In a global economy, image is everything. Perception is reality, as they say -- and trying to compete with companies all over the world, exporting products to places where regulations differ widely, differentiating what's positive for consumers while still being financially sustainable -- just trying to stay relevant in a whirlwind of new expectations -- is challenging. Manufacturers find themselves face-to-face with product recalls all over the world due to regulatory infractions.
Toy makers in China, a peanut factory in the U.S., all sorts of compliance issues have plagued consumers, producers, suppliers and designers. In the midst of all of this, the idea of trying to stand out by being "green" for many companies seems too costly and time-intensive to even consider. Well, consider this. Some of the major issues facing manufacturers right now include reduced revenue, declines in customer demand, staying compliant with international regulations and maintaining a strong reputation. What if there was a new philosophy you could adopt or a strategy you could implement to address all of these factors at once?
There is, and it's called "eco-design." The manufacturing sector is hurting because of the recession and difficulties in adapting to shifting global dynamics. Prioritizing the environment in product design, development and delivery -- the entire product lifecycle - isn't just the whim of environmentalists. Balancing sustainability with profitability is difficult, but it can be done and can often lead to a reduction in material costs while improving efficiency and boosting consumer demand. By incorporating flexible, targeted product lifecycle management (PLM) solutions, companies can achieve a tremendous return, in terms of money and goodwill, by investing in the environment.
PLM enables companies to manage information about their products within a single information environment -- from initial concept through to manufacturing and after-market service. Moreover, PLM ties together all product-related processes, data and non-product documentation.
The Grass Isn't Greener on the Other Side of the Law
Taking the green route to corporate social responsibility (CSR) begins with ensuring that manufacturing facilities, suppliers and ultimately products comply with all applicable regulations. Since failure to comply will result in strict sanctions and fines, along with an unhealthy dose of media and public scrutiny, it's imperative that companies make compliance their number one priority. Bad press will cost a company much more than hiring a compliance officer to stay on top of regulations.
On the bright side, there are more benefits to compliance than simply avoiding bad publicity. Some of these benefits include:
- Increased product quality
- Lower product launch costs
- Being seen as environmentally progressive
- Attracting socially-conscious consumers and investors with an interest in supporting green technology
- Attracting and retaining environmentally-aware talent
These positive aspects of compliance are enticing more companies to try greening their business practices. It was less than a decade ago when the European Union established the first environmental compliance mandate in reaction to a shortage of landfill space. China, Korea and even individual states like California have followed suit by enacting legislation aimed at reusing, recycling and recovering materials, positioning landfills as a last resort.
For example, in 2003, California enacted the Electronic Waste Recycling Act, establishing a system for the reduction, collection and recycling of electronic product waste. Norway and Australia are working on passing similar laws. As the momentum continues to build for environmental sustainability and fewer landfills, more nations will follow suit.
With compliance being an unavoidable requirement of doing business with suppliers and customers in many countries, it makes good business sense for corporations to set up processes and leverage technology to meet both current and potential mandates. The immediate consequences of non-compliance, such as shipment delays, heavy penalties, loss of market share and tarnished public opinion, are severe. However, the long-term competitive implications may actually be worse. Providing regulators with volumes of required data to prove that one's company is compliant with current mandates is expensive; it limits productivity and eats into margins, diminishing competitive advantage.
Eco-Design for Business Improvement
Companies pursuing an eco-design approach need to have tools and processes for measuring, tracking and optimizing their environmental footprint -- including full and instant access to the latest environmental compliance data -- so that design decisions (i.e., which part or supplier to use) take into account possible ramifications on product compliance.
Involving the entire supply chain in efforts to reduce the environmental footprint of your company's products is an increasingly important element of improving the speed and productivity of your operations. The "wait and see" approach is completely out-of-touch; trends show that companies are using green strategies to improve their businesses now. According to Aberdeen Group's June 2008 Engineering Executive's Strategic Agenda study, many manufacturers have already or will soon pursue green product development strategies. Specifically:
- 56% of manufacturers have already deployed a green product design strategy
- 26% of manufacturers plan to pursue a green product strategy within two years
Why Implementing a PLM strategy with Seamless Materials Compliancy Makes Strategic Business Sense
To be fair, consumers don't need to take pointers from eco-activist NGOs to form their own opinion of ethically-sound business practices. For the most part they want to associate with companies that respect the environment. Whether companies institute energy saving policies in their facilities, produce environmentally-friendly products or align themselves with charitable activities that support environmental concerns, consumers want proof of their sincerity.
