Developing Product Safety Compliance and Testing Management Programs Sonal Sinha Associate Vice President Industry Solutions MetricStream Manu Gopeendran Associate Director Marketing MetricStream
Federal Regulations Federal Trade Commission (FTC) Care labeling, fiber content labeling, environmental labeling, country of origin labeling, advertising etc. Consumer Product Safety Commission (CPSC) Children s products, hazardous substances, Flammability Drawstring safety and Tracking label requirements Environmental Protection Agency (EPA) FIFRA, Toxic Substances Control Act (TSCA) Customs and Border Protection (CBP) Country of origin for most imported products U.S. Department of Agriculture (USDA) Organic claims
EPA Regulations & Violations Company Year Fine Program Allegation(s) Family Dollar 2013 $602,438.00 FIFRA Misbranded Pesticide Wal-Mart 2013 $110,700,750 RCRA, CWA, FIFRA, Hazardous Waste Management, Criminal Fines, State Distribution of Misbranded law Pesticides, HW Disposal Down Drains, etc. Home Depot 2013 $8,000,000.00 CAA High levels of VOC (coatings +) Walgreens 2012 $16,600,000.00 RCRA, Customer Records Hazardous Waste Disposal, Mismanagement of Customer Records Costco 2012 $3,600,000.00 RCRA Hazardous Waste Disposal CVS Pharmacy 2012 $13,750,000.00 RCRA Hazardous Waste Disposal Home Depot 2011 $30,000,000.00 CAA High levels of VOC (coatings +)
Consumer Product Safety Improvement Act Mandatory Third- Party Testing and Certification for Children s Products (CPC) Requires well-defined testing strategy Sampling and Testing Plans, Testing Intervals Procedures for periodic testing and retesting due to material changes Policies and training to avoiding undue influence over testing labs Recordkeeping and documentation Corrective Actions Product specification management Restrictions on specific chemicals Certification of Non-children s products (GCC) Regular updates, amendments and changes from CPSC
CPSC Port Surveillance Exponential Increase in # of Units Stopped
Toxic Substances Control Act (TSCA) Lack of updates and effectiveness of federal oversight resulted in creation of state chemical laws 18 states have passed 71 chemical laws since 2003 Pending major overhaul of TSCA (Chemical Safety Improvement Act) could impose significant new burdens Mainly applicable for manufacturers of chemicals and mixtures, processors as well as importers Current list has 84,000 chemicals of which only 5 of them have restrictions Requires reporting, recordkeeping, and testing of chemical substances and mixtures Restrictions on manufacturing, processing, distribution, or disposal of certain substances May require testing if chemicals present unreasonable risk of injury to health or the environment and there is insufficient data to determine its effects
California Proposition 65 (Prop 65) Currently has 800 chemicals in the list and its updated yearly Once a chemical is listed, businesses have 12 months to comply with warning requirements Requires warning label on products / posters in workplace, leaflet distribution Prohibits businesses from Knowingly discharging listed substances into drinking water sources Land where the substances can pass into drinking water sources Potential reform of Prop 65
California Safer Consumer Products Regulation Created/Enforced by California Dept. of Toxic Substances Control (DTSC) Applicable from Oct 1, 2013 and relevant for Manufacturers, Retailers, Assemblers and Importers that sell consumer products in CA Current Status List of candidate chemicals (CC) already available Already proposed 3 Priority products Upcoming DTSC will classify candidate chemicals associated with priority products as chemicals of concern (CoC) Final list of priority products (PP) in 2015
Sample Candidate Chemical List & Product Categories Candidate Chemicals Nonylphenol ethoxylates Per and poly-flurinated (PFOAs) Metals Nickel, Lead, Cadmium AZO Dyes Phthalates Solvents Product Categories Toys Apparel & Leather Footwear Cook wear Electronic products Water & Stain Resistant Coatings Automotive Components Waxes Paints Personal-care products Medical devices
Steps / Actions Required After DTSC Finalizes Priority Products Notify DTSC with details of PPs that they sell and the course of action decided Cease sale / production of products Remove / Replace chemical of concern (CoC) from products Prove that products contains less than threshold amount of CoC and has quality controls in place Perform alternatives analysis, identify alternatives and propose implementation plan Actions required based on DTSC response Change existing / additional labels to warn consumers on chemicals Cease sale / production of products Restrict usage of chemicals Implement safety measures or end-of-life management plans Additional commitments to make products safe
Other State Regulations Washington Children s Safe Product Act Currently include list of 66 chemicals Manufacturers of children s products containing Chemicals of High Concern to Children (CHCC) must annually report Maine Toxic Chemicals in Children s Product Law Currently include list of 49 chemicals Requires reports and notifications on the use of chemicals Vermont Identify and publish list of chemicals by July 2015 Requires notification and replacement of chemicals
And the List Continues Connecticut: An Act Concerning Child Safe Products Illinois: Toxic Chemical Safety Act Minnesota: Children s Health Protection from Toxic Chemicals in Products New York: An Act to Amend the Environmental Conservation Law, in Relation to Regulation of Toxic Chemicals in Children s Products Oregon: A Bill Relating to Chemicals in Children s Products
Increasing Testing Programs and Mandates from Retailers Changing testing protocols Going beyond legal requirements and actively enforcing testing for all products / SKUs Increasing testing requirements for certain product/shipment types Testing and inspections required for even legacy existing products
