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- i – Unpublished work © 2012 Aerospace Industries Association of America, Inc Information Technology (IT) Guideline: Aerospace and Defense Industry Supply Chain Information Collection Processes on Provenance for Chemicals/ Materials/ Articles (REACH) Version 1.0 July 11, 2012 Developed by: Electronic Enterprise Integration Committee Aerospace Industries Association, Inc.

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Unpublished work © 2012 Aerospace Industries Association of America, Inc

Information Technology (IT) Guideline:

Aerospace and Defense Industry Supply Chain Information Collection Processes on Provenance for Chemicals/ Materials/ Articles (REACH)

Version 1.0 July 11, 2012 Developed by: Electronic Enterprise Integration Committee Aerospace Industries Association, Inc.

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REACH-IT A Framework for Understanding REACH with Guidelines for Integrating Systems and

Addressing Compliance Requirements

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Unpublished work © 2012 Aerospace Industries Association of America, Inc

Important Disclaimer: The Aerospace Industries Association of America, Inc. (“AIA”) has no intellectual property or other interest in this document. By developing this document and making it freely available to anyone, AIA assumes no responsibility for the content or use, and disclaims any potential liability associated therewith.

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Table of Contents 1 The Purpose of This Document ........................................................................................ 1 2 Problem Statements .......................................................................................................... 1 3 The AIA EEIC Approach.................................................................................................. 1 4 Using this scenario ............................................................................................................ 2 5 The Scenario: United States Vehicle Original Equipment Manufacturers with European Union (E.U.) Sourced Lead Batteries delivered to an E.U. Customer...................................... 3

5.1 Assumptions .............................................................................................................. 3 5.2 Process Changes........................................................................................................ 5

5.2.1 Manage M&PE Impacts ...................................................................................... 8 5.2.2 Perform Detail Design Trades based on M&PE Impacts ................................... 9 5.2.3 Collect and manage supplier material roll-up information ............................... 10 5.2.4 Manage compliance reporting deliverables ...................................................... 11

6 Scenario initiation ........................................................................................................... 12 7 Actors (roles of participants) .......................................................................................... 12 8 Controls (external influences) ......................................................................................... 12 9 Internal decision points ................................................................................................... 13 10 Information flows............................................................................................................ 14

10.1 Repositories............................................................................................................. 15 11 Scenario results (range of possible outcomes and output) .............................................. 15 12 Exception handling ......................................................................................................... 15 Appendix A – Delivering eBusiness Solutions ....................................................................... 16 Appendix B – Acronym List ................................................................................................... 18 Appendix C – URL references ................................................................................................ 19

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REACH-IT A Framework for Understanding REACH with Guidelines for Integrating Systems and

Addressing Compliance Requirements

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Table of Figures Figure 1 REACH-IT Guideline Usage Roadmap ................................................................................... 2 Figure 2 Business Process Model ........................................................................................................... 6 Figure 3 SVHC Related M&PE Impacts ................................................................................................ 7 Figure 4 Perform Detail Design Trades .................................................................................................. 9 Figure 5 Manage Supply Chain Information ........................................................................................ 10 Figure 6 Manage Compliance reporting ............................................................................................... 11 Figure 7 REACH-IT Substance Hierarchy ........................................................................................... 13

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REACH-IT Scenario: Article that contains a Substance of Very High Concern (SVHC)

1 The Purpose of This Document This document identifies the business problems related to the European Union (E.U.) Registration, Evaluation, Authorization of Chemicals (REACH) regulation. It outlines a reference model for describing REACH IT related issues applicable to any industry. It defines an example business scenario applicable to the aerospace industry. This document informs and references Material Provenance Guidelines to assist any organization in developing an overall REACH-IT strategy. It will serve as the basis for identifying industry-wide problems and providing best practice guidance to companies who are facing these problems throughout the supply chain. While many companies may have REACH-IT processes within their own organizations, they need to ensure that their supply chain develops and maintains viable REACH-IT management systems. There is a growing need to ensure robust standardized methods for applying REACH-IT across the supply chain. Because of this, an industry-wide collaborative electronic knowledge management capability is required.

