Surveying the Essentials of Product Compliance and a Process Overview

The following slides shall give you an introduction and overview on the challenges and the processes of Product Compliance, supported by the 9 assigned scope items. These scope items support business roles related to product compliance and business roles related to logistics by providing functionalities to do the following:

• Manage Compliance Requirements and Compliance Purposes;
• Maintain basic compliance data, assess compliance requirements and document the assessment results; based on system integrated, embedded Regulatory Content.
• Furthermore, functionalities integrated in logistic processes allow checks and output of compliance information, that is, Product Compliance checks, output of Dangerous Goods data on logistic documents or automated shipment of Safety Data Sheets.
• Analytic capabilities complete the set of Product Compliance functionalities.

The Solution Scope of SAP S/4HANA for product compliance is framed by 9 Scope Items. According to the following content structure, the functionalities are grouped into 4 Solution Areas:

• Compliance Data Foundation - CDF

  Here we have no specific scope items assigned, but this groups functionalities for maintenance of basic compliance data, underlying all processes to ensure product compliance.

• Product Marketability - PMA

  The scope items of this solution area mirror the logistic view on materials as well as the assignment of tasks to business roles: we basically differentiate what is going into production and what is produced.

  • Chemical Compliance Approval for Purchased Material and Supplier (‏31G‏), which is the major task of the role Master Data Specialist - Product Compliance.

  • Assess Marketability of a Product (‏31H‏) - assigned to the role Product Stewardship Specialist - Product Compliance.

  • The integration of Product Marketability into logistic processes is supported by scope items

    • Supplier Compliance in the Value Chain (‏5OJ), which enables the integration of a supplier check in purchasing processes;

    • Chemical Compliance in Sales (‏31J‏), which provides the integration of checks against marketability assessment results into the sales processes;

    • Substance Volume Tracking (40L), which monitors quantities of affected substances being contained in products or raw materials. With SAP S/4HANA 2022, rudimentary functionality is available.

• Provision of Safety Data Sheets for products is another task of the role Product Stewardship Specialist - Product Compliance, covered by the scope items:
  • Manage Safety Data Sheets for Products (‏3VR‏) to maintain final safety data sheets as documents for products.
  • Safety Data Sheets in the Value Chain (‏3VQ‏), supporting the automated shipment of Safety Data Sheets  - initially and in case of changes also subsequent shipments according to legal timelines.
• Managing Dangerous Goods is an important task, which is fulfilled by the role Dangerous Goods Specialist - Product Compliance. Two scope items provide required functionalities:
  • Assess Dangerous Goods for a Product (‏3FC‏) - following the regulation defined principles, the first step is the identification of the dangerous goods, resulting in the basic classification. Based on this, the packaging related final classification can be processed with the outcome of the texts to be printed for documentation.
  • The integration into logistic processes is subject of Dangerous Goods in the Value Chain (‏3G8‏), providing integrated checks regards transport permissibility and output of dangerous goods information on documents.

Before we look at the processes of the Product Compliance in more detail, let's have a brief look at the apps providing related functionalities.

You will find the apps grouped according to the solution areas of Product Compliance respective the process context:

• Compliance Data Foundation - CDF: Is all about managing basic compliance data e.g. compositions for products and raw materials. Company Substances serve as base layer, allowing i.e. to relate to numerous substance focused regulations. Regulations and other compliance obligations are managed as Compliance Requirements, which are grouped by Compliance Purposes according to regional / organizational aspects or criteria related to the product portfolio.
• Safety Data Sheet Management - SDS: Allows you to allocate finished safety data sheets to your products and supports automated shipment based on sales business transactions. This frames the legal obligations to provide safety data sheets to customers upon first delivery of the product or inform on relevant changes by a subsequent shipment.
• Product Marketability - PMA: Assessment of marketability requirements is key to ensure compliance regards the business processes to produce and sell your products. Following a detailed assessment of the marketability requirements you consolidate the results in the market assessment.
• Dangerous Goods - DG: Is indispensable when it comes to sell and transport your products to the customer. According to the regulations' approach you first identify the dangerous good in the basic classification. Based on this you process the final classification of the packaged product along with texts required for documents and applicable labels and marks.

Integration of Product Compliance with Product Master is based on the Indicator Compliance Relevant. As soon as this indicator is set to "Yes" in the Product Master a Request from Logistics is created for the product. This request shows up in the app Process Requests from Logistics with the origin Material Master.

Based on this initial setting for the product, subsequent requests are initiated based on changes:

• Changes in material/product master
  • New distribution chain maintained
  • New plant maintained
  • Change of Procurement Type
• Business transaction, i.e. sales: in case the product is sold to a country, not assigned for the business process "Sell in", a request from logistic is created, in case of missing
  • Dangerous Goods-assessment
  • Marketability assessment
  • Safety Data Sheet

The Compliance Information - For Products app is needed for any user in the value chain having to retrieve the current Compliance Status for a specific product/material regards the business processes:

• Production
• Sales
• Dangerous Goods

Information is easily accessible via a map or a table view and you can directly initiate a request to assess a country in case assessment for one of the business processes is missing.

