understanding of chemical compliance issues, internal purchasing practices, risk assessment of their chemical inventory, oversight of their upstream suppliers, chemical storage & handling practices and waste management. This information will help to identify the gaps in your supply chain chemical management readiness and plan actions to ‘plug’ them.
- Actualize: This involves implementing actions to ‘plug’ the identified gaps. It will require training of vendors on chemical management topics, building competencies at each supply chain level for chemical management, implementing control measures for identified chemical risks at upstream suppliers, phase- out and substitution of ‘risky’ chemicals at supplier facilities and screening input chemicals and raw materials used in the Brand’s products through Supplier Declarations and random testing.
- Measure and Monitor: This can be done through due diligence testing of finished products and of discharges/ emissions to water and air, regular review of chemical documentation and planning corrective actions for continuous improvements. A digital platform to record and share chemical management data across the tiers of a supply chain can be designed and implemented to monitor real-time progress and compliance.
A holistic approach of input chemical management, process controls and output controls at supplier facilities will be required to ensure that chemical risks are reduced and finally eliminated from all levels of the supply chain.