Post a Comment
News and New Products
Call In the Lawyers
By Ed Sperling -- Electronic News, 10/13/2005
Who will ultimately be liable for the products that get pulled or barred from the market once the Restriction of Hazardous Substances (RoHS) rules take effect next July isn’t entirely clear at the moment.
The question of liability, which is being posed by numerous electronics companies, is unlikely to be decided anytime soon. Moreover, when it does get decided, it will probably boil down to a matter of whose data is accurate and whether that data was properly shared with other parties that depended on it.
So far there is no shortage of data from vendors. Volumes are being created by vendors across the supply chain, and most of that data is highly accurate and detailed. But in some cases it’s still incomplete or just plain wrong, creating a liability nightmare for every company whose components will be used in an end product -- as well as those that manufacture it -- if they are found to contain the six substances banned by the European Union and other groups following the EU’s lead. An OEM, for example, can be sued for not checking the parts sufficiently, potentially dragging the entire cast of suppliers into a lengthy legal battle and greatly adding to their operating cost structure.
Pulling a product from the shelves or banning it from a market due to non-compliance could be as minor as losing one contract among many for companies with a huge customer base. For many others, however, it may mean the difference between survival and bankruptcy -- particularly if the company has bet the bank on hitting a market window.
Customers already have demanded distributors such as Avnet, TTI and Newark InOne, among others, to guarantee that products they ship are lead-free. So far, all of them have refused because they say the information available to them isn’t solid enough to make any guarantees.
“As a distributor, it’s impossible for us to certify them,” said Paul Tallentire, president of Newark InOne. “When they say inventory is already or they do not change the part number, we go through and visually check every product. We’ve already checked more than 20,000 products. We also started to test for the six banned substances on the basis of how much confidence we have in the products.”
That confidence is high among certain vendors, and not among others, Tallentire noted. Newark InOne, which currently stocks 185,000 products, has separated companies into those that are considered high risk and those that aren’t, a difference that is determined by a risk assessment matrix the company has established based upon the quality and extent of data supplied to the distributor, whether the manufacturer has changed the part number and a half-dozen other criteria. Of those companies that fell into the high-risk category, only about 60 percent of the products said to be compliant actually were in compliance.
That makes guaranteeing parts particularly dangerous for distributors. Add to that companies that have not changed parts numbers and mixed up the parts in the supply chain when some non-compliant parts were returned -- something that has happened regularly throughout the electronics industry -- and the problem becomes even tougher to sort out.
Avnet’s solution, like Newark InOne’s, is to do the best job it possibly can researching the mass of inconsistently reported data from suppliers to customers. But Jim Smith, senior VP of worldwide warehouse and distribution at Avnet Logistics, believes no distributor will be held liable for wrong information provided by a manufacturer. He believes this issue could take years to fully sort out.
“The bottom line is that this issue of lead-free will go on a lot longer than people anticipated,” Smith said.
Making matters worse, some companies have pushed toward lead-free compliance only to be pulled back by their customers. SMSC, for example, was told by automobile makers that rushing into lead-free would create problems given the long lead-time for qualifying parts for cars.
“We found we need to have leaded and lead-free parts,” said William Shovers, senior VP of global operations at SMSC. “For us, it becomes a logistics challenge. …We have to have lead and lead-free parts. It winds up being multiple parts.”
Keeping track of those kinds of parts on all sides is what has many companies worries, and with liability looming over the whole supply chain many companies say privately they expect to see higher legal expenses in coming months.