The Process Request from Logistics app is the main collaboration tool to initiate product compliance processing related product master data. A compliance request can be initiated:

• Upon new or changed product or raw material master data.
• Out of the app Compliance Information - For Products, from which a sales or production employee can request a product marketability assessment for selling or producing a product in a new country/region. Same way you can initiate requests for safety data sheet management or dangerous goods assessments.
• Out of sales documents, when assessments for an affected country are missing, requests are created automatically.

In the request, the product stewardship specialist for product compliance gets an overview: 

• Of the requests from the logistics department to verify the countries in which each product may be sold and produced, and which compliance purposes apply to the product. 
• If a product is labeled a 'new product'. Then it also requires a new compliance view. The requests are sorted by due date so that work can be prioritize.

If a compliance view already exists, data changes in the request are propagated to the associated compliance view for further processing.

There are two apps to Manage Basic Compliance Data - one for Unpackaged Products, the other for the underlying Raw Materials.

Basic Compliance Data comprises:

• Assignment of materials/products, i.e. a material-/product master is created. It can be, for example, a new packaging size to be assigned to an existing unpackaged product.
• Composition data (for unpackaged products the material-based composition before and after production, legal deviations and the analytical composition) but also analytical compositions for raw material or supplier raw materials.
• Assignment of markets and countries/regions - automatically assigned, based on views of the material-/product master or requests launched from app Compliance Information - For Products. Manual assignment is also possible.
• Assignment of compliance purposes - automatically assigned default Compliance Purpose for Unpackaged Products or Raw Materials and manual assignment of specific purposes regards i.e. the markets, product group or application.
• Assignment of property groups to unpackaged products, raw materials and substances. This allows editing properties like toxicological information, safety-related or physical-chemical properties.

From the Manage Basic Compliance Data app, you can navigate directly to the Compliance Assessments of the unpackaged product or raw material. 

Product Marketability Assessments for products - unpackaged or packaged - are processed on two levels:

1. Marketability Assessments for Products - this is the detail level, where you assess all Compliance Requirements for the solution area Marketability being assigned to the product via the Compliance Purpose(s).For assessments related to substances, you can navigate into details of the relevant  substance based composition of the product but also to the raw materials bringing the substances into the product.
2. Market Assessments for Products - this is the aggregation level for use by integrated compliance checks in business transactions from logistics. Here you maintain the consolidated marketability assessment status per country and business process - Production or Sales.

   When you maintain this overall status for a country per business process, you have to derive a consolidated compliance status. To do so, you can navigate into the assessment results of all marketability assessments valid for the country under consideration.

   This consolidated marketability status per country and per business process is the level being checked by the logistic-integrated compliance checks.

Raw Materials are the underlying level of your products. As marketability requirements assigned to the products are propagated to the raw materials going into production, any marketability assessment result for a raw material goes into the compliance calculation of the related products.

You assess requirements for raw materials using the app Manage Suppliers Compliance - for Raw Materials providing access via the supplier of a raw material or you use the app Assess Marketability Requirements - for Raw Materials. Here you approach assessments per compliance requirement. In both apps, you can also use the generic search to find the raw material under consideration.

For raw materials, assessments go even deeper: for supplier raw materials and suppliers, but also to the substances being components of the raw material. While the system can only process substance related calculations and compliance checks with known substances of a raw material, there is the complementary supplier compliance. This supplements calculations when there is no 100% declaration from a supplier. It is also applicable for requirements related to the supplier granting compliance e.g. with a certificate or another kind of statement.

Assessments made on the level of a supplier raw material are specific. These compliance results remain with the raw material, the supplier is assigned to.

Substances are the most detailed level for assessment of marketability requirements. A released assessment for a substance immediately goes into the compliance calculation of any other occurrence of this substance - for raw materials or for products. You have to assess a substance only once per assigned compliance requirement.

You assess requirements for substances using the app Assess Marketability Requirements - for Substances. Here you approach assessments per compliance requirement, but you can also use the generic search to find the substance under consideration.

Following the dangerous goods regulations' methodology, classification is processed in two steps:

1. Basic classification of the unpackaged dangerous good - this means you identify the dangerous good by assigning the applicable line of the regulations' dangerous goods list, means the UN-Number and packing group. You retrieve the data from the system integrated regulatory content. Finalizing this initial step, you review the dangerous goods basic description.
2. Classification of the packaged dangerous good - to be transported, dangerous goods need to be packaged. In this context we also consider a tank or a bulk container as a means of packaging. Completing this second step, utilizing description templates provided with the systems integrated regulatory content, you derive the applicable description for dangerous goods documents as required by the dangerous goods regulations along with required labeling and marking.