2 Problem Statements The European Chemicals Agency (ECHA) REACH regulation includes a requirement to register, report, and/or obtain authorization for use of certain substances. These substances are listed as “substances of very high concern” (SVHCs) in “Annex XIV” or on the Candidate List (CL). For the purposes of this document, both of these will be referred to as SVHCs. There are also threshold criteria invoking certain requirements, such as articles and/or packaging being above 0.1% weight by weight (w/w) or an amount being imported greater than 1 tonne per year. Within an enterprise, many information systems have to be integrated to comply with these reporting requirements. This scenario describes the processes needed to monitor regulated substances and track a design that contains SVHCs as defined by the REACH regulation, beginning at the design stage through manufacturing through delivery of an article to an E.U. country.

3 The AIA Electronic Enterprise Integration Committee (EEIC) Approach

The intent is to provide guidance for the building of solutions that will enable compliance and minimize risk and cost. The capabilities that come from this type of solution will also enable a degree of insight into the material provenance across the supply chain well beyond what currently exists. The REACH regulation falls under a broad category of global concerns related to “sustainability.” The sustainability umbrella includes concerns related to issues such as eco-toxicity, carbon footprint monitoring, recycle-ability, conflict minerals, rare earth elements, obsolescence and material master traceability (e.g. counterfeit material). For more information related to the managing electronic

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information and counterfeit material, please refer to the AIA Electronic Knowledge Management (EKM) scenario.

4 Using this scenario This scenario is designed to help organizations identify the topics and issues they should consider as they define their requirements for REACH-IT solutions. The following roadmap (Figure 1) should assist the reader in understanding the overall framework described in section 5 and the individual use-case scenarios outlined in section 6, which in turn link to the approved AIA eBusiness guidelines that may be relevant to a particular scenario.

Figure 1 REACH-IT Guideline Usage Roadmap

The following representative use-case scenario may be directly applicable to the requirements of the organization. It helps the organization to confirm that their requirements are covered, and that recommendations and best practices can be applied. For scenarios that are not covered completely or in detail, organizations should develop their own use-case scenarios, using the same format as the examples and selecting the processes and flows from the global model of REACH-IT Processes in Section 5 wherever possible. This is in line with the EEIC concept of operations (see Appendix A). Using the global model will allow the relevant best practices to be identified and used in building solutions.

Data

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5 The Scenario: United States Vehicle Original Equipment Manufacturers with European Union (E.U.) Sourced Lead Batteries delivered to an E.U. Customer

5.1 Assumptions In this hypothetical REACH-IT scenario, the substance tracked will be Lead (Pb). While it is recognized that Pb is not currently on the ECHA CL, it is a substance with wide application within the Aerospace and Defence (A&D). It is also noted that with Pb’s high density it is more likely to invoke the REACH “Article 33” reporting requirement. The scenario is described from the perspective of an Aerospace Industries Association (AIA) member company acting as a systems-integrator, which is primarily an Original Equipment Manufacturer (OEM) role. It is assumed for this scenario that:

1. Pb is assumed to be on the CL. This means that according to Article 7.1, if the substance imported into the E.U. is both intended for release and imported in amounts greater than one tonne per year, then registration for use requirements apply to the E.U. based article importer/producer. A substance on the CL also means that if the substance imported in articles and packaging exceeds:

a. 0.1% w/w of the article and/or packaging, then communication for safe use requirements apply according to Article 33

b. 1 tonne per year, then notification of use requirements apply to according to Article 7.2.

2. Pb is also assumed to be on the “Annex XIV” authorization list as an SVHC. This means that regardless of the amount of this substance the article or packaging contains, it has to be removed from the product by a specified sunset date. Prior to the sunset date:

a. The only way to continue using Pb is to obtain an authorization for use in the E.U. from ECHA.

b. Upon delivery of the article and packaging, the manufacturer may require evidence of authorization from ECHA to the final customer.

This scenario is based on a U.S. based vehicle manufacturer choosing to use Pb batteries which make up more than 0.1% w/w of the entire delivered vehicle. This creates communication for safe use reporting requirements for the E.U. importer. These requirements will in most cases be assumed to flow back up the supply chain to the OEM and ultimately to where the use of the substance in the article originated. Decisions about when and where to install CL and/or Annex XIV SVHC substance containing subsystems are significantly influenced by the geopolitical context of the members of the supply chain. This U.S. based OEM has decided to procure and install the Pb batteries from an E.U. based manufacturing operation which imports the battery raw material from multiple Pb producing countries around the world. It is also anticipated that the required deliveries of Pb for the batteries out of the E.U. (and their subsequent import as articles (vehicle) into the E.U.) will amount to more than one tonne per year.

