Designing for Environmental Compliance

March 23, 2008
Companies that take advantage of PLM technology with compliance data management solutions will leapfrog the competition.

Manufacturers have recently been faced with an onslaught of new regulatory pressures, most notably material compliance regulations that are aimed at reducing the amount of hazardous materials contained in new products and ensuring that these materials are recyclable at the end of the product lifecycle. Under new regulations from Europe -- and equally challenging initiatives emerging in California, China and Korea -- manufacturers must implement processes to collect, integrate, analyze and report detailed materials and substance data related to all new products.

Failing to comply with regulations such as the European Union's Restriction of Hazardous Substances Directive (RoHS) or Waste Electrical and Electronic Equipment Directive (WEEE) could cost a company millions of dollars, as AMR Research points out in a report titled, "RoHS and WEEE: It's an Executive Problem." In the report, AMR notes the experience of a major consumer electronics company which lost $110 million in sales revenues, resulting from a ban placed on the sale of its new highly anticipated product because of claims that the product exceeded cadmium content limits.

While existing European directives have created the need for companies to manage an entirely new set of product data, the newest requirements from around the globe are furthering the case for effective and cost efficient methods for managing product compliance information. Efficient compliance practices not only lead to competitive advantages, but also help avoid the significant risks of non-compliance.

Compliance is a major issue facing Original Equipment Manufacturers (OEMs); however it also has a major impact on the supply chain -- particularly for the Tier 1 suppliers who provide parts, assemblies and systems to the OEMs. Compliance verification and audit reporting requirements require OEMs and/or their suppliers to certify that their products meet all regulatory requirements and do not exceed threshold levels of banned substances.

Providing such certification and ensuring compliance means that companies must achieve a high level of knowledge regarding the specific materials and substances that make up each and every part and component of the products that they sell -- a potentially daunting task for companies that sell diverse and complex products, each of which may consist of thousands of parts, materials and substances.

To gain a complete understanding of the material and substance composition of their products, companies must perform four critical functions related to all purchased parts and subassemblies found in new products:

  • Collection of material compliance requirements from customers and markets
  • Integration of material and substance data from suppliers
  • Analysis of material and substance data readiness
  • Reporting of material and substance data compliance to customers, auditors or legal entities

Achieving Compliance Success

To successfully achieve compliance, companies must perform these four functions early in the new product design process so that costly product revisions, new design considerations or retrofits, new manufacturing techniques and time-to-market delays are not incurred during efforts to achieve compliance. Until recently, companies had no simple mechanism for incorporating these functions into the early product design process, resulting in feedback and reporting on material and substance data only after products had been released to market.

Even in the automotive market, where an industry standard repository of part substance data called IMDS exists, OEMs and Tier 1 suppliers could only manually input product structure (Bill-of-Materials or BOMs) or collect part substance data. They had no internal data management tool for efficiently handling the complex and companywide need for handling material compliance data through the entire Product Lifecycle. As a result, some automotive companies had to cobble together manually-intensive operations to address the four critical functions. Those that could not handle this process in an expedient manner were faced with the decision to either risk delivering non-compliant products to market or incur lofty expenses involved in manually managing part material and substance data. Some companies even incurred new product introduction delays as they awaited results from their manual compliance information management processes.

Today, leading manufacturers, as well as Tier 1 and lower level suppliers, are adopting a new method of achieving regulatory compliance without sacrificing time-to-market or the four critical functions for material and substance data management. Through their adoption of a "Design for Environmental Compliance" methodology, these companies are able to integrate part material and substance data into every phase of their new product development process, enabling them to achieve compliance with WEEE and RoHS in Europe and other emerging directives around the globe, while at the same time streamlining new product development. They can now realize the benefits of compliance, and respond to customer requirements faster than their competition.

The PLM Solution

The four critical functions for materials compliance do not change in Design for Environmental Compliance, except that it all happens much earlier, and in a more automated fashion. What enables this unity between compliance data and the early design process is the integration of Product Lifecycle Management (PLM) technology with compliance data management solutions. Essentially, this enables companies to expand the scope of the product data managed within PLM to include material compliance data.

By having compliance data integrated with their PLM systems, companies are able to view customer or market requirements, engineering bill-of-materials (EBOM) data, manufacturing BOM data (MBOM), and part material and substance data related to all product data -- all in a single system. This allows rapid response to customer demands while at the same time understanding the overall functional, environmental and cost impact that various product configurations will have when designing for environmental compliance -- whether in Europe, China, California, South Korea or anywhere in the world. As a result, trade-offs and issues can be discussed at the earliest stages of product development, increasing customer satisfaction and streamlining NPI and compliance efforts.

Linking material and chemical substance compliance data to all product lifecycle processes enables OEMs and Tier 1 suppliers to gain full product regulatory compliance visibility across their organization and supply chain. This will help to drive hazardous substances out of products, and avoid a litany of problems, such as slower time-to-market, product recalls, potential fines, product bans, poor customer satisfaction and possibly a damaged public image.

For those companies seeking to gain competitive advantage through compliance with current and emerging environmental regulations including WEEE, RoHS, ELV and REACH, PLM technology with compliance data management solutions will enable them to leapfrog the competition by helping to speed their product development cycles and deliver compliant products to the marketplace.

Mike Zepp, Director of Material Compliance Solutions, Dassault Systemes. Dassault Systemes brings value to more than 100,000 customers in 80 countries. A pioneer in the 3D software market since 1981, Dassault Systemes develops and markets Product Lifecycle Management (PLM) application software and services that support industrial processes and provide a 3D vision of the entire lifecycle of products from conception to maintenance.

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