Integration with logistic processes is key to safeguard compliance with Dangerous Goods Regulations in every business transaction, where dangerous goods products are transported. Checks and generation of required documentation directly retrieve data from the Dangerous Goods Assessment results.

Safety Data Sheet Management comprises the essential functionalities to comply with legal obligations to provide Safety Data Sheets (SDS):

• Initially to a customer upon the first order for a product.
• Subsequently, in case of substantial changes of the SDS - here the legally defined timelines are automatically applied for subsequent shipments.

Upload released Safety Data Sheets that you have created according to a country or regions regulation-based content requirements and languages for your product.

The Compliance Requirements for Safety Data Sheet Management (SDS-CR) provided with the system integrated regulatory content imply required languages per country so that you can specifically assign the translated SDS. Along comes the country specific, regulation-based timelines which contain your responsibility for subsequent shipments. This legal information is foundation for integrated SDS checks in  SALES and to control automated SDS shipments which you can monitor to solve shipment issues and safeguard compliance.

In case a country is missing, you can apply an existing SDS Compliance Requirement to this country, alternatively you can create an own SDS-CR.

Compliance Requirements (CRs) and Compliance Purposes (CPs) set the stage to assess compliance obligations.

You must process three steps to make Compliance Requirements available for assignment to products or raw materials and thus for assessment.

1. With the app Manage Compliance Requirements, you manage the Compliance Requirement Versions (CRV) of a CR, beginning with creation of the first version. You can set a version to Under Revision, create a new version and release it to make it available for activation or set a previous version to Historical if no longer applicable for assessments. For Compliance Requirements being provided with the system-inherent regulatory content, you can see details of the CR - the maintenance status is set automatically.
2. In theActivate Compliance Requirements app you activate a released CRV to make it available for assessments. If this is the first version of a compliance requirement, it is essential to make this CR available for assignment to Compliance Purposes. With the assignment of a Compliance Purpose to a product or a raw material, you initiate the assessment of the requirements.
3. In the app Manage Compliance Purposes, you define Compliance Purposes to group Compliance Requirements according to organizational or product portfolio aspects as applicable for your company.

The Analyze Assessment apps allow you to create an overview on compliance assessments by applying filter criteria like processing or compliance status. You can also filter by compliance purpose compliance requirement. For the solution area Dangerous Goods, the analyse apps provide functionalities for mass data maintenance when it comes to creation of new classification versions respective setting classifications to historic, i.e. after end of the transition period.

The apps Substance List - Impact on Sales / Suppliers / Production allow you to find out how your business is impacted by substances being assigned to monitoring or restriction lists.

• Impact on Sales / on Production retrieve substances being contained in your products.
  • For Sales, per substance list and affected substance, you get e.g. the related products along with the customer.
  • For Production per substance list and affected substance, you get the affected countries and the compliance status for the business process Production.
• Impact on Suppliers retrieve per substance list the affected substances being constituents of raw materials along with the raw material and supplier(s).

Compliance Data Foundation on one hand frames the conceptual basis of Product Compliance with its solution areas and, on the other hand, provides essential processes to manage basic compliance data. This relates in particular to:

• Managing Compliance Requirements and Compliance Purposes, which constitute regulations or policies as the basis for compliance assessments.
• Managing Substances Compliance - company substances linked to legal listed substances representing the chemical basis for compliance assessment.
• Managing Basic Compliance Data - applicable for products and underlying raw materials. This data sets the stage for assessments and compliance calculations specific per solution area. An important aspect here is the calculation of composition data along the product hierarchy, finally providing a substance-related perspective which is key for almost any compliance subject.

The solution area Product Marketability focuses on the business processes Sales and Production, for which you have to take care of applicable compliance obligations.

• For Production, you must assess compliance of the raw materials going into production and the resulting products with the respective regulations of the countries or regions, in which your company produces. From a logistics perspective, this relates i.e. to the plant views maintained for a product in the product master.
• For Sales, in addition to the production countries, you must ensure compliance with the regulations of the market countries. From a logistics perspective, this relates i.e. to the distribution chains maintained for a product in the product master respective the counties you ship the product.

To serve these objectives, PMA provides three major assessment levels:

1. Product
2. Raw Material with supplier raw material
3. Substance

As Compliance Requirements are propagated along this product hierarchy to subordinate levels, compliance results of underlying levels are utilized for calculation on higher levels.

Finally, you consolidate the compliance results of individual requirements for a product. This market assessment result per country and business process is used by the integrated compliance checks in logistics.

Logistic integrated compliance checks evaluate the compliance status when processing sales transactions to ascertain that the product complies with applicable marketability requirements.

