Material Compliance
Quite simply: Every law is a gun. This gun always points at the managing director. And frankly speaking, just as we will “voluntarily” give the car jacker our car at gunpoint in order to avert damage to our person, we will do our utmost to avert damage to ourselves and our company in terms of regulatory and material compliance.
Just as we pay our taxes, we should also do the best we can in terms of material compliance to avert damage to the company. But of course it also goes beyond it we also need to make the customers happy, that will also have to follow the same material compliance laws or even stricter ones, depending on the industry sector of the client.
Since it is absolutely impossible to reach a compliance level of 100% in 100% of the time, a proper material compliance analysis always starts with a detailed risk analysis and an analysis of the client specifications.
Risk analysis
There are far more than 50 legal regulations in the area of material compliance worldwide. This affects over 100 substance groups and over 3000 substances.
In addition to the legal requirements, practically all well-known manufacturers have set up their own rules for material compliance for purchased parts (e.g. Bosch N2580).
In contract law (e.g. § 433 BGB in Germany) the seller is liable to provide the buyer with the goods free of material and legal defects.
If a customer proves a regulated substance in a product (e.g. based on his own analysis), there is a so-called material defect and there are threats of recall and damage claims by the customer
In addition, there is a risk of a procedure in accordance with product liability law in the event of a specific damage (e.g. § 823 BGB and § 1 ProdHaftG) if compliance with the state of the art cannot be proven.
Product Liability Act
The manufacturer’s liability for damage caused to a person or property by a defective product is regulated by the Product Liability Act (causal liability).
A defect exists if, after judging by the judge, when the product does not meet the legitimate security expectations of an average consumer.
Product liability means that the manufacturer has to answer for consequential damage to persons or things of private use and consumption, which were caused by his faulty product.
Insurance cover is also void if compliance with the state of the art cannot be demonstrated.
Product Liability Act (PrHG): Federal Act of June 18, 1993 on product liability
Product safety: Federal law of June 12, 2009 on product safety (PrSG)
requirements
Here are the specific requirements in Switzerland: (see: https://www.produktehaftung.ch/haftungsvorausbedingungen)
Positive conditions
In order to affirm the manufacturer’s liability, the following requirements (definition according to PrHG) must be met cumulatively:
Manufacturer / importer / dealer (Art. 2)
Product (Art. 3)
Faultiness (Art. 4)
Damage (Art. 1/6)
Adequate causal link
Reasons for exculpation
If the above requirements are met, the manufacturer can only exculpate himself for the following reasons (Art. 5 Para. 1 lit. a-e):
Product not placed on the market;
There are still no errors when placing the vehicle on the market;
Product manufactured or sold for sale or a form of distribution for commercial purposes or in the course of professional activity;
Errors can be traced back to the fact that the product complies with binding, government-issued regulations;
According to the current state of science and technology, errors could not be recognized at the time the product was placed on the market (does not apply to certain transplant products).
There is also an exception for the manufacturer of a basic material or a partial product if the error has only arisen during further processing.
Trigger for liability
Customs notice
Notification from another authority
Communication or complaint from consumers or consumer protection organizations
Accident or damage
Competitions display
Media reports on damage to health caused by chemicals
RAPEX notification
Self-motivated samples of the market review (market purchases)
Consequences
Measures from authorities are threatening (e.g. § 27b ChemG):
Anyone who violates Regulation (EC) No. 1907/2006 (REACH) will be punished with imprisonment of up to two years or a fine.
No direct damage must have occurred. Proof of the regulated substance is sufficient.
Law enforcement in the area of product liability and chemicals law is usually not directed against the company, but against the person acting (management)
General
Purchasing is directly and indirectly responsible for the procurement of materials. Procurement must be in accordance with requirements and therefore material compliance is a product requirement and material compliance documentation is a component of the product.
The purchasing department must therefore ensure the contractual agreement of the requirements in the area of material compliance and the purchasing department must carry out the credibility assessment of the supplier.
Supplier assessment and risk assessment
Location China, India, Asia and America, other USA, Japan and Korea North, Central and Western Europe
SME size (small and medium-sized) Two locations in the EU, more than 2000 employees worldwide Group with more than three locations in the EU
Environmental activities no environmental statements on the website, no REACH or RoHS information on the website Certified according to 14001, topic REACH and RoHS is mentioned but no concrete statements
Material compliance certificates or RoHS statements on the website,
Supplier in the automotive industry
Process steps in purchasing in relation to material compliance
First test: concept phase
On the basis of similarity relationships between related or similar or previous products and the material compliance requirements to be met, an initial risk assessment can be carried out in order to identify risk components and risk substances at an early stage
Second test: development or procurement phase
Before specific products are to be procured from suppliers, there can be specific qualifications for the new materials (ingredients, materials) and requirements for potential suppliers. Material declarations are then requested and checked here
Third check: market launch / sale
This check is carried out before the market launch, when the suppliers have already been identified and the real article can be checked to ensure compliance with the material compliance.
Continuous monitoring
Even after the market launch, the current range is monitored according to change management:
In the event of changes to the existing product that are relevant, the supplier must be asked whether the requirements for material compliance will continue to be met.
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