Hazardous Handling? Bring It ON!

In 2001, Christmas was spoiled for Sony when Dutch customs officers impounded 1.3 million PlayStations and 800,000 accessory packs worth more than $160 million. Environmental protection inspectors discovered these products were a potential threat because they contained up to 20 times the amount of cadmium deemed safe.

• The people at Dannon Company know how important ingredient accountability is throughout a process. Imagine having to scrap a production run of newly packaged strawberry yogurt because you discover the foil wrappers delivered to the line were for raspberry.
• Even a tiny bottle of nail polish can stop a distribution center project dead in its tracks, if you handle enough of those little bottles to classify you as a shipper of hazardous material.

These are just a few lessons material handlers have learned in their effort to do business in a world of ever-changing regulations. These regs are changing because the world in general is being changed by terrorism, technology, pollution, politics, litigation, legislation and other irresistible forces. This makes your job more important than ever. Part of your job is continuing education — yours and that of your supply chain partners.

"A lot of people think hazardous material is nuclear weapons, poison gas and TNT," says Roy Marshall, president of Regulations-Training Inc., and an instructor in hazardous material regulations. "They don't think alcohol and the kinds of things you find at home would be regulated by the government. That's why you have people shipping this stuff and they're not aware of it."

Every few years there's an update on international regulations and many shippers don't keep track of those. Then, when a regulator walks into their facility and finds they're using 1990s-era shipping descriptions, it shows they haven't kept up with the changes.

"I've never seen the environment for enforcement like it is today," Marshall says. "Companies that never or rarely got visits [from regulators] are now getting them annually. Along with that, companies are being fined and some of them are significant — in excess of $50,000 for a single undeclared box."

Of global concern
Hazardous material handling is a global supply chain issue. As the Sony PlayStation case illustrates, suppliers of subcomponents could cause a major kink further down your supply chain. That's why you need to understand every partner's contribution, from raw material to finished product. That understanding should encompass contractual terms, especially if you're dealing with a third party.

OEMs that outsource manufacturing of electronics products are finding compliance particularly difficult because finished goods often include components built by multiple tiers of suppliers. As a result of the Restriction on Hazardous Substances (RoHS), Waste in Electrical and Electronic Equipment and other legislation, companies are frequently held accountable for material contained in their products, including components or subassemblies they did not manufacture.

"Companies selling into the European Union [EU] should make sure which regulations apply to them in their business space," says Richard Kubin, chair of the National Electronics Manufacturing Initiative(NEMI) Project on Materials Composition Data Exchange, and vice president of Product Lifecycle Management Solutions at E2open. "Say IBM wants to import laptops into the UK. A lot of people are assuming that after July 1, 2006, a material declaration document will be required with each shipment. That's the case with any importation documentation describing the material in a product. That's not the case. The UK is leading in how it will support and regulate this. The approach is one of self-declaration. It will assume that any importer or distributor that puts product on the market in the UK after July 1, 2006, will be handling compliant product. The way they'll regulate that is by doing audits on the producers. It's the producers or the branding agents who are responsible. So in the case of an IBM branded laptop, it doesn't matter if it's sold by Circuit City or anybody else, it's IBM whose name is on it and IBM is responsible."

Tough implications
That means it's up to you as the brand owner to query your suppliers as to the technical material composition of the components they supply you. The material banned by the RoHS legislation includes lead, cadmium, mercury, hexavalent chromium and a few others. Fines for non-compliance in the UK are on the order of 5,000 pounds, but the implications are that it would seize your shipment and not let it be distributed within the country, as in the PlayStation case. Furthermore, an information network is being established across all 25 EU countries that if a product is found to be non-compliant, it will be broadcast to all 25 countries, and you could be shut out of those markets.

Under the RoHS reporting guidelines, suppliers are free to provide OEM customers with the necessary data on their products in a variety of ways. That could lead to a rather complex inventory management challenge.

"Some component suppliers will change their part numbers to reflect that they have gone lead-free and others will not," Kubin explains. Some suppliers won't change their part number, but they'll issue some kind of announcement or notification. From an inventory system level, you'll have to track that and keep them separated. We'll see some real allocation problems when this starts."

While you're building your database of information from all your component providers, the challenge will be to establish your own set of standards. Data exchange standards could help. Kubin has been involved in their development.

"I'm working with the National Electronics Manufacturing Initiative, which is a consortium working with some international standards bodies," he says. "The intention is to help manufacturers collect data at a level that will support their legal due diligence."