The scope items related to the solution area Product Marketability reflect these levels and functions:

• Chemical Compliance Approval for Purchased Material and Supplier (‏31G‏), which is the major task of the role Master Data Specialist - Product Compliance.
• Assess Marketability of a Product (‏31H‏) - assigned to the role Product Stewardship Specialist - Product Compliance.
• Chemical Compliance in Sales (‏31J‏), which provides the integration i.e. of checks against marketability assessment results into the sales processes.

The system-integrated regulatory content provides the legal basis, defining the marketability requirements to assessed.

Safety Data Sheet Management comprises two major functional areas which are mirrored by two related scope items

• Management of regulatory data and assignment of country and language specific Safety Data Sheets to products → scope item Manage Safety Data Sheets for Products (‏3VR‏);
• Logistic integrated Safety Data Sheet checks and shipment→ scope item Safety Data Sheets in Sales (‏3VQ‏);

The system integrated Regulatory Content provides Compliance Requirements for Safety Data Sheet Management (SDS-CR), which imply languages required per country so that you can specifically assign the translated SDS. Along comes the country specific, regulation-based timeline with regards your responsibility for subsequent shipments. This legal information is essential for integrated SDS checks and to control automated SDS shipments which you can monitor to solve shipment issues and thus safeguard compliance.

Dangerous Goods Management comprises two major functional areas which are mirrored by two related scope items

• Management of regulatory data and classification of products → scope item Assess Dangerous Goods for a Product (‏3FC‏);

  The dangerous goods assessment is processed in 2 consecutive steps:

  1. Assessment of the unpackaged product, means identifying the dangerous good which results in the definition of the dangerous goods basic description.
  2. Assessment of the packaged product - only the packaged product is permitted for transport. This final classification does not only imply assigning the packaging (a tank is also kind of a packaging since it is required to make the product transportable) but can also mean, for example, applying a special provision for the packaged product, resulting in the comprehensive dangerous goods description for legal required documentation.
• Logistic integrated dangerous goods checks and generation of documentation → scope item Dangerous Goods in the Value Chain (‏3G8‏);

The system integrated Regulatory Content provides both the required data from the specific dangerous goods list and text patterns used for generation of documentation per dangerous goods regulation or applicable labels and marks.

Product compliance processing is based on the availability of compliance requirements and an inventory of related listed substances. These are the two major pillars that are provided with the regulatory content forming an inherent part of the system.

Supplementing these pillars, there are:

• Data structures to enter required primary data
• Logic to calculate secondary data as one result layer
• Logic to process compliance data, integrated with, i.e. supply chain processes, such as sales or outbound delivery processing
• Templates providing the layout and data formatting to generate documents

Regulatory content is automatically updated, but not automatically activated. This task is carried out by the product stewardship specialists.

Prior to the activation, analytics functions enable product stewardship specialists to estimate the impact and consequences of a newly received update.

With the update and enhancement of the integrated regulatory content, you stay compliant with your product portfolio using the most recent regulatory updates.

• Reduce time to market and extend marketability
• Help ensure proper and up-to-date product declarations

• Names and numbers for 320 000+ listed substances
• Product marketability:
  • 140 compliance requirements with regulatory content
  • Additionally 67 compliance requirements for documentation only
• Dangerous goods:
  • 14 compliance requirements
  • Additionally 1 compliance requirement for text-based classification
  • Extensions for enclosure-specific list data, organic peroxides, and self-reactive substances
• Safety Data Sheets
  • 102 compliance requirements for SDS management, each one is assigned to one country
  • 95 compliance requirements for SDS related assessments
  • 92 compliance requirements for occupational exposure limits
• Standardized texts: 9200+ phrases and their translations
• Graphics: 790+ standardized graphics
• Updated with every release, continuous update for phrases

To safeguard compliance with applicable obligations, it is essential to keep the underlying regulatory content up to date.

SAP Regulatory Content Service provides continuous updates of embedded phrases. It can be connected to your productive SAP S/4HANA system (as of SAP S/4HANA OP2021 release).

SAP Regulatory Content Service will be extended to provide updates for

• Listed Substances, underlying your company substances used in Raw Materials and (unpackaged) products.
• Compliance Requirement Versions.

For technical details, please refer to SAP Note 3055767.

The app Data Migration Cockpit facilitates 13 migration objects for product compliance data:

• Product compliance info to migrate unpackaged and packaged products
• Raw material compliance info
• Substance
• Physical-chemical or safety-related properties
• Dangerous Goods Assessment
  • For unpackaged products
  • For packaged products
• Dangerous Goods technical names for substance
• Product Marketability
  • Simple compliance assessment
  • Supplier information assessment
• Safety Data Sheets
  • SDS assessment for unpackaged product
  • SDS shipment history

In the migration cockpit app, you find templates for each migration object along with documentation to manage migration of your legacy product compliance data.