A close look at how inconsistent, inefficient and inaccurate chemical inventory management processes are incurring higher risk, and how to address the challenges.
The frequency with which federal, state and local safety regulations are being updated is not only increasing, but the regulations are also growing in number and complexity, making it confusing and difficult to ensure compliance.
When the regulations concern chemicals, it is vital that the organization deploy efficient processes and systems that enable laboratory and Environmental, Health and Safety (EHS) personnel to easily comply with the regulations, ensure safe chemical management and produce accurate chemical inventory reports. Most laboratories today must be operated in accordance with a variety of government regulations; thus it is important to avoid noncompliance situations caused when chemical inventory management is inconsistent or ineffective.
This article discusses the obstacles organizations face ensuring chemical compliance and how different organizations have solved the compliance challenge.
Challenges to ensuring chemical inventory regulatory compliance
There are four key compliance challenges confronting research organizations and production facilities that utilize large quantities of chemicals in their work processes. These challenges are driven by inconsistent chemical tracking; inefficient chemical-related work processes; inaccurate chemical inventory reports; and high-risk hazardous materials management errors.
1. Inconsistent Chemical Tracking
Maintaining regulatory compliance of chemical inventories can be difficult when ownership is poorly defined or shared. What often happens is that the site may use an inconsistent, nonstandard way to register chemical inventory, with the process varying from laboratory to laboratory or even from person to person. One lab may keep their chemical records on a spreadsheet, the other may use a manual log book. Further, personnel within the same lab may not be updating the spreadsheet every time a chemical container is received or disposed. Such disconnected processes make it difficult to track chemical container location, quantity or even whether it is stored correctly. Without this data, it is almost impossible to ensure safe chemical management or produce accurate regulatory reports.
2. Inefficient Chemical-related Processes
A second key stumbling block is confusion over chemical container ownership. In this case, however, the ownership confusion centers on who is responsible for chemical inventory reports. Typically, lab personnel order chemicals for their research, but EHS personnel are responsible for reporting those chemicals to the regulatory agencies. This disconnect produces a very inefficient process when there is no centralized system for managing chemical receipt and tracking. EHS personnel must collect the information for their reports not by checking a centralized system, but by repeatedly asking lab personnel to produce reports specifying the chemical containers they have in their lab. This takes the lab personnel away from the research bench to repeatedly perform an administrative task that could have been avoided with a more efficient chemical management process. EHS may in turn be required to perform frequent inventory counts to confirm or correct the lab inventory reports, causing excessive time to be spent on this task.
3. Inaccurate Chemical Reports
The third challenge, hinted at in the previous paragraphs, is that the reports that EHS provides to the regulatory bodies will be inaccurate as a result of inconsistent chemical tracking. This risk, if revealed during a chemical management audit by a regulatory agency—such as an audit by the EPA to confirm accuracy of Tier II reports—can subject the organization to greater regulatory scrutiny, fines and worse. Beyond regulatory compliance risk, the site safety may be at risk, even if unknowingly, when the exact quantity and location of materials are not certain.
4. Higher Hazardous Materials Management Risk
Finally, the highest risk that results from inaccurate chemical management is the risk of incorrectly identifying hazardous materials on site and thus improperly managing those hazardous materials. There are numerous regulations that specify how hazardous materials should be received, stored, tracked and disposed of, as well as thresholds for the amount of hazardous materials that can exist on a site without reporting the over-threshold amount. Oversight of hazardous materials management is seldom deliberate, but this provides little solace when something goes awry.
It is important to note that disposition of outdated chemicals and containers is vitally important, whether the materials are hazardous or toxic or not. This is because the chemistry of some chemicals can change over time or after the container is opened. For instance, 2,4-Dinitrophenylhydrazine (DNPH, Brady’s reagent), or the chemical compound C6H3(NO2)2NHNH2, is a shock explosive so care must be taken with its use. It is usually supplied wet to reduce its explosive hazard, since it becomes a hazardous material when the material changes from a liquid to a powder. It is critical to ensure that disposal of expired and hazardous materials takes place correctly and in accordance with government regulations.
Further, there is often a high cost associated with disposing of expired chemicals as well as an increased safety risk. If an expired container of 2,4-Dinitrophenylhydrazine is discovered during an inventory count, activities must come to a halt, the lab closed, and a hazardous materials team called in to dispose of the container safely. This uncomfortable situation can be costly and disruptive.