NGO and Social Media Impact
Proactive Approaches to Ensure Compliance Enforce policies & controls across supply chain Improve visibility and traceability in the supply chain Centrally manage multiple compliance programs Develop and implement a comprehensive testing strategy Identify potential risks and implement risk mitigation plans Quality Assurance and Control programs to ensure effectiveness Record retention programs to ensure all required documents are in place
Proactive Approaches to Ensure Compliance Enforce Policies & Controls across Supply Chain Product specifications, quality controls in the supply chain Communicate requirements to suppliers Supplier certifications to ensure hazardous chemicals are not in the products Training and capacity building programs to educate suppliers Improve visibility & traceability in the supply chain Which factories are producing List of retailers carrying them Detailed product specification Differentiate by design / manufacturing / contract manufacturing ownership Chemicals, Hazardous / Restricted substance lists Source of Raw-Materials and Ingredients Material change impact
Proactive Approaches to Ensure Compliance Compliance Management Centrally manage multiple compliance regulations, retailer / brand requirements by products, product categories and locations Link products, chemicals to regulations and compliance requirements Develop and implement controls to ensure compliance Harmonize controls to avoid duplication of effort Provide policies, compliance training to employees, and means to report concerns Regulatory Intelligence to manage changes to compliance requirements Testing Strategy Risk-based testing for high risk chemicals Collaborate with suppliers and third-party labs on testing and certifications Centrally manage testing requirements, plans, protocols, schedules etc. Sampling strategy Production testing, Periodic and Random Testing Remediation action plans for test failures
Proactive Approaches to Ensure Compliance Risk Management Suppliers, products, components, chemicals and materials etc. Risk identification, analysis, assessment and mitigation Assess impact and likelihood for various risk types and categories Leverage risk metrics to prioritize programs and tasks Quality Assurance & Control programs Assessments of suppliers, manufacturing facilities, production, processing, transportation, storing processes etc. Final & In-line Inspections Leverage both external and internal auditors Record Retention / Documentation Bill of materials, Product specification Supplier Declaration, Test results, Material changes, Certifications etc.
Quality Management & EU Product Safety Leading French Retailer Ensure compliance with upcoming 2015 EU product safety compliance requirements Automate, and integrate End-to- End quality assurance Inspection Management Quality Audit Management Product Risk Management Product Testing Product & Supplier Nonconformance Investigations and root cause analysis Preventive actions, and curative actions including product blocking, and recall management
Integrate Safety Compliance into Product Lifecycle Sustainability Recycling Creation & Design General requirements Regulatory requirements Standards & certifications Customer Complaints & Claims Product Recalls Disposal Distribution / Retail Process controls Audits & certification Issue & CAPA Production Testing Development Testing Materials & Specifications Test plans and requirements Packaging & labeling requirements Product Integrity Raw materials, specifications, RSLs Tracking / traceability
Collaborate with other Supplier Assurance Programs Product Information Quality & Safety Standards Risk Analysis & Hazard Reduction Quality & Production Capacity Audit Product Compliance Product Testing NCM & Corrective Action Supplier EHS policies Raw Material Sourcing Environment Responsibility Audits Fire & Building Safety Audits Waste Generation, storage and disposal Energy Use, Transport, GHG Emissions Supplier On- Boarding Supplier Information Management Policy Communication Third-party Due- Diligence Supplier Governance Supply Chain Structure Security Policies Record Retention & Evidence Risk Assessments & Analysis Self-Assessments & Internal Audits Supplier & Factory Audits Inspections CSR Policies Supplier Surveys and Self-Assessments Supplier & Factory Audits Compliance Monitoring NCM & Corrective Actions Capacity Building Programs
Automating Supply Chain Governance Optimizing the efficiency and agility of a supply chain governance program I ve gotten really good feedback from the business units and teams that are using the system. They like having something that they know is going to work. They like knowing that they re not going to get 20 different emails. It s really easy from my standpoint too. When I log onto the system, I can see what projects people are working on, where we re at, what s overdue it just makes life easier. Susan Van Houten - Senior Director of Global Sourcing at HD Supply
Maturity of the Product Quality & Safety Compliance Program Strategic Effectiveness Supplier dependent; Relies on Tier 1 suppliers for all relevant information, lack of effective product documentation Basic Multiple programs and fragmented approach; Safety & quality policies, processes in place to address after adverse events Reactive Integrated Integrated approach to quality and safety programs; Centralized and collaborative approach with suppliers Proactive Embedding culture of quality and safety; management commitment, risk-based approach Maturity of the Product Quality & Safety Compliance Program
Integrated GRC & Quality Management Automate, and integrate multiple governance, risk, compliance and audit management programs Quality & Safety Compliance Supplier Governance, Risk and Compliance Legal, Corporate & Regulatory Compliance Enterprise Risk Management Internal Audit IT GRC
Technology Strategy for Product Safety Compliance and Testing Management Programs
