HORIZONS
REGULATORY AFFAIRS UPDATE
Eleventh Issue
Spring 2000
INTRODUCTION
We thought that we should use the first publication of the new
millennium to reflect on the newest trends in business. There are
certainly several changes of note in the graphic arts industry, but we
thought we would look at a growing trend and analyze its impact on our
business from a regulatory perspective. We decided on globalization of
business, which is the buzzword of the late nineties and the new
century.
One advantage of globalization of business on any level is its economic
balancing effect if one region or country suffers a down-turn. So, the
broader-based company can hope for a more predictable bottom line.
However, it takes good planning on all management levels to realize the
benefits of globalization.
Often, globalization is viewed as simply moving more and more goods or
services around the world faster and faster. This oversimplification
can lead to decision processes that ignore regulatory issues as a
variable in the global business strategy. The result may be inadvertent
liability that can attack the bottom line.
DISCUSSION
We have mentioned oversimplified decision processes and liability. It
is necessary to identify the root cause actions in the regulatory sense
that support that conclusion. The main regulatory areas of concern in
global business are:
- Moving materials and finished goods across borders.
- Old and new raw materials.
- World-wide chemical accounting.
Addressing the first issue, a fundamental dictum of global
business is to "buy or make it here, ship it there." Raw materials,
semi-finished goods, intermediates and finished goods inventories are
moved among the business units of the larger ink suppliers. This is in
response to larger customers' and end users' expectations to have
uniform product quality within their global business efforts. The need
for a good supplier to be responsive is obvious. The notion of mobile
inventories is also obvious. The fact that they may be moved randomly
without any "control gates" may not be so obvious to either marketing
or manufacturing elements within a business. Thus the potential for
random, inadvertent liability exists.
Regarding the second point, the ink supplier is also a customer. The
products offered by the ink divisions of Sun Chemical currently rely on
more than 4000 purchased raw materials. Ultimately, the concept of
globalization must enter everyone's business equation. Again, the
realization of opportunity at the supplier level has focused on price,
availability and logistics, but not much on regulatory information.
The third issue is one of chemical accounting, which has been the stuff
of previous issues of this bulletin. However, now the problem is
compounded as a worldwide trend.
The main burden of controlling liability in global business activity
falls on the ink supplier as a part of doing business. There is a need
to harvest data, and use it to improve the choices of available
products to introduce to other business markets. It also means
involving suppliers to support Sun's regulatory information systems
through the imposition of new information demands. We see this as
becoming a condition of supply in the whole global business chain.
ACTIONS
Based on the above, Regulatory has undertaken a Globalization Project.
It is based on several initiatives. At the customer/end user level, we
are undertaking a baselining of expectations and experiences at some of
our largest accounts. We hope to better understand whether their
business strategies have considered the regulatory aspects of the
supply chain, and whether they have already experienced any
difficulties in this area.
Within Sun, we are establishing a world-wide regulatory network. The
focus of the international regulatory action group will be development
of a standard process to identify the regulatory hurdles in various
markets. This will parallel the global marketing and manufacturing
activities.
We see an immediate need for strengthening our databases that drive our
regulatory document outputs. A starting point is soliciting additional
data on all items that are actively purchased within the division. All
new raw material requests will be subject to screening for regulatory
inventory status in both Europe and Canada prior to release to active
purchasing. On a parallel path, a longer-term goal is developing a
logic for automated evaluation of shipments by formula composition,
relative to the regulatory status of all the components in the
destination country.
CONCLUSION
It is clear that the implications of global regulatory concerns go well
beyond moving existing products in and out of world markets. But, there
is a need to focus on the new product development processes as well.
While older technologies are probably easier to move across borders,
the future of business market share is in products based on new
chemistries, as well as new processes.
Newer technologies not only become harder to move, but they become more
expensive to develop and slow the time to commercialization. This is
especially true if development must also include bearing or sharing the
cost of registration in various inventories around the world.
A new level of understanding is emerging with interactions both within
Sun Chemical and with our customers. We need to develop new information
links with our customers, end users and vendors, that are more
inclusive. Coupled with new international regulations, these will be
the new business drivers in our efforts to serve our markets better.