Insourcing vs. Outsourcing: That Is the question!

Insourcing vs. Outsourcing: That Is the question!

By | July 6, 2017

The Challenge

While the Globally Harmonized System of Classification and Labelling of Chemicals, or GHS, was created to make identifying hazardous products and substances simpler for companies and workers, the truth of the matter is things have gotten a lot more complicated over the years. The big question is: As a company, can you handle the data overload internally or do you need to look for some outside help?

The challenge of ensuring global compliance increases each time another country updates its regulations to adopt GHS. 

It wasn’t supposed to be this way. One of the main drivers of GHS implementation was to harmonize legislation throughout the world and make it easier for the consumers and users of hazardous products around the globe to understand the information being provided on a Safety Data Sheet, or SDS, or a label. The down side of GHS is the fact that a majority of countries are applying their own criteria to their regulations. The variations include, among other things, the number of building blocks being adopted, different cutoffs being imposed and additional hazards or label requirements that are not covered by GHS.

Becoming a proficient SDS or label author is equally challenging. If an organization’s products are distributed globally, an author needs to distinguish the regulatory variations of all countries being covered. Even the knowledge of the European Registration, Evaluation, Authorisation and Restriction of Chemicals for Classification, Labelling and Packaging, or REACH/CLP, regulations are not sufficient to cover all member state countries  as there could be further country-specific requirements that need to be taken into consideration.


Words, Words and, Well, More Words

The GHS, which is the regulatory basis for a majority of countries with SDS-related regulations, is covered by 521 pages). The Regulation (EC) No. 1907/2006 of the European Parliament and the Council on the Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH Regulation) contains 505 pages; the Regulation (EC) No. 1272/2008 on the classification, labelling and packaging of substances and mixtures (CLP regulation) contains 2,014 pages. The scope of these regulations alone creates a challenge, but it does not end there. Beyond the regulations, one would also need to carefully review the guideline documents explaining the expectations for the application of the regulations and, as mentioned above, for Europe there are also country specifics to consider.

If we take a country like Canada as another example, an author would need to be familiar with the act, the regulations and the guideline (more than 350 pages). If your organization is active in 45 countries, your Product Stewardship authoring team would need to be acquainted with more than 18,000 pages of acts, regulations and guidelines.

It’s an overload of information that’s not easy to digest. In fact, it’s highly unlikely that there’s a human brain out there that can store so much information and for that person to be able to repeatedly identify—from memory—the specific regulatory sections required for all queries that need to be addressed on a weekly basis. Of course, today it is practically unthinkable to perform SDS and labeling authoring work without software solutions with integrated rules and the possibility to pull data for the assessment and classification of hazardous materials.

Even so, programmed software solutions will not grasp all the subtleties. There will always be a need for authors that are primarily regulatory experts among other necessary skills. The authoring tasks also encompass reviewing the validity and entering the initial data such as the chemical composition, the properties and toxicity data from the final-product testing, and the responsibilities also include reviewing the final compliance documents. Moreover, let’s not forget the numerous grey areas of legislation requiring experience in regulatory interpretation and knowledge of industrial practices. In addition to the authoring work, understanding the regulations and being able to explain to customers the reasoning behind the information on a document when they have inquiries is a requisite. Having these skills within your authoring team is essential.


So, what are the advantages of outsourcing your product stewardship activities such as SDS and label authoring?

When an organization is assessing whether to build their own team or outsource the authoring work, one must consider the fact that qualified resources may be limited and difficult to find. As a manager of an authoring team, I can confirm that the learning curve when hiring people with minimal experience is taking longer each year because of the amount of regulations to cover and the increased complexity of the solutions that we work with if we want to be able to comply globally.

Furthermore, authors need to be dangerous-goods experts for the SDS transport classification section. Here also, if an organization is involved in international activities, an author must be familiar with the regulatory differences for intermodal transportation and must also be aware of the countries’ regulatory variations. Leveraging a team of external company experts who’s daily job revolves around interpreting regulatory nuances and applying them in many different industry contexts is a definite asset. Over time a set of best practices is also established and then applied as a matter of course.

The need to ensure that the work meets high quality standards is also indispensable to maintain control over the risk of noncompliance. An authoring team that has integrated quality assurance activities that are performed by senior team members is also an important benefit.

Another advantage of outsourcing is the possibility of covering all time zones. A resource available to tackle urgent requests is an asset for an organization. Being able to count on an expert that is readily available to respond to regulatory questions whether the need is internal, for customer inquiries or for auditing purposes, means avoiding disruptions of an organization’s daily activities.


Keeping an Eye on the Ultimate Goal

The goal of your company, as with most companies, is to maintain compliance in the most cost-efficient, effective manner possible.

The costs of outsourcing may seem considerable at a first blush, but it is a worthwhile exercise to calculate the return on investment for outsourcing activities. Ultimately the choice is one each organization must make understanding the pros and cons of each option.

Some companies have opted for a hybrid approach, maintaining a core regulatory authoring team but also outsourcing to an external team in certain scenarios where there’s a sudden spike in demand for regulatory expertise. Spikes in demand can occur when your company is going through major changes such as:

  • •   Expansion into new markets
  • •   Acquisition of new businesses
  • •   Launch of new product lines
  • •   Large scale regulatory changes


With all things being considered, the Managed Regulatory Services outsourcing approach can be a cost-efficient solution for your organization that will contribute in customer satisfaction, enable reduction of compliance risks and support business growth.

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Sphera is the leading provider of Environmental, Social and Governance (ESG) performance and risk management software, data and consulting services with a focus on Environment, Health, Safety & Sustainability (EHS&S), Operational Risk Management and Product Stewardship.
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