Automate and Integrate Relevant Programs Information Management NCM & CAPA Policy & Compliance Product Compliance Validation Management Risk Management Testing Management
Leverage Robust and Flexible Information Model Area of Compliance Functions Product Information Risks Controls Tests GPSD Standard 1 Materials Risk 1 Control 1 Test Plan CPSIA Standard 2 Specifications Risk 2 Control 2 Survey CA Prop 65 CCPA Standard 3 RSLs Risk 3 Control 3 Self-Assessment Assertions Policies/Documents Assessment Issues Assertion 1 Assertion 2 Procedure 1 Document 1 Work Instruction 1 Risk-Based Requirement-Based Business Unit-Based Action Plan Implement Monitor
Automation to Enhance Collaboration Alerts and notifications for regular communication to stake holders Collaboration between suppliers and third-party testing labs Supplier surveys to gather information Automate and manage Product Testing, certification etc. Collaborate with suppliers to remove / replace candidate chemicals Manage non-conformance & corrective actions Capacity Building & Training Programs Suppliers Organization Testing Labs
Supplier Information & Product Specification Management Capture and map relevant product information from supply chain Include components, raw-materials, specifications, chemicals, thresholds etc. Automate material change process Compliance Regulation Raw- Materials Product Chemicals Supplier Country of Origin Facilitate supplier declaration through supplier surveys Leverage BOM, MSDS etc. Manage supplier and sub-supplier information, labs, third-party auditors Manage relationships between supplier, product, material, attribute and compliance Enable traceability and visibility across the supply chain
Policies for Effective Compliance Create, communicate and manage policies, controls & expectations Product safety Create & Organize Policies Compliance Testing Quality Update procurement and supplier policies to facilitate compliance Policy Exception Management Tracking and Visibility Map Policies to Standards & Compliance Requirements Harmonize & Map policies to multiple compliance requirements Supplier Surveys & Assessments Capacity Building - Awareness and Training Regular training & capacity building programs on regulations Collaborate with suppliers on policy exceptions and potential risks Leverage supplier surveys & assessments to ensure compliance
Centrally Manage Multiple Compliance Requirements Create centralized compliance library CPSIA, TSCA, Toy Directive,, WA, Maine, CA Prop 65 Map Standards & Requirements to Products Leverage regulatory intelligence Identify new requirements updates on existing requirements Facilitate compliance assessments through surveys and audits Store and manage certifications Monitor and track compliance violations, progress of corrective and preventive actions
Case Study: Fortune 500 Retail Chain Streamlining and integrating compliance programs across BUs and functions Integrated framework to streamline compliance with HR policies and procedures, training and certification requirements, privacy policies, diversity affairs, legal requirements, risk management, internal audit, IT security and SOX Selected MetricStream for its flexible and extensible data model and reporting capabilities that are designed to support multiple regulatory requirements in an integrated manner
Product Testing Management Product & Chemical Management Compliance Certification Management Test Planning & Management Product Testing Statius Test Failures & CAPA Management Test Requests & Data Gathering
Product Risk Assessment & Management Supplier & Product Risk Assessment & Management Identify and manage risks in central library Design hazard risk analysis Failure mode analysis for both design and production Regular risk assessments on products and suppliers Facilitate Risk-based audits, tests Create and manage controls & procedures including risk mitigation plans
Product Safety & Compliance Audits Audit Scoping Planning & Scheduling Audit Remediation Executive Program Management Audit Execution Final Audit Report Audit Review & Completion
Product Non-Conformance & Corrective Action Management Capture non-conformance from all program elements policy non-conformance Test failures risk assessments safety audits Customer complaints Collaborate with supplier and internal teams to develop and implement corrective actions Product Recall Track and Monitor implementation to closure
Monitor & Track Program Performance
Leading Retail Chain in South Africa Optimize and automate supplier information, inspection and audit management processes Integrated solution for auditing and reporting across stores, supplier manufacturing plants, warehouses and farms Facilitated collaboration with third-party auditors and suppliers. Suppliers can access any policy documents, templates, design artworks Allows suppliers to upload their certificates and customer complaints which in-turn can be accessed and reviewed by internal compliance team
MetricStream Corporate Overview Vision Integrated Governance, Risk & Compliance (GRC) for Risk-Driven Intelligence and Better Business Performance Solutions Store Audit & Loss Prevention Supply Chain Security Management Compliance Management Audit Management Policy & Document Management Supplier Governance, Risk & Compliance Social Compliance & Factory Audits Product Quality & Safety Compliance Risk Management EHS & Sustainability Partners Differentiators Recognition Technology - Enterprise GRC Platform 9 Patents Breadth of Solutions Single Vendor for all GRC needs Cross-industry Best Practices and Domain Knowledge ComplianceOnline.com - Largest Compliance Portal on the Web Leader in Gartner GRC Magic Quadrant: 2008 to present Leader in Forrester GRC Wave
Thank You Sonal Sinha Associate Vice President Industry Solutions MetricStream sonalsinha@metricstream.com Manu Gopeendran Associate Director Marketing MetricStream gmanu@metricstream.com