Finally, another key aspect of hazardous materials management is not providing the most recent information about materials through current Safety Data Sheets (SDS) to the lab personnel who will be using them. Mandated by Right-to-Know regulations such as those promulgated by OSHA and ECHA, the responsibility for providing and disseminating SDS information can fall under the responsibility of either the lab manager or EHS or both, making it a challenge to ensure that employees not only have and know how to access SDS but also have access to a current version.
Solving the compliance challenge
The root causes of the above compliance challenges all have to do with chemicals. How the chemicals are received. How the chemicals are tracked. How they are stored, and how they are disposed. These are all processes that can be resolved with a strategic decision to implement a single centralized solution that can streamline the workflows involved.
With the goal of centralizing chemical inventory management control, organizations can bring their chemical management process under control with three key tactics. First, all chemical containers need to be tracked with one simple, user-friendly system through which users can register all materials approved for use at the site upon receipt.
Second, implement a methodology that provides complete visibility for all safety information for each material and register that material for its specific hazard classes and categories. Such a system can be manual or electronic, but it is important to provide the data on demand, both for EHS professionals as well as lab personnel.
Third, the chemical management system needs to deliver a quick and efficient way to run inventory reports concerning the chemicals on site, detailing quantity and storage location. This is particularly important where hazardous materials are concerned as some materials are strictly regulated and have maximum allowable quantities (MAQ) that may not be exceeded and/or require threshold reports.
“Implementing a web-based chemical inventory management system has ensured that the chemical containers on site are now managed safely and more effectively while relieving the laboratory scientists of workflow challenges.”
Tactics for Gaining Control of Chemical Inventory
- Ensure cross-functional collaboration between the lab and EH&S
- Identify chemical inventory
- Define hazard classifications on site
- List regulations that require compliance
- Identify existing chemical safety processes
- Conduct a gap analysis
- Develop end-to-end chemical safety SOPs
- Implement a real-time chemical inventory system
- Identify and input applicable chemical and materials inventory into the system
- Train users in safe chemical management
- Conduct an internal chemical safety audit
Streamline Chemical Inventory Management Workflows
Changing a well-worn workflow is disruptive, but if the workflow is broken then the problems it causes are also disrupting other processes. To bring chemical inventory processes under control, organizations typically start by researching available software solutions and selecting the best fit. Once the system is selected, a complete review of the inventory management process is undertaken to streamline the process. Next, a thorough housecleaning and inventory of all chemicals on site is performed, and each container is bar-coded and entered into the new system. Finally, users are trained on the new system so that all future chemical inventories are managed within the system.
One leading pharmaceutical manufacturer took a hard look at their chemical tracking processes and decided to implement a chemical tracking process improvement initiative. Laboratory management was responsible for overseeing some 4,000 chemical containers on site and ensuring the accuracy of associated chemical safety and inventory data for regulatory requirements. However, chemical management was completed manually as time permitted. When a quarterly physical inventory was conducted, repeated inconsistencies were found between the inventory reports and actual inventory on hand. The process involved laboratory scientists collecting the chemical data manually on spreadsheets that were then provided to EHS. This process was cumbersome, inconsistent and hard to manage.
Two key objectives were identified for the chemical tracking process improvement initiative: streamlining the scientists’ workload and ensuring the accuracy of chemical inventory data. Implementing a web-based chemical inventory management system has ensured that the chemical containers on site are now managed safely and more effectively while relieving the laboratory scientists of workflow challenges. Further, the organization realized numerous cost and time savings. Not only were they able to eliminate the quarterly manual inventory counts, disposal costs for expired chemicals were significantly reduced. With a real-time chemical tracking system in place, the organization was able to reduce chemical inventory on site by 30%, while performing at the same level. They estimated their savings at $75,000 per year.
Address Regulatory Safety and Compliance Requirements to Reduce Risk
Regulated laboratories serving regulated industries are audited not only by regulatory agencies but also by their regulated customers. For a large laboratory, these audits can be frequent. When noncompliances occur, not only does it place the lab under a spotlight; it also puts an enormous amount of pressure on management and staff.
After a particularly intense audit, one specialty chemicals manufacturer cleaned up their lab and cleared all non-compliant materials by implementing a chemical inventory management system to track material lifecycle from receipt to disposal.
Previously, the organization tracked chemical containers with spreadsheets, none of which were in a central place, nor were they updated consistently to indicate when chemicals were received or disposed. A critical customer audit became the catalyst for change during which a number of corrective actions were found.
After an intensive review of three different systems, the review committee selected a system that would meet all their functional requirements and ensure audit compliance. The functional requirements were straightforward, with barcoding containers and automatic report generation on the top of the list along with a system what would be easy to use and scalable.