From consumer trends to government mandates, manufacturers face growing demands. The choices they make will influence their competitive positioning in the global economy. Implementing a green strategy will generally result in improved brand perception by consumers, shareholders and suppliers, not to mention the communities where plants are located.
Saving Some Green in More Ways than One
Eco-design takes into consideration a product's environmental impact during its entire lifecycle (procurement, design, manufacture, use and disposal). When consumers contemplate buying a product, companies that can offer information on the hazardous content, recycled (post-industrial and post-consumer) content or the carbon footprint of their products have an edge. Similarly, suppliers that offer carbon credits to their customers may have preferred purchasing status over other suppliers.
By using a compliance-enabled PLM solution, companies can provide full product regulatory compliance visibility across their entire eco-system of suppliers, customers and partners. This broad scope of insight into the world of environmental compliance allows companies to improve product time-to-market, enhance customer satisfaction and meet regulatory directives. A Dassault Systmes business value assessment on the labor and cost savings potential of a compliance-enabled PLM solution at a major tier one automotive supplier showed time savings improvements of 40% to 95% across various roles-and cost savings greater than $20 million dollars over three years.
It is critical that the environmental compliance be managed early in the product development process because the costs associated with late-stage design changes can be enormous. True eco-design leverages PLM to manage these elements in advance, including:
- Improve product quality by removing information silos that prevent collaboration and reuse of intellectual property (IP)
- Provide accurate audit information and traceability by verifying and integrating product compliance specifics at every step of the product development process
- Speed time to market by avoiding late-stage design changes that often cause product delivery delays
- Lower costs by building compliance mandates into the product at the concept level
- Enhance brand identity by enabling the successful implementation of an eco-design strategy for product design
What are companies doing to promote an eco-friendly image? Issue entire annual reports focused on communicating their green corporate social responsibility, for starters. Toyota, for instance, is working to phase out mercury, cadmium, lead and hexavalent chrome to make vehicles easier to recycle (Toyota, "North America Environmental Report 2008," p. 29). Similarly, Johnson Controls has taken measures to improve the recyclability of its materials and maximizing the energy efficiency strategies of renewable technologies like wind, solar and biomass power (Johnson Controls, 2007 Business and Sustainability Report, p. 23). Some high-tech companies in Japan have begun to track and measure the carbon footprint of their products starting with the supply chain, continuing through the manufacturing processes and finally via transportation and delivery logistics. Looking good to customers, government bodies, partners and employees as well as doing good for the environment? Now that approach can create a clear competitive advantage.
Preparing to Green the Enterprise
Developing a successful environmentally sustainable program requires an enterprise-wide strategic imperative that encompasses every process, from engineering to manufacturing to purchasing. Companies should consider these key areas:
- Delivering maximum reuse of compliant components, eliminating costly engineering changes late in the design process
- Proactively meeting global regulations throughout the entire product lifecycle and across the full eco-system of suppliers, customers and partners
- Enabling a measurable and sustainable environmental compliance aspect to the sourcing process
- Maximizing the efficiency of the compliance data management process through automation of the collection, analysis and reporting phases
- Providing simple access to environmental compliance information to all employees with the goal of promoting sustainability
Whether it concerns land usage in Europe, water resources in the US or clean air in China, eco-design is becoming a major consideration for all elements of society. Companies that demonstrate green awareness and sustainability have the chance to increase their market share, enhance their brand image and drive revenue. Getting the greatest return-on-investment from eco-design will require manufacturers to think well beyond just meeting compliance regulations. Successful green companies have invested in a PLM strategy, chosen a vendor that understands the concept (both thematic and practical) of eco-design and deployed solutions that support enterprise-wide environmental goals. Incorporating scalable, flexible and easily adaptable PLM solutions can help corporations take their products onward -- and greenward.
Mike Zepp is the director of material compliance solutions for ENOVIA, Dassault Systemes. ENOVIA is a PLM provider that delivers a production proven SOA architecture for driving collaborative innovation http://www.3ds.com/products/enovia/welcome/