Making sense of evolving service requirements

SigmaTron International’s corporate director of quality and compliance, Allen Abell

SigmaTron International’s Allen Abell explains how EMS providers are playing the lead role in helping OEMs manage increasingly complex compliance regulations

Outsourcing electronics manufacturing used to focus on identifying the best partner in a location providing cost or proximity advantage. Today, manufacturing expertise is only part of that equation.

Electronics manufacturing services (EMS) providers are now expected to provide a complete solution that may include product development assistance, multi-region manufacturing support and post-manufacturing logistics support. The supply chain management element equation has expanded to include serving as a conduit for increasing compliance reporting requirements. Growing interest in environmental, social and governance (ESG) practices has expanded the breadth of audits and increased the range of metrics EMS companies must measure.

Regarding outsourcing strategy, it is important to analyze whether projects require an EMS provider capable of delivering a more complex compliance solution, particularly if the project’s annualized volumes range from 50,000 to 500,000. Understanding compliance reporting complexity is critical. Some well- established requirements such as the Conflict Minerals reporting requirement of Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, CA Prop 65, RoHS, REACH and SCIP reporting are well-served by supplier disclosures, third-party databases and reporting templates. However, initiatives expanding due diligence on sources or actual elimination of raw materials or chemical substances are ongoing. Where OEMs have started proactively tracking substances and expect support from their EMS provider, internal EMS resources are often required. The following are some initiatives.

The Extended Minerals Reporting Template (EMRT) created by the Responsible Business Alliance (RBA) focuses on cobalt and natural mica supply chains. While not required by any regulatory body, it is designed to support due diligence in accordance with the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas by expanding the list of conflict minerals monitored.

The Toxic Substances Control Act (TSCA) as amended by the Frank R Lautenberg Chemical Safety for the 21st Century Act, has resulted in the US EPA beginning a safety review of a list of 90 chemicals developed in 2014. Under the legislation, the US EPA must now have at least 20 of these chemicals under safety review evaluation at any time. If it is determined a chemical presents an unreasonable risk, EPA must mitigate that risk within two years.

Various US states are restricting use of per- and polyfluoroalkyl substances, known as PFAS or forever plastics. The European Chemical Agency (ECHA) is also proposing a universal ban on PFAS within the EU by 2026. The list of PFAS has not been fully established and some don’t have Chemical Abstracts Service (CAS) numbers. This complicates PFAS reporting.

SigmaTron International uses proprietary software, third-party databases and an internal Compliance and Sustainability Center team to address customers’ reporting requirements. The Center is in its Taiwan International Purchasing Office which coordinates disclosure statements as new suppliers are added. The team also supports customer-driven ESG audits, as needed. A specialized team addresses reporting requirements not well covered in third-party databases. The team also provides feedback to help design out problematic materials.