The new system ensures that all chemical containers are barcoded upon receipt and tracked in a central database. Expiration dates are clearly indicated and reports are automatically generated that indicate when a material needs to be tested. If materials expire before use, the system ensures that they are reported so they can be disposed and taken out of the system. The result has been greater cross-functional collaboration between the laboratory and EHS; accurate reports are now easily generated for provision to the various regulatory agencies.
Implementing a chemical inventory system has enabled the organization to gain control of their chemical inventory and sail through audits with ease and confidence. Further, not only are they spending less on materials now since they’re not over-ordering materials anymore, but the new system has streamlined workflows and eliminated non-compliances and corrective actions from expired materials.
Reduce Chemical Containers to Increase Efficiency and Lower Costs
As organizations grow, business and operational processes also grow and evolve. Over time— particularly if the facility expands—items are moved, sometimes lost, sometimes misplaced. If that item is chemical inventory, it can exceed the recommended shelf life or expiration date. Simply knowing what chemical inventory is on hand and where it is eliminates many management headaches and much regulatory scrutiny.
One industrial manufacturer had been evolving in just such a way. Eventually they found that using spreadsheets to track chemicals or an off-the-shelf database to create special reports could no longer provide accurate chemical inventory data. As the organization grew from a small lab to more than 150 research staff in several buildings, the need increased for more accountability and better controls to enable enforcement of chemical receiving and tracking.
The EHS team determined the need for a chemical inventory system that would meet four key criteria: the ability to monitor chemical shelf life, track ownership, track material quantity and maintain SDS’s in the same system.
Migrating to a real-time system required a few key steps. First, they identified old chemicals and disposed them. Barcodes were then attached to all remaining containers to enable real-time tracking of not only expiration date and container location but also quantity, owner and CAS number as well as associated hazard information. By tracking the expiration date in the system, the organization is now able to dispose chemicals within the appropriate time frame, and thus reduce both waste and waste disposal fees.
Second, when the chemical inventory system was implemented, new procedures were also implemented to ensure that all chemical transactions were processed through the system. This was accomplished by putting a chemical system check box on all Purchase Requisitions. Now, the researchers check whether a material is in stock before ordering more; a simple fix that has resulted in a significant decrease in purchase orders for new materials. Thus, duplication and reordering chemicals that were already in-house has been eliminated.
Just by enabling better shelf life tracking and management, the chemical inventory system has enabled the organization to reduce the total number of containers on site by half, from 10,000 to 5,000 containers, Further, as a result of fewer chemicals on site, the inventory material cost has dropped from $600K to $400K per year—a reduction of 33%.
“Just by enabling better shelf life tracking and management, the chemical inventory system has enabled the organization to reduce the total number of containers on site by half, from 10,000 to 5,000 containers.”
Previously the company’s reconciliation accuracy seldom exceeded 70%. The new system enabled them to change that dramatically; now they typically exceed 97% accuracy. The system they chose enables the organization to define material location not just by cabinet and shelf, but down to the drawer level, which in turn has enabled them to obtain a much higher level of accuracy on their reconciliations. Now whenever someone wants to know exactly where a material is located in the 8,000 square foot facility, anyone can find it immediately.
Implementing a real-time chemical inventory system has enabled the organization to not only gain control of their chemical inventory processes, but to reduce inventory costs and realize significant cost savings.
Implement a User-Friendly System to Drive Adoption and Ensure Data Accuracy.
The common denominator in all three case studies above is the implementation of a real-time chemical inventory system. What all three organizations discovered was that providing a simple, user friendly system which could accurately register all incoming materials drove user adoption, while also ensuring the accuracy of chemical inventory data.
Real-time systems also provide complete visibility for not only the chemicals on site, but also all safety information for that material. Upon receiving a chemical, the system can immediately register that material for its specific hazard classes and categories, enabling data on demand for EHS professionals as well as lab personnel. A comprehensive chemical inventory system can also enable the correct SDS to be associated with the material so that both regulatory and safety requirements are easily satisfied.
With all chemical inventory captured within the system, a quick and efficient way to run reports concerning chemical inventory on site is enabled. Further, because hazardous materials are captured within the system, it becomes easy to ensure compliance with hazardous material safety mandates.
