REACH regulations and its effects on the supply chains

Filed in archive Sustainability and Supply Chain on May 5, 2008

I don't know how many of you have heard about REACH regulations which has come into place recently; probably not too many, but the fact is that REACH is going to seriously affect the supply chain operations in chemical-using industries all around the world.

The Registration, Evaluation, Authorization and Restriction of Chemicals (REACH) actually went into effect June 2007 and requires all chemicals of one metric ton or more in volume that are manufactured in or imported into the European Union each year to be registered and tested for EH&S purposes. The companies have been given a deadline till Dec. 2008 to do the pre-registration. The law will affect industries such as chemical, coating, petroleum, electronics and even automotive.

According to a report by Purchasing Magazine, Awareness is very low among European and American managers.

As an example, in order to register a 1-10 metric tons of a substance would cost about $2,500 to register while the fee for registration a 1,000 tons of a substances would be $48,000. Many substance suppliers are pruning their substances product lines because of this. They don't want to pay the money.

So in the current situation, the companies which start investing in the required processes for pre-registration and SKU pruning will be the ultimate winners.