RoHS2 and Conflict Minerals

Today’s medical device manufacturers need to contend with an ever-increasing number of government regulations and customer requirements. However, what has really caught the attention of C-Level executives regarding the latest regulations, RoHS2 and Conflict Minerals, is the significant revenue risk associated with them.

RoHS (Restriction of Hazardous Substances) first went into effect in 2006. It mandates that producers of certain categories of electrical and electronic equipment are not allowed to place products on the European market if they contain six banned substances: lead, mercury, hexavalent chromium, cadmium, polybrominated biphenyls, and polybrominated diphenylethers flame-retardants. While medical devices were excluded from the original RoHS scope, EU legislators published RoHS2 (Directive 2011/65/EU) which became law in 2011. It states that beginning July 22, 2014, RoHS requirements will apply to medical devices, putting European revenue streams at risk.

Europe is not alone in releasing impactful new product material regulations. As part of the U.S. Congress enacted Dodd-Frank Wall St. Reform Act legislation, the Conflict Minerals Law requires publicly traded U.S. companies to begin tracking for the presence of conflict minerals (tantalum, tin, tungsten, and gold) and determine if the country of origin for the conflict minerals was the Democratic Republic of the Congo (DRC) or an adjoining country. This is because the U.S. Congress determined that the exploitation and trade of conflict minerals originating in the DRC is helping to finance conflict characterized by extreme levels of violence contributing to an emergency humanitarian situation. As a result, beginning in May 2014, companies will need to report their findings to the Securities and Exchange Commission (SEC). In addition to disclosing whether or not their products are DRC Conflict Free to the SEC, they must also post this information to their public websites., enabling customers, patients, and group purchasing organizations to factor this into their buying decisions.

What are the costs if your products fail to comply with RoHS and Conflict Minerals regulations? Recalls, brand damage, costly redesigns, and scrapped parts are just the beginning. The stakes are high – with potentially millions of dollars of revenue at risk. In order to satisfy these regulations, manufacturers may be required to provide regulators and customers with detailed reports demonstrating product compliance, while keeping up with frequent changes in product designs, parts, suppliers, and in the regulations themselves – an enormous data management challenge. Fortunately, solutions such as PTC’s Product Analytics help companies mitigate risk and ensure products are compliant.

Both RoHS2 and Conflict Minerals regulations add due-diligence requirements, which involve collecting and analyzing complex product and supply chain data. While the task of collecting information from all of your supply chain partners may seem daunting at first, there is no need to feel overwhelmed. Momentum is on your side. In recent years, the supply chain has matured when it comes to data collection. Standards are improving and information is becoming more readily available.

PTC’s Product Analytics solution automates supplier data capture and integrates with your existing enterprise systems for real-time bill-of-material and product data. The result is complete visibility into the materials and substances used in products. Additionally, as regulations evolve, or new sources of conflict-free minerals are approved for the Conflict Minerals law, PTC’s Product Analytics will keep your team up-to-date on the changes and the impact on product compliance status. The solution not only provides detailed reports to evaluate regulatory risk and satisfy customer and regulatory inquiries, but also generates reports to help satisfy customer requirements for environmental data, such as the Kaiser Permanente Sustainability Scorecard. Increasingly, this information is required by customers as part of the product evaluation process.

PTC’s Product Analytics solution tracks and manages the compliance of products beginning early in the innovation process and continuing throughout the product lifecycle. Medical device companies understand that a problem found in manufacturing or in the field can be tens or even hundreds of times more costly to address than the same problem uncovered early in planning and design phase. Given the revenue risk, the need to collect detailed information from your entire supply chain data, and the long product development and government approval processes for medical devices, companies must begin preparing for these regulations now.

PTC Inc.
Needham, Mass.
www.ptc.com