A Short List of Regulations Requiring Compliance
Some of the regulations organizations are subject to and which an inventory management system should assist in safety compliance and reporting efforts, include:
- OSHA Substance Specific Standards
- 29 CFR 1910.1450 Specific Hazardous Substances
- 29 CFR 1910.119 Process Safety Management
- EPCRA Tier II Chemical Inventory Reports
- Globally Harmonized System of Classification and Labeling of Chemicals (GHS)
- CLP (Classification, Labeling and Packaging of Chemicals)
- REACH (Registration, Evaluation, Authorisation and Restriction of Chemicals)
- Dangerous Substances Directive (67/5489/EEC)
- Restriction on Hazardous Substances (RoHS) Directive (2002/95/EC)
- Hazardous Waste Directive (2008/98/EC)
Selecting the right chemical inventory system for your organization
There are many criteria to consider when selecting a chemical inventory management system. The most important aspect of this project, however, is to create a functional requirements list that reflects your needs for the new system.
Keep in mind that, because your existing processes aren’t working well, you will be updating these processes to take advantage of the chemical inventory system’s capabilities. For instance, the new system must utilize barcodes for tracking materials; even very small quantities in small vials can be tracked by putting the vials in a small packet that is then barcoded. Without barcodes on every container, there is no truly effective means of identifying and thus tracking those chemical containers.
A best practices chemical inventory system should accommodate all basic inventory tasks and leverage a ‘build it once, use it often” philosophy. The system should manage all the steps associated with registering a material, including receipt (data entry and barcodes), re-labeling, dispensing, storage and container disposal. Further, any chemical inventory management system needs to be able to track materials with multiple chemical components, some of which may be hazardous and reportable to regulatory agencies.
Utilize Barcodes for Tracking
Any well-designed inventory system should enable your organization to avoid duplicate ordering and high disposal costs. Features like barcode labeling and tracking, remote inventory control and automatic e-mail notifications enable the lab or EHS to know exactly, in real-time, where materials are located and how much is available as well as when those materials are set to expire, regardless of how many users and materials the system must accommodate. With everyone able to use a single system, EHS can pull data for regulatory reports without requesting it from lab personnel, in turn enabling lab personnel to stay focused on research. This is one process change everyone will like.
When barcodes are placed on chemical containers upon receipt, the system can then provide a wide range of data, including not just quantity on site but also container location. Further, by using barcodes to track containers, the system will be able to provide deeper functionality such as listing expired materials for a user (owner) and for a site; a mechanism for deleting individual containers or a series of scanned containers; create, edit and delete permissions for various operations in the system; the ability to accommodate parent/child or split container relationships; and duplicate materials clean-up.
Flexibility for a Wide Range of Users
It is important to consider who will be using the system. A large production line will utilize a dedicated production system with a dedicated team of users. A laboratory, however, typically does not have the luxury of staff who perform only one function. The optimal chemical inventory system for a lab would thus be a versatile system with which anyone in the lab can interact at various defined permission levels.
For instance, the system should be able to define a system-wide Administrator who oversees system configuration (users, locations, workflows, etc.); General users who will be able to view and edit specific inventory based on group access; and View-Only users who have permission to access all inventory and safety details but not make any changes within the system. Whether your organization will use all these permission levels upon system implementation shouldn’t prevent you from requiring this capability from the new system. Your organization’s needs will grow and expand. Building in this type of scalability from the start will enable you to accommodate future change.
Obviously a web-based solution that utilizes familiar web browser screens and resembles typical work processes would entail the least amount of training and easiest adoption. The downfall of many custom-designed chemical inventory management systems is that they are too difficult to use. The result is that only a few people in the company have the knowledge and patience to use the system. Accuracy and timeliness of the chemical inventory data suffer. Valuable time may be lost when experiments must be stopped because the necessary chemicals are not on hand. Analytical, Quality Assurance (QA), EHS, and lab personnel should all be able to interact directly and intuitively with the system.
“A web-based solution that utilizes familiar web browser screens and resembles typical work processes entails the least amount of training and easiest adoption.”
Eliminate Chemical Safety Deficiencies
Any time chemicals are used, safety is an issue. In the event of an accident, the correct information needs to be available on the spot. A chemical inventory system should provide details about exactly what chemicals are available and where they are. Safety information about those chemicals should be readily available, whether as an SDS or as customized handling instructions.
In addition, the system should be able to identify toxic and hazardous materials so that these chemicals are stored and managed in accordance with environmental regulations and deliver prompt, accurate reports for the various regulatory bodies.
Further, a web-based chemical management system that can be accessed remotely can ensure that accurate information about chemicals in a specific building will be given to first responders—such as the Fire department—during an emergency. Without remote and immediate access to data about the type and location of chemicals in a building, firefighters will not know what is in the building and will let the building burn to the ground.
