Electronics Manufacturing Supply Chain: Regulations Can Impact You

The electronics manufacturing supply chain is a major risk for many OEMs. Challenges in this area include environmental and global regulations, which can be as confusing as the tangled cords behind your computer.

To cut costs and avoid delivery delays, working closely with your electronics contract manufacturer (ECM) is important for keeping components in your final product compliant with regulations. Since regulations affecting electronics manufacturers change often, both you and your suppliers need to stay alert. Not keeping up with these changes can lead to a series of problems that could impact you and several suppliers.

Electronics Manufacturing Supply Chain: 4 Regulatory Snags

When you begin a new or redesigned project that requires extensive regulatory practices, you need to account for extra time, effort, and cost for your ECM. If you want your product to be sellable long-term, around the entire world, there’s no other way.

Consider what might happen if your product fails an inspection. If you’re audited, and your product doesn’t meet requirements, you could be fined. And it won’t be a slap on the wrist -- these penalties are designed to make it cost-prohibitive to ignore the rules.

Four regulatory areas are responsible for most electronics manufacturing supply chain compliance issues:

1. Restrictions of Hazardous Substances (RoHS)
2. Registration, Evaluation, Authorization and Restriction of Chemicals (REACH)
3. Dodd-Frank Conflict Minerals
4. Pharmaceutical & Medical Equipment Tracking and Record Keeping
   
   

1. Restriction of Hazardous Substances (RoHS)

The aim of RoHS to limit hazardous materials, such as mercury, lead, cadmium and several others present in many electronic products.

In America, some states have rules similar to this European Union-based mandate, but it’s not federal law. Still, if you want to sell your product in the EU, you must make certain that, if these materials are present, it’s in amounts under 0.1% (in the case of cadmium, 0.01 percent). Even if only part of your product has excessive levels of a RoHS material, the entire product will be banned.

HOW YOUR ECM CAN HELP: Your ECM should know where the raw materials that go into your components come from and that they’re sourced with RoHS compliance.

Your contract electronics manufacturer can also help you assess the cost-effectiveness of releasing two versions of your products. It’s not unusual for OEMs to make a RoHS 2 compliant product for the EU market and a cheaper-to-make version for elsewhere.

2. Registration, Evaluation, Authorization and Restriction of Chemicals (REACH)

Another EU regulation that is similar to the RoHS rule, REACH covers “substances of very high concern.” If a substance appears on the REACH list and is present in an amount higher than 0.1% of the product’s mass, you must report it.

HOW YOUR ECM CAN HELP: Just like with RoHS, your ECM should help you make sure nothing banned is going into your design.

3. Dodd-Frank Conflict Minerals

The Dodd-Frank Act includes a section that requires public companies in the U.S. to demonstrate that the minerals they buy don’t benefit armed groups in the Democratic Republic of Congo or countries that adjoin it.

HOW YOUR ECM CAN HELP: Many manufacturers have a Dodd Frank policy outlining their adherence to a supply chain free of conflict minerals. It’s a bonus if your contractor uses a trustworthy third-party components database like SiliconExpert -- this can further help weed out gray market and counterfeit products.

4. Pharmaceutical & Medical Equipment Tracking and Record Keeping

The U.S. Food and Drug Administration monitors the Drug Supply Chain Security Act and the Unique Device Identification rule, which requires that manufacturers provide adequate information about the raw materials in their products. This information includes the raw material suppliers and shippers as well as how the final product is delivered to a distributor or retailer.

The FDA also has developed a little something called Title 21 CFR Part 11 to outline qualifications for record keeping. In practice, the rule means companies have to employ trained personnel who can document information.

FDA and ISO 13485 regulations are tiered in three groups/classifications.

• Class I – Highly monitored by the FDA (most critical impacts to consumers). High level of overhead and associated costs. This class is reserved for final assemblies and medication – a material or mineral that directly contacts a patient.
  
  
• Class II – Lower-level attributes, tooling, manufacturing restrictions, etc. This class encompasses a moderate level of overhead and associated costs. Think sub assemblies or anything else that potentially puts a patient in contact with certain materials or minerals.
  
  
• Class III – Minimal attributes, general manufacturing, etc. There’s a low level of overhead and associated cost with this group. Class III includes low-risk components with materials that don’t come in contact with the patient.
  

Note that these are different from IPC class specifications for electronics.

Of utmost importance with medical devices is the term “off-label” manufacturing. The rule of thumb with the FDA is that you make what you say you’re going to make -- nothing more, nothing less. In other words, you can only sell a product or design that is approved within the regulatory specifications of the FDA. There’s a risk with certain email communications, approvals, etc. -- everything must be documented and archived properly.

HOW YOUR ECM CAN HELP: This FDA oversight has an especially big impact on medical device manufacturing. To make sure your product complies with FDA requirements, your ECM should either contract out the necessary record keeping or have the engineering capability to keep records on what goes into a medical product.

Records should go back at least 10 years. Sometimes OEM electronics makers demand record keeping for the product’s entire lifetime -- perhaps you should look into that. All this “paperwork” adds to the cost of the equipment, but it’s well worth the expense.

The ECM-OEM Relationship is Vital

You need electronics manufacturing services providers who will watch your back, keeping you informed of evolving regulations and seeing to it that their own supply chain meets requirements.

If you want to avoid the pain that can come with non-compliance with regulations, pick your ECM based not only on its ability to provide you with functional components, but also on its regulatory knowledge. Your ECM is your source of information about what’s new and changing in the regulatory arena.

So ask about the regulations mentioned here. Test your ECM’s knowledge about conflict minerals and the subtleties of FDA watchdog processes.

The list above is not all-inclusive -- there are other ways your electronics contract manufacturer can help you stay in electronics regulatory compliance. To learn more about these processes, talk to your ECM early in the design phase.

Navigating Regulatory Challenges in the Electronics Manufacturing Supply Chain

Navigating the maze of regulatory compliance in electronics manufacturing presents ongoing challenges for OEMs. 

From RoHS and REACH to conflict minerals and FDA requirements, the regulatory landscape is complex and ever-changing. Success often hinges on the partnership between OEMs and their electronics contract manufacturers. Choosing an ECM with deep regulatory knowledge and robust supply chain management helps OEMs stay compliant, reduce risks, and remain competitive. 

As regulations evolve, a proactive approach to compliance goes beyond meeting current standards – it positions your business for long-term success in the global market.

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This article was published in April of 2019 and was recently updated to reflect industry trends.