3 Potential Moments of Regulatory Crisis

A moment of regulatory crisis is a point in time where past inattention to compliance issues leads to critical problems. There are at least three moments of regulatory crisis that every company should be aware of.

moments of regulatory crisis

#1. Moment of Regulatory Crisis – Found in Design

This moment of regulatory crisis is more of an annoyance than a crisis because the R&D team still has significant flexibility to make changes to the product. Let’s look at the following example.

A company designed an electronic product that will be an excellent fit for the US market. When preparing the product for its release on the US market, the marketing team states that the same device will have a high sales potential in Europe too. The problem, though, is that one of the product components contains a hazardous substance that is illegal for use in EEE according to RoHS. The company can solve this issue in one of the following two ways:

  • Replace the substance with another non-banned chemical with similar properties and try to correct for any resulting change in the performance of the product. Release the revised product on both markets simultaneously to compare their market performance.
  • Design a similar product model for the EU market and, while waiting for the necessary approvals, release the original model on the US market to avoid delays.

In both cases, the cost of taking the product into world markets escalated, but the risk of manufacturing non-compliant products was eliminated.

#2. Moment of Regulatory Crisis – Found in Production

This moment of regulatory crisis is an internal issue that leads to internal delays, process disruption and expense. Let’s look at the following example.

A radio equipment manufacturer discovered during production that standards in place in North America prohibited the use of an external antenna in a particular frequency band.

Unfortunately, if this type of issue is found in production, the recovery options are more limited, and the impact is greater. In the example above, the production process was stopped, project resources were redirected, and a redesign effort was launched. Retesting of the additional product model before certification led to increased costs and delayed the product release. The desire and attempt of the manufacturer to test and certify a single product for global purposes were foiled.

#3. Moment of Regulatory Crisis – Found After Sale

A successful wireless manufacturer had a globally deployed product that had passed all product safety standard requirements when tested for certification. However, at some point during the product lifecycle, an oscillator vendor changed a component, introducing faster rise times. Pleased with the product reliability boost, the engineers incorporated the revised part through an engineering change order process. Months after the improved product began shipping, an Italian customer discovered that the device didn’t meet the European requirements for radiated emissions. The product had become a non-compliant product. As a result, the customer alerted RAPEX of his “discovery”, resulting in damage to the company’s good name and product recall.

This example highlights the fact that manufacturers must effectively manage their compliance documentation and make sure that R&D teams have access to it. With accurate information on product safety requirements, the engineers would have better analyzed the revised component and predicted the consequences of its implementation in the product design.

product compliance management software

Solution: Implementing Design for Compliance

Design for Compliance as a term denotes a practice that considers the compliance environment at every stage of a product lifecycle. It is a way to improve the process of product design and prevent moments of regulatory crisis. This approach continuously asks key questions, such as:

  • What standards apply to the product, and how do they vary among the countries?
  • Does the product design optimize or limit the ability to achieve certification?
  • Would any design changes simplify the certification process?

Implementing such an approach requires not only companies to identify and address regulatory requirements early in the product lifecycle, but also include product compliance management in all stages. This consists of the very beginning stages of product design before any R&D resources may be involved. A thorough review of the target markets should help identify the intended use of the product as well as the countries in which it will be sold. The next challenge is to make sure that designers have the tools available to identify any regulatory violations.

However, the regulatory maze is far too complex and changes too rapidly for any person to hope to address without automation. International product safety standards and regulations are in a constant state of flux and revision, and they can impact a product anywhere along its lifecycle. Because of that, the compliance checks in the design phase are critical to developing products that meet current regulatory demands.

Thus, R&D teams should have access to product compliance tools that can automatically cross-examine their designs, list all relevant product safety regulations, and provide notifications for whenever a standard or regulation is about to be changed or updated.

Documenting Compliance

Compliance must not only be implemented across the product lifecycle, but it often must also be proven. Documenting product compliance is an essential aspect of compliance itself. The company manufacturing products should have access to all regulatory rules as well as the proof that they are being adhered to. In many cases, the documentation is the source of compliance.

create and manage compliance documentation digitally

With the increased demand for public safety, product documentation has become increasingly complete. Its completeness has placed an increased demand on manufacturers to provide accurate, detailed information about their products. This documentation often includes identification of raw materials, product registration forms, test reports and certificates, product labels, transportation instructions and permissions, and detailed material safety data sheets. Creating, storing and keeping up to date all this documentation can be a cumbersome manual effort if it doesn’t rely on reliable, automated processes.

To sum it up, there are at least three moments of regulatory crisis that can be prevented by implementing compliance across all stages of the product lifecycle. By doing so, a company can benefit from the following:

  • Financial – minimal need for costly redesign, reduced retesting costs, minimized risk of manufacturing noncompliance products, accelerate revenue recognition from new products, and lowered costs of duplicative testing for multiple markets.
  • Market – reduced time-to-market, increased market acceptance, better customer confidence and branding opportunities.
  • Corporate – reduced company liabilities, enhanced corporate recognition and increased stakeholder value.

A good approach to preventing moments of regulatory crisis is following a Design for Compliance approach and using a product compliance management system. The system should be able to streamline compliance workflows, ensure collaboration between different internal departments, and provide regulatory monitoring and reporting.

Learn here about the limiters that can affect your product compliance and what solutions to implement to overcome them.

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