Cutting Down on the Cost of Green

"Don't reinvent the wheel" is an old maxim, but it's still quite effective at conveying why tapping existing resources is more beneficial to an enterprise than trying to re-create a proven solution. This is more applicable than ever today for electronics equipment vendors, component suppliers, and contract manufacturers when it comes to compliance with environmental regulations.

Regulations governing the production and disposal of hazardous chemicals have mushroomed in the last decade as countries, regional authorities, and local governments compete to roll out their own rules and guidelines. Sometimes these are quite similar legislations, but often they vary widely, and the terms and conditions can be very burdensome on small, midsized, and even large enterprises. Keeping abreast of all these rules in Europe, North America, and Asia is quite daunting, not to mention the costs to manufacturers that aren't easily passed on to customers.

Recently, India, which up until now has stayed relatively quiet about environmental issues, declared its intention to introduce laws that would determine how electronics manufacturers and other companies whose products may impact the environment can produce, sell, collect, and destroy these items at the end of their lifecycles. Without warning, it seems, another country of significance to the electronics industry must quickly get placed on the radar of all manufacturers.

When I first read about India's WEEE recycle program, I thought about the countries that haven't introduced similar legislation in Africa. They will eventually, and what they come up with may be as complicated and as varied as anything now on the market. (See: Before Shipping Your Electronic Wastes to India.)

So, what should companies in the electronics industry do? Let's go back to what I stated in the first paragraph: Don't reinvent the wheel. Monitoring the avalanche of new and old laws and assuring compliance with rules like the European Union's Restriction of Hazardous Substances (RoHS) and Waste Electrical and Electronic Equipment (WEEE) directive can be a full-time job for numerous employees, and the cost is certain to creep higher as more nations pile in. Rather than re-create what's already in existence, manufacturers should tap existing resources and leverage this to assure compliance.

The resources available in the industry are quite extensive, and many of these can be found for a fractional cost or even by simply turning to some of your current business partners. For OEMs and contract manufacturers, I suggest starting at your distribution partner. The biggest electronic components distributors, like Avnet Inc. (NYSE: AVT) and Arrow Electronics Inc. (NYSE: ARW), collect extensive product data from customers and can easily certify whether the components you are buying from them are in compliance with local regulations.

These companies offer other advantages. Take Avnet, for instance. The company has extensive presence in most parts of the globe and supports tens of thousands of customers in all geographic regions. What this means is that it already has information on local laws and can help customers find replacement parts easily for components that may be in compliance in one region but not in another. Since distributors also represent hundreds of component manufacturers and collaborate with them on sales and marketing initiatives, they get direct information from these companies about internal steps being taken to avoid tripping over local environmental laws.

The services offered in distribution are certainly not limited to the stocking and transfer of components from suppliers to assemblers or manufacturers. They also offer design support services, which means an engineer knows early in the design phase what components are in compliance with RoHS and WEEE rules, for example. Supply chain assessment and management services can also be used to determine how to remain compliant with regulatory requirements.

However, aggregating information from distributors and other front-line service providers is only the starting point. To avoid tainting the supply chain with non-compliant products, companies need to partner with specialized service providers focused on the close monitoring of environmental rules around the world. There are quite a few of these in the market, including Design Chain Associates LLC (DCA) , which provides a number of free resources for regulations like the EU's Registration, Evaluation, Authorization, and Restriction of Chemical (REACH) substances.

DCA also provides regular free Webinars on the various environmental regulations in addition to updates on recent changes to existing laws and pay-per-view documents on emerging regulations. A battalion of similar resources exists on the Web, including those that are focused on specific countries and regions. For companies concerned with electronic waste disposal in India, for instance, there is WEEE Recycle, an organization set up by the local Manufacturers Association of Information Technology, and Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, a service provider funded in part by the German government to help communities with "sustainable development" plans.

Finally, for companies that have even smaller budgets for tracking and assuring compliance with environmental rules, I suggest staying closely connected with the regulatory authorities in each region. They all provide detailed information about their activities and what companies operating in their locations can do to avoid getting snagged in expensive litigation over product manufacturing and disposal. They also offer national lists of service providers already approved for each country.

Complying with environmental laws isn't going to be cost-free for any enterprise, but since compliance is mandatory for electronics OEMs and suppliers, the only option is to find a way to tamp down on costs with careful planning and collaboration with partners interested in achieving similar goals.