EXECUTIVE SUMMARY

Regulations require manufacturers to provide a Material Safety Data Sheet for hazardous products to their customers when a product is purchased and provide an updated MSDS when there is a significant change in a product formulation or health/safety evaluation. Most manufacturers provide an MSDS with the first order or shipment of a product to a customer. Mail outs are used often to provide customers with updated sheets. Chemical users are required by regulations to make employees aware of current information concerning potential hazards of the products used in the course of business. In addition to these two transactions, manufacturers must support the ongoing requests for one of their MSDSs when the customer/employee who actually uses or needs an MSDS doesn't have it. Some individuals involved in MSDS transactions believe this accounts for most MSDS inquiries. The cost to manufacturers to provide a customer an MSDS and the cost to the customer to obtain an MSDS and make it available to employees is a necessary cost of doing business.

As chemical manufacturers and their customers have sought ways to reduce their costs and maintain or improve their effectiveness in satisfying regulatory requirements, the idea of using a central repository to distribute and obtain an MSDS has evolved and gained support. There is a consensus among many users and manufacturers on the benefits of a central repository, but data based on actual costs of these MSDS transactions is often limited or non-existent. This is not surprising considering that the transactions have historically been treated as a necessary cost.

Initial efforts to build a central repository failed for a variety of reasons. The lack of an easy delivery mechanism was one. The rapid development and use of the Internet technology has overcome that. Gaining consensus on specifications for a central repository was another one. There is now a proposed set of specifications that takes advantage of the Internet technology and that are feasible for almost any manufacturer or customer to use. There are other issues, but they don't appear to be significant barriers. For example, many users want to extract data from an MSDS to perform other business functions such as regulatory reporting and would like the MSDS to be available in a database format, not just a text file. However, since the majority of users do not need or want this functionality, the scope of the specification is limited to an MSDS in ASCII format. It will be up to the customer to extract the data needed for internal uses. Likewise, there is reluctance by some manufacturers to make their MSDS available because of proprietary information. In that case, an MSDS that a manufacturer doesn't want made available would be handled as an exception using the manufacturers current business procedures. The one issue that is not yet resolved is who will pay for the central repository.

The basic concept of a central repository is that manufacturers will make their MSDSs available to the central repository in an ASCII format. The manufacturers will enter into a service agreement with the central repository service provider that ensures that the MSDS provided "are current and from the manufacturer." The service provider will index MSDS sheets from all manufacturers and make them available via an Internet site. Customers will then access the central repository web site and look up and retrieve an MSDS. Since available data indicates that most MSDS searches (83%) are based on product name, product number or synonym, and most searches (55%) are for one MSDS, this simple approach will satisfy the large majority of customers.

Nearly all involved in health/safety operations recognize the benefits of a simple, but very cost effective approach such as a central repository. However, in a competitive environment, manufacturers are reluctant to incur an additional cost to pay a service provider to index their MSDSs since they already have a "delivery" mechanism to get an MSDS to their customers. In many cases, these manufacturers have also made their MSDSs available on a corporate or company website. Manufacturers view this additional cost as unnecessary. Preliminary studies show that some of these internal costs will decline as their customers begin to use a central repository to obtain an MSDS.

Customers seem unwilling to pay for the convenience of a central service provider since they believe that manufacturers should incur that cost since they are required to provide an MSDS. Upon reflection, it is apparent that both manufacturers and customers are routinely satisfying regulatory requirements. MSDS sheets for not only hazardous material, but also many other non-hazardous materials MSDSs are routinely available to customers. Customers are making information available to their employees about hazardous and non-hazardous products. What is desirable then, is for manufacturers and customers to see this opportunity not as an either or, but as a way to reduce the cost of what they are already doing routinely. It is likely that based on valid analysis of the costs of conducting MSDS transactions, a solution will surface that will be supported by the stakeholders and allow the central repository concept to become a reality.

Unfortunately, there is no common denominator to intervene and "mediate" a solution. Since there are hundreds of manufacturers and customers, no single trade organization or governmental agency believes it can intervene and support a central repository becoming a reality. Some believe that the petroleum, chemicals, pharmaceuticals, and agricultural product manufacturers may be a key since they author most of the MSDSs.

Our company has developed a website that supports the basic specifications described above. Based on limited data for manufacturers' internal costs of distributing MSDSs to customers, the MSDS Search rates are competitive. As of early 1999, no manufacturer has subscribed to the service, apparently for the reasons above.

One purpose of the Pacific Northwest National Laboratory (PNNL) pilot study is to address the above issues. Can a pilot study validate the central repository concept? Can they assess what the transactions cost are so both manufacturers and customers are more likely to be aware of their "hidden" costs and be willing to choose other MSDS transaction solutions to reduce their costs? If so, what are the critical factors to make that happen? What might be a role for the key manufacturers above? What is the position of their industry trade organizations on a central repository?

PNNL is seeking 20 manufacturers or distributors to participate by making available 5000 MSDSs for the pilot. They estimate a cost of $42 per MSDS or about 210,000 $ for the study. This will be in addition to funding from the primary client, the US Department of Energy, and other government agency groups. That is about 10,000 $ per participant. Consideration of reducing the number of MSDS for the pilot is underway, to help make the pilot feasible. An alternative approach would be to request some major manufacturers and customers to provide some "seed monies" or grants to determine the feasibility of a central repository. If 50-100 contacts could be made, and both major manufacturers (who are also customers) and their customers or distributors contributed 1-2 thousand dollars, this project could also be realized. The same 5-10,000 MSDSs would have to be obtained from the manufacturers in electronic format, but the distribution costs, accessibility, reliability, etc could be evaluated with a committed customer base.

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