Grimly Hindering Shipments: the many ways GHS can cripple your supply chain, and how to strategize for success

Few regulatory requirements have impacted supply chains worldwide as much as the Globally Harmonized System of Classification and Labelling of Chemicals (commonly known as “GHS”).

Conceived by the United Nations in the late 1990s, the basic concept was perfect: a single, worldwide system to communicate the hazards for all chemicals. One that would be quick to interpret visually regardless of language and allow the sharing of chemical hazard data across the industry.

Once implementation began, though, the hope of harmonization was quickly lost. It became evident that, as each country transposed the UN “purple book” to its own regulations, variations in specific requirements would complicate the regulatory landscape. Issues ranged from cosmetic features, such as China’s requirement for a black border surrounding the GHS information on a label, to significant discrepancies in hazard classification, such as those for Acetonitrile.

Today, many businesses are struggling to comply with GHS’ differing implementations, their existing supply chains challenged to meet customer demands and keep the business fully compliant. Especially vulnerable are smaller multinational companies that either resell chemicals or prepare mixtures to be sold anywhere in the world.

First, a little history…

Japan was its first adopter, passing legislation to implement GHS in 2006. They were alone for a couple of years, until the European Union passed their updated regulations to implement GHS in 2008, kicking off a mad dash for multinational companies to update their Safety Data Sheets (no longer “MSDS”) and product labels.

Although it was feasible to stay in business and ignore Japan’s requirements, once Europe came into the fold, GHS could no longer be a side note. More traction was gained when China implemented GHS in phases between 2008 and 2013. A key difference was that, unlike the European Union, China’s enforcement efforts were immediate and blunt. Many shipments were stopped at customs pending compliant GHS data.

Further conundrums arrived when the United States released its own GHS legislation in 2012, and yet further with Canada in 2015. Both of these GHS implementations presented conflicting requirements, that diverged enough from Japan, Europe and China to warrant completely different labels depending on where the product would be sold.

Delightful outlook, right?

With a little planning and significant commitment of resources, any company can achieve compliance and stay competitive.

To that end, I’m sharing below what I’ve learned in the past nine years working with GHS:

Know the products you sell but don’t make

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Many companies buy and resell items because they pair well with their core catalog. This usually means an off-shore supplier, with whom no specific data sharing commitment is made and who do not share the same sense of urgency to comply with GHS.

Biblically know the chemical products you make

Intimacy with your formulations, raw materials and manufacturing processes is a must. The effort to compile this data could result in a significant allocation of resources, so you must be ready to pull all the stops. And be sure to establish a sustainable system to update data as changes occur.

Decide whether you’re willing to lose a market

It would be a rough decision, but it may make more sense to let go of a market (i.e. country, region) that makes GHS compliance particularly difficult. Bring your marketing team together to make these critical decisions. Product managers, R&D, and others involved in the development of new products, must be fully aware of GHS requirements to correctly gauge the potential impacts.

Ensure you have ironclad contracts with your suppliers

Data transparency is of the essence for GHS compliance. Start today, if not already, and set the ambitious goal to have all contracts updated in 12 months. Persistence on this will immensely further your ability to sustain your GHS compliance program. Simply put: you cannot succeed at GHS compliance without your suppliers’ data.

Start thinking about drastic changes to your supply chain

Although efficiency dictates that goods should move through central hubs, you may need to rethink that. If a product needs a different label depending on where it’s shipping to, and this means perhaps opening finished packages to relabel inner containers, it may start making more sense to keep separate inventory according to GHS requirements. For example, keep Asian, European, North and South American stocks separately, so each product requires fewer GHS label variants. This is no easy feat, and will probably require multiple years to implement. It may, however, be your only option to stay compliant.

If your supply chain can’t change, invest in multi-fold labels

When the supply chain must remain intact, a solid strategy is to device a multi-region GHS label. This could possibly mean 20 or 30 labels in one; think not only about country variations, but also language requirements. Possible options are to purchase preprinted labels with all the required GHS information in a fold-up peel-away format, and print the required manufacturing data, such as lot number or expiration date, separately to affix in parallel. Be prepared to manage the added costs and production procedure changes to manage at least one SKU (stock-keeping unit) per label per product. Yes, your Bills of Material will need an overhaul.

There’s a lot of useful software, choose wisely

Having many years of software development and implementation under my belt, I’ll be first to acknowledge that off-the-shelf solutions are the way to go for data management, SDS authoring and supply chain transparency. Choose wisely, and be ready to spend real money on the optimal solution. I wouldn’t recommend frugality in this particular case.

Have you tackled the GHS compliance debacle? Do you have recommendations, disagreements with my strategies, opinions to share? I’d love your feedback as a comment below or via email.