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Since Pb from the batteries (in addition to any other accumulation of Pb in the vehicle) is not intended for release, registration for use requirements as a CL substance do not apply for the importer of the vehicle. Yet, since the batteries are manufactured in the E.U., Pb (as a substance or preparation) is required to be imported into the E.U. in amounts greater than one tonne per year. This creates a registration for use requirement by the E.U. battery manufacturer/importer. As a hypothetical Annex XIV substance, the incorporation of Pb into the article (vehicle) occurred in the United States and not the E.U., therefore it does not obligate this U.S. based OEM to obtain authorization for use with ECHA directly. Yet, since the batteries are manufactured in the E.U., this does create a requirement for the authorization for use with ECHA by the E.U. based Pb battery producer, supplier, and/or importer of Pb. This creates supply chain risk to the OEM if the E.U. producer does not register the use (as a CL substance) or get authorization for use (as an Annex XIV substance) or more significantly decides to discontinue production due to these additional regulatory burdens. In order to simplify this already complex scenario, the following assumptions are made:

• The reader has a basic understanding of the REACH regulation. An introduction to REACH can be found on the AIA web-pages.

• In the future, industry will experience REACH-like requirements globally (e.g. sustainability).

• While it is understood that simply delivering an article to the E.U. will not require authorization, the sharing of related substance information across the industry in an effective manner will be relevant to potential future requirements. These collaborative exchanges will be addressed in additional scenarios.

• Collaboration with E.U. aerospace industry associations’ (ASD-ADS) technology is vital.

• Registrations (and uses) are well-documented by industry. • A standard methodology for aggregating weight of substances combined in an

article exists. • Enterprise/Material Resource Planning (ERP/MRP) and Manufacturing Execution

(MES) Systems contain (and are the “systems of record” for) “as manufactured” and “as maintained” bills of material (BOMs).

• Product Life Cycle Systems and/or Product Data Management (PLCS/PDM) will contain detail “as-designed” information, with related 3D models, mass properties and material specifications.

• Materials Processes/Properties Management (MPM) systems will contain detail information about materials and chemicals in use, along with their SVHC risks.

• It is recognized that there is a need to integrate supply chain information based on sustainability concerns in addition to REACH specific ECHA regulation. This information will be stored in a Supply Chain Management (SCM) system or included in the ERP/MRP/MES system.

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• Some combination of information from ERP/MRP/MES, PDM/PLM, SCM and/or MPM systems will provide the principle references for article and packaging SVHC % w/w calculations from detail as-delivered models and data. Any or all of these systems will have roles in the solution.

• Disclosure statements from supply chain are complete and accurate and are sufficient to facilitate the aggregation of data. In a separate scenario the accuracy and completeness of information collected from the supply-chain will be addressed using a capability maturity model based approach to aggregation of substance data.

• U.S. Trade considerations are out of scope for this scenario. Agreements between countries have been worked out prior.

Figure 2 is a high level process map that uses a Business Process Modelling Notation (BPMN) methodology to validate the scenario and align with Department of Defense (DoD) customer methodologies. It has most all of the internal Prime OEM functional actors impacted by REACH activity. It also includes external actors, including the ECHA regulation authority, the U.S. government, the E.U. Member State customer, as well as the entire supply chain.

5.2 Process Changes This scenario addresses a broad set of processes that will be impacted by regulatory requirements. These changes are identified and discussed below in four major process categories:

1. Material and Process Engineering (M&PE) 2. Detail Design 3. Supplier Information Management 4. Compliance Reporting

A major impact from the need to understand and track the material provenance of a product results in the need for collaboration across the supply chain to determine impacts from changes in regulations. It is intended that a social-media based collaboration will be hosted as an ongoing and current “industry conversation” in a wiki on the AIA group collaboration website. One method for engaging in this conversation is contained in the Material Provenance Guidelines being published along with this document. This document provides a Capability Maturity Model (CMM) matrix with three types of “business approaches” to supply chain information collection (adhoc, tactical, and strategic) as columns and three levels of declarations (partial, full, and complete) as rows. Each cell in this matrix will have URL pointers to specific conversations important to relevant businesses across A&D.

