There are various regulations, inventory lists and policies are available for managing the chemicals. Such management of chemicals via inventory lists, restriction lists or so is an import aspect of Raw material procurement, chemical usage or even Production scenarios. There are major laws already implemented by many countries and some are in the path of implementation. India also introduced a draft National Action plan for Chemicals in India during December 2019 and has been revised for the 4th time recently. Though this regulation will take about a year to be come into force from the date of promulgation. I used this regulation to analyze the SAP S/4 HANA 1909 Product Compliance – Product Marketability and Chemical Compliance for requirement analysis. In this blog I would like to highlight key requirements of the draft regulation and how SAP S/4 HANA 1909 Compliance Requirements including Substance List Checks master data object can help in managing such regulations.

In Dec 2019, a draft National Action Plan for Chemicals in India was published. Though it is a major regulation which is in draft stage towards a point of compiling national chemical inventory and assessment of risks posed by those chemicals and registration and notification processes therein. Almost 1500 chemicals are regulated by current rules consisting of Hazardous or pesticide chemicals. Definitely it is not the first regulation towards chemical management in India, earlier regulations on Manufacturer, Storage and Import of Hazardous chemicals & Ozone Depleting Substances Rules are also managed the chemical movement and necessary draft guideline towards Safety Data sheet creation as per GHS norms.

When you look at the draft regulation it needs all chemicals needs to be notified, while some will require additional registration and subset of those will be authorized. We currently have about 30,000 chemicals in circulation for which there is no complete information of toxicity is available. One of the features of the regulation is that it is going to compile Chemical Inventory while it is being implemented. Any Substance, Substance in Mixture or Substance in Article exceeding 1TPA are required to be notified. Those emitting < 100 TPA are required have basic registration, while those exceeding more than 1000 TPA require full registration. Details of the regulation can look at from the perspective of Notification process, Registration approach, Dossier evaluation approach by the committee and fee structure. However, from the perspective of implementation it going to consume huge IT requirement for companies Operating in India or foreign companies which are going to introduce the substances. Traders cannot register for the products.

When this draft regulation is seen from perspective of implementation it needs data gathering, data generation, Document analysis, Safety auditing Inspection processes, site safety reporting, emergency plan implementation, Safety Data sheet generation, label creation. Even the earlier regulation on Manufacture, Storage and import of chemicals which based on toxicity, inherent characteristics of chemicals, suggested similar approaches. What is required now for companies is Dossier preparation, GHS based classification, specific labelling which should be English and Hindi, and packaging requirements for priority substances for leak or escape prevention etc. As highlighted earlier there are still certain guidelines which were not clearly defined like if IT tools will be provided for the industry support or industries need to work to create their own tools. Whatever may be the mechanism of substance IT tools, there are already ERP tools available for managing chemical inventory like notification status in case of SAP EHS Product Safety Stewardship. Which offers inventory list of substances and basing on expert rules those can be identified for inclusion in the inventory of other criteria which different for regulation to regulation.  Such information is widely known, and it is well established.

Recently SAP has released S/4 HANA 1909 Product Compliance module which consisted of Product Marketability and Chemical Compliance module. I looked at the features of the module for meeting the chemical inventory requirements and found that it has good framework for manging the Raw Material compliance, Substance List management and even Product Marketability checks. The basis master data for implementing these types of regulations include Compliance Requirement, in this case it is checking the substance to be in the mentioned list. There are various ways a listed substance can be included for the check for example it can be single substance, or it can be a Inventory List, monitoring list or even restrictions list. Once a necessary list is identified which at times can be a mix of those items like in case of DSL+NDSL, substance group can also be checked if applicable.

For each compliance requirement there are different business processes are defined like Sell, Import, produce or other scenarios, which are relevant for the organization. Definition of action suggests which type of checks are performed at the substance level. Similarly, Compliance statement suggests what kind of compliance information is checked while validating the compliance requirement like availability of Vendor SDS document. Like such information is compiled, the requirement is then linked to compliance purpose. For meeting the notification processes for chemical control laws there are various compliance patterns are defined like Substance List Checks, Simple compliance documentation or even Supplier information. While maintaining the compliance pattern necessary composition is defined.  

When such compliance objects are defined, relevant materials can be marked “Yes” for Compliance Relevance in product master. This flagging triggers necessary logistic objects and other analysis like managing the basic compliance data or even Supplier compliance for material master can be analyzed further. The different processes for analyzing further include business processes like Process requests from Logistics, Manage Basic Compliance data – unpackaged products, where composition is managed, Unpackaged product compliance requirement. This analysis is automatically rooted to Product Level compliance requirements.

This model been integrated into core logistic process of sales and delivery via document status. The structure which has been built for the module consists of other features for functionalities like SDS distribution, Dangerous Goods checks in the current release, and SVT or label distribution framework for future releases. These types of tools will make the organizations introduction of chemicals or meeting introduction of dynamic regulations at different locations very convenient and reduce compliance risks. The system framework has been established to provide a skeleton where additional fields for Supplier evaluation or even other information suiting to industry can easily be adopted.  Based on analysis of features for Raw Material introduction, Product Compliance check, Marketability maps or even substance list checks are found to be very user friendly and is an industry best practices which has be implemented. Supply Chain communication not part of the core solution, but complementary solutions can be used. Further details of each process step and how it can be used at product level is beyond the scope of current blog and readers are recommended to check SAP documentation.



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