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HORIZONS
REGULATORY AFFAIRS UPDATE
Fifteenth Issue
Spring 2002

CONTINUING PRODUCT GUARANTEES
An article in a Danish newsmagazine precipitates questions about chemicals that may be contained in inks or coatings. Concerns for certain classes of azo dyes used on clothing fabrics in Germany lead to the same questions. With what has become a predictable effect, once remote incidents immediately ripple through the ink making industry from the top down side of the supply chain.

In this issue of HORIZONS, we address the continuous driving force for translating information up and down the supply chain where Sun Chemical is an intermediate link.

We have addressed several topics related to communicating chemical information in earlier issues. In the Winter 2001 issue, we discussed the nature of the global marketplace, and how that concept impacts existing practices throughout our business. We underscored how constraints on chemistry have even changed the processes within our company’s product development processes. In the same issue, we discussed specific issues such as endocrine disrupters and ozone depleting substances in relation to how these concerns affect formulating products.

It may be restating the obvious, but it is the global nature of the larger end users that has set in motion the global response needs of the suppliers in our business chain. Clearly, this global perspective is based on an economic drive to balance sluggish national markets with global business. A second driver is the desire for multinational end user products to perform identically in all world markets. However, as ink makers, we must adopt global business perspectives that go beyond the basic economics. In fact, there are times when the global economic perspective must defer to regulatory constraints (things that are not available within the corporation or are illegal to carry out).

The focus of this issue will be to step back and explore the broader implications of meeting the demands of customers and end user companies for ever greater amounts of chemical information. What some end users want is a continuing product regulatory guarantee. Let’s see how this has evolved and how it affects the ink producer.

First, we should answer the question of what is a continuing product guarantee? It is a statement of position regarding a number of issues. These include a mixture of regulatory, and more importantly, health and safety issues. The issues are often emerging in the sense that they require information before they may become the subject of regulation. These issues are often parochial, and can initiate literally anywhere in the world. Clearly, these are customer concerns regardless of whether or not they are well founded; and they need to be addressed.

When we as a company focused our innovation on the United States markets, the established regulatory structure kept the issues constrained. This model no longer works in a world view of economic opportunity. For a period of about three years prior to 2001, the ink industry response mode was to handle the end user interests issue by issue. Starting in mid 2001, the global end users at the top of the chain began to bring their marketing and image concerns down the chain in the form of a Continuing Product Guarantee. The underlying conformance is generally based on the absence of some chemical species. The motivation is twofold. There is a need to supply information on an increasing number of issues outside the U. S., and there is a desire to condense the information on many issues into one document.

It is well to recognize that the effect of supporting global initiatives is disproportionately higher in the ink industry than in any other part of the chain. This is simply a reflection of the fact that the vendor base size for the ink making industry is greater than any other part of the chain. Add to this the desire for the ink manufacturing level itself to get economic benefits from buying in the global market as well as selling to it.

While the communication chain is viewed as individual links, the vendor base is exponential in number as one goes from end user to converter to ink supplier. As an example, we now need to address our issue-related needs as a blanket document for our products that are based on over 4000 raw materials. This translates directly to the need for us to have the same discrete, chemical data for each of the products we buy. Formulation is a controlled process. We can choose to avoid any chemical species as a primary formula ingredient. However, product guarantees require the same assurance about the components of any purchased intermediate.

The Regulatory databases within Sun Chemical must be augmented to include data relative to the end user issues. We need to add internal processes to support customer demands; but more importantly, we also needs to involve individual raw material vendors as well. In order to achieve this, we are instituting a vendor product certification process using our new Product Certification Form (PCF). This new information will support automated processes that will aid in the Product Certification documentation for the end users.

These certifications will include specific questions relating to the presence or absence of specific chemicals related to as yet unregulated issues, as well as requests for the status of the raw materials in major, world-wide chemical inventories. This last item will serve several internal concerns as well. Global sales intentions are not always clearly identified. Yet, finished goods importation choices as well as product development processes need this input. One wants to avoid a new product ready for commercialization that cannot be sold as originally intended. Correcting the root cause of this kind of a problem requires the introduction of a regulatory/marketing review very early in the importation decision or the development process flow charts. However, the data on the inventories status of a raw material will be an essential element to support worldwide sales as we go forward.

The additional data gathering at the vendor level will begin in the third quarter and is expected to be an ongoing part of supply to Sun Chemical. We recognize that we will be putting additional burdens for information on our vendors; but necessary for us to satisfy our global market responsibilities and good corporate citizenship requirements.