Executive Briefings

How the Consumer Product Safety Improvement Act Could Forever Change the Supply Chain

In 2008, Congress passed the Consumer Product Safety Improvement Act (CPSIA), a wide-sweeping bill designed to improve the safety of children's products.  The legislation, implemented in stages over the last two years, lowered limits on hazardous substances such as lead and phthalates, increased funding for the Consumer Product Safety Commission (CPSC), imposed new testing requirements on manufacturers, and established broad documentation requirements for all participants throughout the supply chain.   Spanning a wide range of products, including apparel, shoes, personal care products, accessories and jewelry, home furnishings, bedding, toys, electronics and video games, books, and school supplies, the bill is estimated to cover tens of thousands of products developed and marketed to children 12 and under.  In addition, the bill established sizeable fines for offending companies - up to $100,000 for the first incident and $15m in aggregate - including jail penalties for infractions.

Manufacturers large and small immediately created an uproar, claiming the law required unreasonable and costly testing and that it could cost the U.S. economy millions, if not billions, of dollars.  Nonetheless, new aspects of the CPSIA went in to effect as recently as February 10, with manufacturers of many of the aforementioned products now required to produce certificates of conformity stating that their products have been tested to the substance and safety standards set by the CPSC.

The Information Dilemma

Suddenly, the consumer products industry found itself faced once again with the age-old problem of product information sharing.  According to the legislation, testing certificates must accompany a product throughout the supply chain, from manufacturer to distributor to retailer to reseller to consumer.  This is no small feat, considering that packaging may be stripped at a distribution center and that products may be recombined many times before sale.  To combat these issues, the CPSC suggested that certificates be posted at a company website, which potentially works until the item is too small or the information would impact the design. (Where do you put a web address on a sock?).  Further, a typical retailer may offer hundreds, if not thousands, of products for which they must produce a certificate if requested, presenting a data and risk management nightmare.

This is, of course, not the first time that companies have faced these information sharing challenges.  In fact, a recent Aberdeen Research report found that many companies continue to rely solely on email, phone and fax to collaborate with over 90 percent of their trading-partner community.  For years, standards bodies have worked to develop common vocabularies to help streamline supply and demand chains.  However, with the rapid timelines required by the CPSIA and with limited B2B automation and uptake for a variety of existing standards, a new approach for compliance is required - one that could forever change the way we think about exchanging supply chain information.

Making Supply Chains Social

If social software products such as Facebook, LinkedIn and Twitter have taught us anything, it is that we live in an age of transparency.  I no longer simply send a private email to a friend about my weekend activities; I "tweet" my information to a public audience.  Further, I don't maintain a personal website or blog, but instead favor publishing information to a network where friends can see not only my information, but that of many others.  In much the same way, manufacturers and retailers must embrace open networks and simple categorization methods as a way to deal with the dizzying array of compliance and information sharing challenges they face.  Providing data or certificates such as that required by the CPSIA to an online community, where all supply chain participants are peers and can readily access information in a human-readable form, helps individual companies and entire industries to lower costs, reduce risks, and simplify compliance.

The CPSIA may have created new challenges for the supply chain, but it also creates new opportunities.  Companies are now using these new compliance mandates as a way to rethink how they share data, embracing the supply chain as a community where information can be rapidly disseminated and democratized.  Making supply chains social means making them transparent.

Now that might actually be something worth tweeting about.

Source: RollStream

In 2008, Congress passed the Consumer Product Safety Improvement Act (CPSIA), a wide-sweeping bill designed to improve the safety of children's products.  The legislation, implemented in stages over the last two years, lowered limits on hazardous substances such as lead and phthalates, increased funding for the Consumer Product Safety Commission (CPSC), imposed new testing requirements on manufacturers, and established broad documentation requirements for all participants throughout the supply chain.   Spanning a wide range of products, including apparel, shoes, personal care products, accessories and jewelry, home furnishings, bedding, toys, electronics and video games, books, and school supplies, the bill is estimated to cover tens of thousands of products developed and marketed to children 12 and under.  In addition, the bill established sizeable fines for offending companies - up to $100,000 for the first incident and $15m in aggregate - including jail penalties for infractions.

Manufacturers large and small immediately created an uproar, claiming the law required unreasonable and costly testing and that it could cost the U.S. economy millions, if not billions, of dollars.  Nonetheless, new aspects of the CPSIA went in to effect as recently as February 10, with manufacturers of many of the aforementioned products now required to produce certificates of conformity stating that their products have been tested to the substance and safety standards set by the CPSC.

The Information Dilemma

Suddenly, the consumer products industry found itself faced once again with the age-old problem of product information sharing.  According to the legislation, testing certificates must accompany a product throughout the supply chain, from manufacturer to distributor to retailer to reseller to consumer.  This is no small feat, considering that packaging may be stripped at a distribution center and that products may be recombined many times before sale.  To combat these issues, the CPSC suggested that certificates be posted at a company website, which potentially works until the item is too small or the information would impact the design. (Where do you put a web address on a sock?).  Further, a typical retailer may offer hundreds, if not thousands, of products for which they must produce a certificate if requested, presenting a data and risk management nightmare.

This is, of course, not the first time that companies have faced these information sharing challenges.  In fact, a recent Aberdeen Research report found that many companies continue to rely solely on email, phone and fax to collaborate with over 90 percent of their trading-partner community.  For years, standards bodies have worked to develop common vocabularies to help streamline supply and demand chains.  However, with the rapid timelines required by the CPSIA and with limited B2B automation and uptake for a variety of existing standards, a new approach for compliance is required - one that could forever change the way we think about exchanging supply chain information.

Making Supply Chains Social

If social software products such as Facebook, LinkedIn and Twitter have taught us anything, it is that we live in an age of transparency.  I no longer simply send a private email to a friend about my weekend activities; I "tweet" my information to a public audience.  Further, I don't maintain a personal website or blog, but instead favor publishing information to a network where friends can see not only my information, but that of many others.  In much the same way, manufacturers and retailers must embrace open networks and simple categorization methods as a way to deal with the dizzying array of compliance and information sharing challenges they face.  Providing data or certificates such as that required by the CPSIA to an online community, where all supply chain participants are peers and can readily access information in a human-readable form, helps individual companies and entire industries to lower costs, reduce risks, and simplify compliance.

The CPSIA may have created new challenges for the supply chain, but it also creates new opportunities.  Companies are now using these new compliance mandates as a way to rethink how they share data, embracing the supply chain as a community where information can be rapidly disseminated and democratized.  Making supply chains social means making them transparent.

Now that might actually be something worth tweeting about.

Source: RollStream