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Figure 2 Business Process Model

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Figure 3 SVHC Related M&PE Impacts

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5.2.1 Manage M&PE Impacts Figure 3 highlights the area of process impacts related to M&PE relative to the SVHC compliance requirements that necessitates knowledge of where an SVHC is used and the percentage concentration contained in aerospace and defense products. Considerations relative to engineering design supportability are introduced for identifying common data repository structures, performing impact assessments, analyzing material performance requirements, determining whether alternatives or substitutions exist for an application and if risk mitigation strategies need to be implemented. These considerations are:

• Visibility into where-used • Assess Impact - begin risk assessment • Analyze material performance requirements / specifications

o Material o Components o Product designs o Process/factory designs

• Documenting performance requirements • Develop alternatives/substitutions • Selecting alternatives/substitutions • Perform design trades if needed

If a company decides that risk reduction is required for a substance, then it must identify material performance requirements for that particular substance. Performance requirements need to be socialized. Changes in contracts with suppliers, such as in Terms and Conditions (T’s & C’s), must be agreed upon.

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Figure 4 Perform Detail Design Trades

5.2.2 Perform Detail Design Trades based on M&PE Impacts Figure 4 Perform Detail Design Trades highlights the area of potential process impacts related to detailed design trades. Having received SVHC analysis from M&PE and established customer performance requirements, it is necessary to identify options for alternatives and/or strategies to assure continued use of existing material or substance. Trade study decision factors and options with respect to SVHC regulation changes are:

• Use of alternative materials • Cost impacts • Exit the market • Reduce Market • Choose differ supply sources • Reduce the weight of the Substance below the threshold • Pursue an exemption

Having weighed all alternatives and strategies, a company may need to prioritize and select an alternative material, substance or strategy. Subsequent to this prioritization and selection of an alternative or strategy, a company needs to re-assess the risk of maintaining business continuity and capability to produce safe and reliable products qualified for aerospace use. If the company can’t accept the risk, it will need to go back and select another alternative or strategy.

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Figure 5 Manage Supply Chain Information

5.2.3 Collect and manage supplier material roll-up information Figure 5 highlights the area of process changes related to detailed design trades. In order to have visibility of substance/material composition data of procured components, the supply chain will play a key role in executing data collection methodologies to capture SVHC content in articles through a supplier substance declaration process. The supply chain will need a prioritized list of the SVHC data to initiate data capture from suppliers. Periodic updates to the targeted list of SVHCs due to the dynamic environment of evolving regulations are expected as substances are added to the REACH candidate list. The type of data elements anticipated to be collected includes chemical abstract number (CAS#), chemical name and family, weight percentage of the article and percentage concentration of the SVHC. This information will need to be tracked, stored, validated, and managed in order to facilitate the calculation, roll-up, and communication of detailed product information exchanged between prime and subcontractor as well as other upstream and downstream users.

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Figure 6 Manage Compliance reporting

5.2.4 Manage compliance reporting deliverables Figure 6 highlights the area of process changes related to managing compliance reporting deliverables. In order to achieve an acceptable level of compliance with Article 33, detailed product knowledge of SVHC’s contained in articles will become the basis for satisfying reporting obligations. SVHC compositional data will need to be captured and stored to create an accurate, up-to-date and standard compliance document. There are two main applications of the communication requirements under REACH:

1) to communicate hazard information for substances 2) to communicate the content of specific substances in articles

Manufacturers and importers of substances and mixtures in the E.U. are required to communicate associated hazards, primarily through inclusion of information in safety data sheets, to recipients of those substances or mixtures. Manufacturers and importers of “article” products in the E.U. are required to communicate information available to them that would allow the safe use of the product if it contains an SVHC in a concentration greater than 0.1% (by weight) to the recipient. At a minimum it must identify the SVHC triggering that threshold. Communication requirements for articles are triggered by an SVHC substance appearing on the REACH “candidate list” – a list of substances being considered for authorization requirements. Information must be provided “automatically” with the delivery of the article. The requirement to communicate the hazards of substances is covered in Title IV of REACH.

