Training: Material Compliance Requirements - PowerPoint Presentation

Training: Material Compliance Requirements for Cummins Suppliers

Agenda Introduction Cummins’ ApproachSupplier RequirementsFull Material Disclosure (FMD)FMD FormatFMD Reporting ToolsReference MaterialRegulations Driving RequirementsRoHS BasicsREACH BasicsELV BasicsNext Steps 2

Introduction Depending on the business, market and product, companies face different rules of product compliance. Some rules such as RoHS, REACH and ELV require compliant supply chains. This means that even though they come from the EU, they have global implications.In order for Cummins to continue to sell products around the globe, we must be able to demonstrate our products are compliant.3

Introduction (cont..) This presentation is intended to inform you about the regulatory requirements of Cummins and what we require of you as a valued supplier of parts / components NOT trying to mandate how you, as a business, comply with the relevant laws for your own products (if in scope) – if in doubt, please seek professional adviceFailure to fulfil these compliance requirements may lead us to seek alternative solutions4 Insert Data Classification

Cummins’ Approach 5 Insert Data Classification

Cummins’ Approach Cummins products + relevant markets + legislation = challenging and complex compliance requirements Our Mission: Demanding that everything we do leads to a cleaner, healthier, safer environment To comply and execute our mission, we need to know what is in our productsMay need to perform supplier audits and testing, as needed, depending on product risk6 Insert Data Classification

Supplier Requirements 7 Insert Data Classification

Supplier Requirements: Full Material Disclosure Provide a full material disclosure (FMD) in industry standard format within 45 days of our request.What can go wrong?If we don't have the information, we can't provide compliance information to customers and regulatory authorities, and our market access may be limited.If a only partial declaration is provided, you will be required to submit new declarations upon regulation changes, which can be as frequent as every six months. 8 Insert Data Classification

Supplier Requirements: FMD Format The full material disclosure must be declared using the industry standard format, IPC1752A:http://www.ipc.org/ContentPage.aspx?pageid=Materials-DeclarationThis standard allows the information to be read by compliance databases, which enables Cummins to provide a product compliance status report. If suppliers are unfamiliar with this standard, Cummins recommends three other ways you can comply with this request: IMDS – Automotive applications only BOMCheck Anthesis Template Additional guidance on these methods are described in the following sections. 9 Insert Data Classification

Supplier Requirements: FMD Reporting Tools The International Material Data System (IMDS) is used by suppliers worldwide to support the automotive manufacturers (www.mdsystem.com).If you sell a product into the automotive industry, it is likely that you are already familiar with the IMDS.Unfortunately, other industries are not as fortunate to have a common tool. Therefore, for Cummins, non-automotive components that are subject to RoHS and REACH, alternative methods of reporting are necessary. Caution: Hewlett Packard Enterprise (HPE) takes the IMDS Terms of Use (ToU) seriously. If you have any doubt regarding adherence to the ToU, contact HPE . If you are unsure if your part is used in an automotive application, please send an email to supplier.compliance@cummins.com . If you receive a request specifically asking to use IMDS, please submit data to Cummins ID 3664 . While submitting the MDS, supplier must include the Cummins part number and six-digit Vendor ID in order for the data to be accepted. 10 Insert Data Classification

Supplier Requirements: FMD Reporting Tools BOMCheckBOMCheck is an online resource for sharing product compliant data which can be accessed at www.bomcheck.net.Using BOMCheck benefits both suppliers as the supplier data for a single part number would only need to be entered once, but can be shared with multiple customers. The cost for using BOMCheck is minimal: Free 90 trial Free for companies with total annual turnover of less than 3 million Euros Otherwise, only 300 Euros per year Creating a Supplier Account is easy. Click the green “Suppliers” button at the top, then click the blue “Create a supplier account” button. There are several training opportunities (pre-recorded webinars, live training webinars, and User Guides) 11 Insert Data Classification

Supplier Requirements: FMD Reporting ToolsAnthesis SpreadsheetThis Excel tool can also be used to provide product compliance data.If you did not receive a copy of your parts list and spreadsheet, please e-mail the Cummins Supplier Compliance team at the e-mail address following this presentation.Tool Demonstration…Please refer to the Quick Start Guide for additional guidance.The Quick Start Guide and additional information may be found on the Cummins Supplier Portal. A link to the Portal, by clicking the “Help” button, may be found on the Products tab of the Anthesis spreadsheet. 12 Insert Data Classification

