Consortium-supported Blockchain Applications: Materials Content Declarations
Sometimes, it takes a village (Part 3 in a series)
(This post is a continuation from two earlier posts, referenced in the footnote.[1])
Another area, where a consortium approach may be the most practical way to solve a problem that affects the entire electronics industry, is in the processes that support companies’ environmental compliance programs.
Companies that sell electronic products into major markets such as North America, Europe, China, Japan, and Korea, have to comply with relevant laws that place restrictions on hazardous substances and/or require disclosure of their presence above reporting thresholds. Examples of these laws include the EU Directive on Restriction on Hazardous Substances (RoHS) and the EU regulation on Registration, Evaluation, Authorization and Restriction of Chemicals (REACH).
Typically, companies at each major stage of the supply chain (component manufacturer, subassembly manufacturer, EMS provider, OEM) need to collect data on the materials content of the parts & subassemblies they purchased and put into their own products. For example, in order to comply with RoHS requirements, an OEM like IBM, which produces finished products that are sold to users, would collect “Materials Content Declarations” (MCDs) from its suppliers (which might provide anything from components to major assemblies, like assembled server boards or hard disk drives). The OEM would then roll those MCDs up against the BOM for the final product so that it could self-declare that the product complies with the RoHS requirements.
A similar process would occur at earlier stages of the supply chain. Assemblers (like EMS providers) have to collect information on the components (and any subassemblies) that they purchase, and their suppliers have to do the same thing. Even a semiconductor manufacturer has to collect information on the lead frames and other materials they purchase, and calculate the overall materials content (of each regulated substance) in their finished products.
Various OEMs have developed their own requirements/formats for collecting MCDs from their suppliers. Suppliers (for instance, companies that produce capacitors, transistors, or integrated circuits) which provide products to multiple customers — each with unique data disclosure requirements — would have to provide MCDs in multiple formats. Alternatively, a supplier may choose to provide product content information in a format of its own, requiring its customers to interpret its disclosures. Yet another approach to information disclosure may involve a supplier simply posting MCDs on its website, expecting customers to search for what they need. These inconsistent approaches to product materials data disclosure generate a tremendous amount of non-value-added work and extra effort for both suppliers and their customers.
The collective inefficiencies across industry, such as the extra effort described above, suggest that there should be significant industry support for a common, consortium-based approach. Such an approach would establish a standard for material content reporting, so that most data needs would be addressed in a common way for all participants in the supply network. We think a blockchain-based application would provide an efficient and trusted means of making product content information available throughout the supply chain. With the use of smart contracts, suppliers could grant access to intended customers.
The solution would eliminate effort by providing a common industry standard for the MCD document & process. Companies providing the information would enter their data once on the network; companies using the information would obtain permissioned MCDs through a common, automated, process. Blockchain would provide the level of security, privacy, and assured transmission of the information between partners needed to make the process reliable and trustworthy.
No consortium has yet been established for the purpose of building a cross-industry MCD process; the short-term plan is to work to find additional companies that might be interested in helping to identify requirements for the process so that we can collectively identify an appropriate “Minimum Viable Product” that would be appropriate for an initial Proof of Concept blockchain application.
For additional information, please see:
Orchestrating tomorrow’s supply chain: Infusing the electronics supply chain with new potential, IBM Blockchain for Electronics, and twelve new reports to help electronics executives make informed decisions
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