Manage the Material Lifecycle
The features described above specify the minimum functionality a best practices real-time chemical inventory system should provide. However, a robust comprehensive solution should also manage material lifecycle from “cradle-to-grave.”
The material lifecycle starts with receipt and tracks material quantities, location changes and disposition. This capability is important because it allows the organization to have better accountability and visibility for their material inventory. By knowing and being able to track this aspect of operations, the organization is better able to estimate the material demands, and to establish accurate audit trails for every container. Whether the audit trails must meet regulatory GMP requirements or not, the material lifecycle workflows remain the same for any quality-conscious organization.
Going beyond the minimal requirements for a chemical inventory system frees the organization to focus time and energy on better managing their products and processes rather than on managing their inventory. A lifecycle-oriented chemical inventory system provides numerous additional benefits, such as additional levels for material data lifecycle and approval processes as well as permission control levels.
Ensure Internal Compliance and Regulatory Compliance
After ease of use, perhaps the most important capability of all is regulatory compliance. Most labs must be operated in accordance with a variety of government regulations; thus it is important to avoid noncompliance because a system isn’t effective or used properly.
Systems fail because they aren’t easy to use. This touches on two issues: internal compliance and regulatory compliance. Internal compliance is driven by usability. If users find it difficult to use the system, they may use it incorrectly or only occasionally, so that material could be exceeding limits or be so far out of compliance it impedes workflows. And the organization might not discover this until an audit takes place—a poor time to find out.
With regard to regulatory compliance, a system that is difficult to use can generate numerous problems. Not only should it be easy to receive containers into the system, it should be easy to manage inventory updates and container disposal. If material and/or hazardous waste don’t get disposed of properly, the facility is out of compliance.
In addition to ensuring that the system gets used properly and effectively, the organization needs to determine whether the chemical inventory system can accommodate auditing and what types of audit controls it has. The chemical inventory system should support inspections by the fire department, EPA, FDA and/or OSHA by providing tools for compliance. It should accurately track chemical inventory and allow the design and generation of reports that document compliance at any time. For example, the system should assist in preparation for OSHA audits or SARA and Tier II reports by producing accurate, thorough reports quickly and easily.
Accommodate Regulated and Non-Regulated Laboratory Environments
Document linking, audit trails and other security features are critical to labs that need to track samples and/or material classes which can include biologicals, chemical standards, excipients and intermediates. It can also be important that the chemical inventory system be adaptable to non-Good Manufacturing Processes (GMP) and non-regulated environment if the facility has a combination of both. The system therefore should be able to seamlessly accommodate both GMP and non-GMP materials, enabling each user to see just the data that relates to his/her work or location based on their security profile.
Many organizations still rely on inefficient chemical inventory management processes that make it difficult to ensure safety or compliance on site.
Updating these inefficient, marginally effective processes by implementing best practices enables organizations to gain process efficiencies while at the same time reducing operational costs and ensuring greater employee safety and regulatory compliance.
There are a few key takeaways from the information presented in this white paper. First, it is important to note that a best-practices chemical inventory system will enable your organization to perform regular inventory maintenance to purge hazardous material from your site in a timely manner. Second, a barcode-based chemical inventory system will be able to track all chemicals on site and thus ensure that inventory data is accurate and so are your regulatory reports.
Third, as a result of better chemical inventory knowledge, the chemical inventory system should also enable your organization to reduce chemical inventory on site (particularly when it comes to hazardous materials), and thus reduce risk. Reduced risk equals reduced liability, again driving greater site safety and compliance.
Further, most organizations realize considerable cost savings when chemical inventory is known, tracked and reported accurately. Fewer chemicals are ordered, thus reducing purchasing costs. Fewer chemicals are on site, thus reducing management and reporting costs. Fewer chemicals on site also means faster chemical turnover and fresher chemicals, delivering better quality research results.
When EHS and laboratory management work together to update chemical management processes by implementing best-practices solutions to streamline workflows for both departments. The result is not just greater efficiency but also a reduction in the costs and risks associated with compliance.
Dassault Systèmes’ BIOVIA provides a scientific collaborative environment for advanced biological, chemical and materials experiences. Sophisticated enterprise solutions from BIOVIA support Collaborative Science, Unified Laboratory Management; Process Production Operations and Quality/Regulatory Management, driving innovation for science- and process-based industries.
About BIOVIA CISPro
The BIOVIA CISPro chemical inventory management system enables organizations to manage chemicals safely from receipt to disposal along the entire lab-to-plant value chain, ensuring Environmental Health and Safety (EH&S) compliance across the enterprise. For more information about BIOVIA CISPro, visit www.accelrys.com/cispro
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