Keeping the food supply safe
In the food and grocery industries, due diligence is spelled HACCP. That stands for Hazard Analysis Critical Control Point, and it's a system dedicated to preventing contamination of the food supply chain. The system is legally required for the fish, red meat and poultry, fresh fruit and vegetable, and fruit juice industries.

With food supply chains going global, food hazards also go global. Witness the well-publicized examples of widespread food-borne epidemics, like mad cow disease. HACCP helps prevent and control such food-safety compromises, and helps identify the source of hazards. By initiating such programs, shippers do their due diligence by tracing and documenting supply chain glitches.

Information systems play a key role in setting up an HACCP program.

"A lot of companies, whether in food or other industries using hazardous material that can expire, have to be prepared for any type of disaster," says Dan Mahoney, director industry marketing, WMS solutions, Irista. "In the food-processing iningdustry, the recipe for a product has to be listed so if there's a person with a foodborne allergy he can avoid that food. The way to prevent such a situation is with a check-and-verify picking system listing the recipe, the product you have to pick, and the date range to prevent spoilage."

In Dannon's case, in addition to getting the packaging right, there are several post-production steps. When the finished yogurt comes off line, the cultures must go through an incubation period before product can be released for shipment. In the past, this was done with a manual system of placards showing date and time of the production run. These were applied to each palletload before it was placed in work-in-process storage. Finally, someone manually released these palletloads, sending them off to shipping.

"Many times these were either released early or late," says Mahoney. "Now it's all done automatically. The other thing a food processor is concerned about is a food recall. The Food and Drug Administration (FDA) does unannounced audits where it will do a recall exercise. The food manufacturers have to treat this as if it were a true recall. They get timed and evaluated on thoroughness and completeness of information-gathering and how they put this into effect. Nine months after Dannon went up on its automated system, the FDA came in for one of these and the manufacturer was able to have all the information available within minutes. With its manual system this took several hours."

Put out fires
Companies producing consumer goods with components that fall into the biological, petrochemical, pharmaceutical or food classes must be concerned about conditions inside their four walls. They can't rely on past experience to plan future facilities. If they're not up to speed on current regulations, their building plans could go up in smoke. Local regulations can be particularly problematic, because they're enforced by local regulators who have faces and names and like to know the who and what of projects going up on their turf.

"There's been a big change in the last couple years in the way local officials look at a company's inventory," says Steve Garvey, principal of Garvey Associates, New Jersey-based distribution consultants. "Today they look at everything in the building that can be considered a hazmat, including solvents in beauty products like nail polish. Before, when nail polish and solvents for nail polish removal were packaged in little bottles and in cases, regulators didn't look at them much. Now, the fire authorities are saying, ‘if it's in the building, it has to be figured into the whole scheme of how many chemicals you have on site.' This is part of a national code that is new to both retail distributors and to local officials."

Garvey offers the following advice to ensure your new distribution center project goes smoothly:

1. Do an analysis of what will go on in this building. Get your inventory and marketing people involved in analyzing how much hazardous product you'll store at one time.
2. Consult you local fire code official as early as possible. It may be that the Early Suppression Fast Response Sprinkler you selected will be sufficient to cover the entire storage area. Then, again, your fire official may say you need to build a fire room. That may require a second look at your inventory to decide the minimum amount you can store without needing a fire room. You may even choose to receive this material on a just-in-time basis so you'll never have more than the maximum allowable amount on site.
3. Once you develop a final plan, get your local town officials involved as soon as possible to make sure their code interpretations match those of the fire official.
4. Consult your insurance carrier. Insurance people can be more critical than the code inspector, depending on what size premium you have and what you're storing. Consulted early enough, they can bring some costsaving options to the table. For example, cutting a week's worth of inventory may put you into a lower premium bracket.
5. Keep material handling in mind. The facility might look great once it's built, and you might have all the right plumbing for fire suppression, but make sure the plumbing doesn't impede equipment. Garvey recalls one site he visited where the shutoff valves came down in the middle of an eight-foot-wide storage aisle. "They needed all eight feet to allow sufficient turning radius for the lift trucks," Garvey recounts. "I couldn't ask them to move the pipes so we ended up losing some pallet storage. Unless you get everything on the same drawing, sometimes you don't see all this until the last minute."

Stay informed
Dust, nail polish, yogurt, electronic games; nothing about these items would spell "hazardous" to an untrained material handler. That's why education is the most important investment you can make to ensure your company's future.

Consult the list of resources provided in this article to stay up to-date on new technologies and regulations.

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