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6 Scenario initiation The following triggers initiate the scenario processes in Figure 2:

• Trigger 1: SVHC added to Annex XIV • Trigger 2: Design of new vehicle

o Early within O.E.M.’s design process o Trade study concludes that all other substance options are cost prohibitive

• Trigger 3: Contract for delivery of vehicle with SVHC to E.U. Member State

7 Actors (roles of participants) The following is a list of participants from Figure 2 that play a role within the entire transactional cycle:

• European Chemical Agency (ECHA) • E.U. End Customer (e.g. E.U. Member State) • U.S. DoD PEO • U.S. DoS Foreign Military Sales (FMS)) • Environmental Health and Safety (EHS) • Contracts • Legal • Business Development (BD) • Program Management Office (PMO) • Export/Import Operations (EX/IM Ops) • Design & Mfg. Engineering • Materials & Processes Engineering (M&PE) • Manufacturing Operations • Supply Chain Management (SCM) • Supply Chain (Suppliers, Tier 1 and Sub-tier) • Systems & Repositories

• ECHA Data Management System (DMS) • PLCS/PDM Systems • ERP/MES Systems • MPM Systems

8 Controls (external influences) The REACH regulation is the primary influence. REACH creates a compliance requirement for listed substances when incorporated into article design or manufacturing processes. Categorization of these compliance requirements are as follows:

• Restriction/Elimination from European Union Market • Authorization

• With limitation • Without limitation • By exception (e.g. E.U. Member State grants defence exemption)

Other organizations which influence an O.E.M.’s availability and processes for procurement and use of SVHCs are as follows:

• Substance Information Exchange Forums (SIEFs)

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• E.U. Member State interpretations and enforcement of REACH regulations (i.e. using E.U. Member State Customs Agency)

• European suppliers • U.S. Government:

o Department of State o Department of Defense

9 Internal decision points Trade study decision points primarily occur during the design phases, but may require re-evaluation as SVHCs are added or progress through the ECHA life cycle as illustrated in Figure 7.

Figure 7 REACH-IT Substance Hierarchy

Decision Points (see information flow #6 in Figure 2):

• Use alternative materials/Determination of viability for substitutions • Cost • Exit the market • Reduce Market • Choose differ supply sources • Change manufacturing location • Reduce the weight of the Substance below the threshold. • Pursue an exemption

*dated from March 9, 2010

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10 Information flows The following is a detailed list of information flows from Figure 2:

1. Trigger: New SVHC added to Annex XIV 2. Trigger: New vehicle design initiated

a. RFQ b. RFP c. Design Requirements

3. Trigger: Contract to deliver new vehicle to E.U. member state 4. SVHC Design-Process Trade Request 5. Design Trades

a. Request Pb battery make/buy decision b. Make c. Buy

6. Trade Detail: Pb battery specifications 7. Report SVHC Analysis for Design Changes (Parameters of Pb battery trip wire) 8. Request flow down requirements to supplier(s)

a. Supplier Terms and conditions (Ts & Cs) b. Article & Package Mfg Design TDP to Mfg. c. Subcontract with supplier d. SVHC Management Requirements

9. Specification detail: a. Supplier Name b. O.E.M. Part Number c. Part Weight/UoM d. Supplier Part Number e. Part Description (optional) f. Substance Name g. Substance CAS # h. Substance UoM i. E.U. Index #

10. M&PE SVHC Analysis Report to Ex/Im Ops 11. E.U. Pb Substance Importer/Battery Mfg. Supplier Registers Use to ECHA 12. E.U. Pb Substance Importer/Battery Mfg. Supplier requests ECHA Authorization 13. SVHC Use Report to OEM (Recorded SCM data) 14. Supplier delivery of battery subassembly

a. Subassembly b. Incoming Inspection Report

15. Begin Report Preparation (Request EX/IM Ops notification to customer) a. Sub Assembly SVHC Usage Query (request for Pb battery SVHC data)

16. SVHC Usage Report a. REACH report data specification b. OEM to U.S. FMS customer c. U.S. FMS to Importer/E.U. customer d. Importer/E.U. Customer to ECHA

17. Article Delivery (& UID/RFID registration information) a. New vehicle delivered to U.S. FMS for delivery to E.U. member state