Supplier Requirements: FMD Reporting ToolsAnthesis Spreadsheet Common ErrorsBusiness Info Tab Select a Template Setting (Class A, C, or D)Enter your Company Name and Vendor ID as it appears in the Parts ListProducts Tab (For Class A, C, and D)Enter the Part Numbers as they appear in the Parts ListEnter the weight and unit of measure for each part Query List Tab (For Class A) Create three rows EUROHS- 1506 EUROHS- 0508 EUREACH- 0117 13 Insert Data Classification

Supplier Requirements: Reference Material Access the Supplier Portal site by either clicking here or the Help button in the Anthesis template to reference the following materials:Materials Compliance Requirements for Cummins Suppliers PresentationAnthesis TemplateAnthesis Quick Start GuideFor questions not answered by the portal, please send an email to supplier.compliance@cummins.com 14 Insert Data Classification

Regulations Driving Requirements 15 Insert Data Classification

Regulations Driving Requirements: RoHS BasicsThe European Union’s Restriction on Hazardous Substances16

Regulations Driving Requirements: RoHS BasicsWhat is RoHS?RoHS is an European Union (EU) legislation that restricts certain substances in electrical and electronic equipment with the goal of reducing the environmental impact of such equipment.It originally entered into force July 1, 2006 (2002/95/EC) and was later revised June 8, 2011 (2011/65/EU) and entered into force July 3, 2013.The latest version of RoHS may be found here.Countries beyond the EU (China, Korea, India, etc.), have also adopted RoHS-like legislation.Many Cummins products are considered electrical and electronic equipment. 17 Insert Data Classification

Regulations Driving Requirements: RoHS BasicsRequires declaration that relevant products placed on the market do not contain above threshold level of certain substancesRequires CE MarkingRequires Declaration of ConformanceRequires Technical DocumentationIncludes exemptions with expiration dates18 Insert Data Classification

Regulations Driving Requirements: RoHS BasicsRoHS Substance RestrictionsSubstances restricted (Percentages indicate the max tolerated and are based on the amount of the substance in a single homogenous material):Lead (0.1%)Mercury (0.1%Cadmium (0.01%)Hexavalent chromium (0.1%)Polybrominated biphenyls (PBB) (0.1%)Polybrominated diphenyl ethers (PBDE) (0.1%)Bis (2-ethylhexyl) phthalate (DEHP) (0.1%) Butyl benzyl phthalate (BBP) (0.1%) Dibuytl phthalate (DBP) (0.1%) Diisobutyl phthalate (DIBP) (0.1%) Some exemptions exists 19 Insert Data Classification

Regulations Driving Requirements: RoHS BasicsExemption Examples:Lead as an alloying element in aluminum containing up to 0.4% lead by weight is permitted (6b).Copper alloy containing up to 4% lead by weight is permitted (6c).Lead in high melting temperature type solders (i.e. lead based solder alloys containing 85% by weight or more lead) (7a).Keep in mind that exemptions have expiration dates! 20 Insert Data Classification

Regulations Driving Requirements: RoHS BasicsWhat is a Homogenous Material?Either:A material with a uniform composition throughoutA material that consists of a combination of materials, that cannot be disjointed or separated into different materials by mechanical actions such as unscrewing, cutting, crushing, grinding or abrasive processes.EACH homogenous material must be compliant. If not, the whole product is not compliant.Examples: plastic computer screen cover, a copper wire inside a cable, solder part of a solder joint, material layer in a bearing. 21 Insert Data Classification

Regulations Driving Requirements: RoHS BasicsCommon homogenous materials containing restricted substances:Lead – Solders, termination coating, paints, pigment, PVC stabilizerCadmium – Coatings, solders, semiconductors, contacts, PVC stabilizers, pigmentsMercury – Fluorescent lamps, batteries, sensors, relaysHexavalent Chromium – Coatings to prevent corrosion (on zinc, aluminum or in paints).PBB, PBDE – Flame retardant in certain plasticsDEHP, BBP, DBP, DIBP – Plasticizers in certain plastics and cables 22 Insert Data Classification

Regulations Driving Requirements: RoHS Basics Products that were compliant to RoHS 2002/95/EC may not be compliant to RoHS 2011/65/EU.Even products that were compliant to RoHS 2011/65/EU in the past, may no longer be compliant, if the exemption has expired!It is critical that suppliers provide Cummins with up-to-date compliance information - New substances may be added to RoHS and exemptions expire, which may change the compliance status of your products. 23 Insert Data Classification

Regulations Driving Requirements: REACH BasicsThe European Union’s Registration, Evaluation, Authorization and Restriction of Chemicals24

What is REACH? REACH is an European Union (EU) legislation designed to protect human health and the environment. It entered into force in June 2007. Aims to monitor and restrict the movement of hazardous chemicals through the EU, including substances in preparation form and incorporated into articlesIt replaces 40 years of old EU chemical legislations by compiling them into oneIt contains 849 pages of text, plus tens of thousands of pages of technical guidance.Applies to EU legal entities but many requirements flow down the supply chain.Requirements apply to all industries and vary depending on the product (substance/material or article)25 Regulations Driving Requirements: REACH Basics

Regulations Driving Requirements: REACH Basics Registration – A substance must be registered with the European Chemicals Agency (ECHA), if the substance is intentionally released from an article > 1 ton per year. Authorization – Banned substances, will need special authorization in order to continue to be allowed used in the EU.Potential banned substances are taken from the Candidate List (aka: Substances of Very High Concern, SVHC) list.Companies using SVHCs may have Notification (to ECHA) and/or Communication (to Customers) requirements depending on the amount of the SVHC.It is critical that suppliers provide Cummins detailed information regarding the amount of any SVHCs in their products. This information is needed to determine Cummins’ or Cummins’ customers’ Communication and Notification obligations. 26 Insert Data Classification

Regulations Driving Requirements: REACH Basics What is an article?An object which, during its production, is given a special shape, surface or design which determines its function to a greater degree than its chemical composition. 27Insert Data Classification Weight of substance = Concentration Level Weight of substance = Concentration Level OA5 Ruling – “Once An Article is A lways An Article” Threshold limits are now calculated at the smallest component with an engineered shape.

Regulations Driving Requirements: REACH Basics More on SVHCs…SVHCs that are added to the Candidate List are those that are a candidate for elimination. These include: carcinogens, mutagens, reproductive toxins, persistent, bio-accumulative toxins, very persistent and very bio-accumulative toxins, endocrine disruptors, and substances of equivalent concern.The Candidate List continues to grow and currently numbers 173 SVHCs.The current list of SVHCs may be found here.We are requiring suppliers to provide FMD so that the supply chain does not need to be re-surveyed every time a new SVHC is added to the Candidate List. 28 Insert Data Classification

The European Union’s End-of-Live Vehicles Directive 29Regulations Driving Requirements:ELV Basics

Regulations Driving Requirements: ELV Basics What is ELV?ELV is an European Union (EU) directive that restricts certain substances in automobiles goal of reducing the environmental impact at the end of the vehicles useful life.It originally entered into force September 18, 2000 (2000/53/EC) and set the stage for other product compliance regulations such as RoHS and REACH.ELV is applicable to automobile manufacturers that manufacture or import automobiles into the EU. However, most all global automotive manufacturers have adopted the requirements.The Cummins products, used in automobiles, must comply with the ELV to meet their customer’s requirements. The current ELV directive may be found here and current exemptions may be found here . As the burden of ELV compliance is on the automotive manufacturers, the automotive manufactures agreed upon a common tool (IMDS) for which their supply base could provide their material declarations. 30 Insert Data Classification

Next Steps 31 Insert Data Classification

Next Steps Respond to our requests for information in a timely fashion (45 days from request)Upon submission of material declaration, look for a system-generated email notification of acceptance or rejectionIdentify a Product Compliance contact at your organization and send the contact information to supplier.compliance@cummins.com Cascade requirements to your supply chain Include requirements as part of your terms and conditions Continuously monitor product compliance regulations Join industry groups to help keep your company up to date and/or consult professionals if you require assistance in your compliance efforts For further questions, send an email to supplier.compliance@cummins.com 32 Insert Data Classification