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10.1 Repositories The following is a list of systems and repositories referenced in Figure 2:

• ECHA Data Management System • Entire Cross Industry Supply Base Integration of:

o ERP/MES Systems o PLCS/PDM Systems o MPM Systems

11 Scenario results (range of possible outcomes and output)

The following is a list of outputs referenced in Figure 2: • Reports to E.U. Customers and/or Consumers of SVHC information which

fulfill REACH communication requirements • Reports to ECHA of SVHC information which fulfil REACH registration and

authorization requirements

12 Exception handling • Not applicable to this example scenario.

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Appendix A – Delivering eBusiness Solutions The basic process for delivering a business solution is based on the definition of a particular requirement for a business process or interaction, described in sufficient detail to allow agreement by subject matter experts on the validity of the scenario and the identification by the EEIC of the necessary eBusiness components required to meet the business need. A scenario should contain the following information:

Name - meaningful title Description of the problem/requirement, and the business justification for action

Integrated process diagram – business user view containing: Scenario initiation - what prompts it? Actors – roles of participants shown in "swim lanes" Sequence of events within activity Controls – external influences/constraints Internal decision points Information flows – using existing components if possible

Repositories "Master data"

Scenario results – range of possible outcomes and output Exception handling

The scenario defines the processes and information flows required, and existing scenario components that may be reused in order to simplify the development of common solutions. (See Figure 1) Once the scenario definition has been agreed in business terms by the subject matter experts, the business solution can be developed by selecting candidate components from the AIA eBusiness framework to support the scenario, and any requirements for tailoring those requirements. Key steps in the process include:

Review process flow diagrams against available standard process components Identify specific information transactions between actors – across "swim lanes" Identify of available and required information components Identify fixed information sources accessible to multiple actors, such as reference

data standards Identify communication mechanisms and performance requirements - select IT

service components Identify security mechanism components required Identify commercial and regulatory components

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Identify missing components that need to be provided - may lead to framework extensions

Tailor components as necessary Validate design against original scenario

Architectural guidance should provide any necessary design time guidelines on the specific information models, reference data and process definitions to be used, as well as the development of a business case. Implementation guidance should provide any necessary build time guidelines, such as the key characteristics of any implementation to ensure interoperability of solutions. Consideration should be given to the need for a reference implementation for testing and validation of software, and the provision of any examples. Operational guidance should provide any necessary run time guidelines, such as working constraints.

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Appendix B – Acronym List Aerospace Industries Association (AIA) Aerospace and Defense (A&D) Bill of Material (BOM) Business Development (BD) Business Process Modelling Notation (BPMN) Export/Import Operations (EX/IM Ops) Candidate List (CL) Capability Maturity Model (CMM) Chemical Abstract Number (CAS#) Data Management System (DMS) Department of Defense (DoD) Department of State (DoS) Enterprise/Material Resource Planning (ERP/MRP) Environmental Health and Safety (EHS) E.U. aerospace industry associations’ (ASD-ADS) European Chemicals Agency (ECHA) Electronic Knowledge Management (EKM) European Union (E.U.) Export/Import Operations (EX/IM Ops) Foreign Military Sales (FMS) Lead (Pb) Manufacturing Execution Systems (MES) Materials & Processes Engineering (M&PE) Materials Processes/Properties Management (MPM) Program Executive Office (PEO) Program Management Office (PMO) Product LifeCycle Systems (PLCS) Product Data Management (PDM) Request for Quote (RFQ) Request for Proposal (RFP) Original Equipment Manufacturers (OEM) Registration, Evaluation, Authorization of Chemicals (REACH) Substance Information Exchange Forums (SIEFs) Substance of Very High Concern (SVHC) Small to Medium Enterprise (SME) Service Oriented Architecture (SOA) Supply Chain Management (SCM) Terms and conditions (Ts & Cs) United States (U.S.) Unit of Measure (UoM)

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Appendix C – URL references Aerospace Industries Association (AIA) AIA eBusiness guidelines AIA Electronic Knowledge Management (EKM) scenario. An introduction to REACH European Chemicals Agency (ECHA) Candidate List (CL) ECHA “Article 33” “Annex XIV” authorization list Registration, Evaluation, Authorization of Chemicals (REACH)