Q&A: Not Ready for the Jolly Green Giant

18 Sep, 2006 By: Kenneth Wong

PLM vendor Arena Solutions finds that manufacturers are ill-prepared for RoHS compliance.

The European Union's RoHS (Restriction of Hazardous Substances) took effect July 1. The directive "bans the placing on the EU market of new electrical and electronic equipment containing more than agreed levels of lead, cadmium, mercury, hexavalent chromium, polybrominated biphenyl (PBB) and polybrominated diphenyl ether (PBDE) flame retardants." Manufacturers who wish to sell their wares in the European Union must comply with RoHS.

Among the first casualties of RoHS was Palm's Treo650 smart phone. (See "RoHS Rules Kill Shipments of Palm Treos to Europe," EETimes.) The green giant also took a bite out of Apple. According to the AppleInsider Web site, Apple had to withdraw several products from the European market, including the desktop eMac.

Recently, PLM vendor Arena Solutions polled manufacturers who are not currently using Arena PLM to gauge their RoHS readiness. Arena's survey found "83% of respondents were at severe to high risk of not being able to demonstrate compliance or due diligence for RoHS based on their documentation management capabilities. In addition, 60% of respondents are not confident that they track all parts and materials in their products."

Arena CEO Michael Topolovac talked with Cadalyst about how some manufacturers might have underestimated the green giant's resolve, how Arena plans to tackle compliance management and why outdated computational processes -- although good enough at one time to land man on the moon -- might not be the best for managing RoHS today.

Cadalyst: Did the survey reveal anything unexpected about manufacturers?
Michael Topolovac: I believe that some manufacturers weren't ready because they expected the deadline to be pushed back, as had happened with other government regulations. As a result, they were caught off guard, because that didn't happen in this case. I'd have expected people to understand better what they needed to do. A lot of people thought they were compliant, but they were a long way from it.

What were some of the manufacturers' general misconceptions?
A lot of them thought they could just put a check mark next to a box. They thought they would just buy parts that are compliant, or they'd call up a vendor, the vendor would say [the part] is compliant, and they'd just call it a day -- but that's a simplistic view of compliance. Compliance includes everything that the product is made up of -- not just the electrical components but even the processes involved in making the product.

Some customers thought compliance pertains only to the European Union's RoHS. They don't see other regulations coming down the pipeline. So they might say, "I'm documenting that this resister is compliant; I'm naming it resister4273_EUcompliant." Well, they'll find out that this naming scheme is not scalable when they're confronted with other regulations. There's one [set of rules] for California, one for Korea and one for China.

Does the level of readiness vary among small companies, midsize companies and large enterprises?
Bigger companies are able to throw more people at the problem. Smaller companies are likely to miss it completely. But it's not like the bigger companies have figured everything out. They have their own issues too. As we've heard in the news, Palm and Apple had to pull some products from the European market because they couldn't get them to be compliant in time.

What should manufacturers expect?
It's still very unsettled, so I can't speak with authority on what the eventual outcome will be. But I guess compliance enforcement can happen on two fronts. One, you prove your product is compliant at the individual product level: You say, "This widget with 3,000 parts is compliant and here's the documentation packet that proves that it is, from its materials to its components." Or, you show you have a system for producing an RoHS-compliant widget. You show you have managed procedures and policies in place, which requires a PLM (product lifecycle management) solution. With PLM you can demonstrate that every time you buy a part, it goes through the verification loop, there are people controlling that, and you can look at its compliance history and so on. Either one of those two approaches we believe will be sufficient. Now, it's possible to [show compliance] manually with spreadsheets and file cabinets -- after all, we did send men to the moon without 3D CAD. But we'd say the only way to do it sanely is with something like PLM tools. Instead of spending valuable resources on manual processes, let a PLM tool take care of it in an automated fashion.

What is the challenge for technology vendors?
Even after the deadline there are lots of uncertainties, so part of our challenge is to educate our customers, to help them better understand what they need to do. Two, we have to relate to them where the tools fit in. If we're talking about BOM (bill of materials) management or version control, because these policies and practices have been around for a long time, it's only a matter of mapping the data to the PLM system. But compliance is new stuff for our customers.

Are vendors ready to commit to a reporting format, for example IPC 1752? Is there any reporting standard that Arena is prepared to adopt as the default for reporting compliance?
The objective is to report at a high level that a product is compliant. The final report isn't an IPC 1752 form. It's a top-level report about the entire product. IPC 1752 is one of the formats that have been proposed for reporting what's in a component, but it has not been universally adopted yet. It's intended to make it easier for suppliers to properly document the substances that make up a component. I think it's actually a good standard, but only a handful of component manufacturers have embraced it. We're also embracing it, but our aim is to be agnostic. The regulation doesn't dictate a format, so even if IPC 1752 takes hold as the standard, [the RoHS directive] won't force an OEM (original equipment manufacturer) to use it. The regulation requires that you provide evidence that the components are compliant.

What's Arena's approach to compliance management?
In the past, the approach was to tag individual items as RoHS-compliant. But we stepped back and said, "You know, it looks to us like compliance management is becoming a core element of design development, because now multiple government agencies will issue different compliance regulations, and RoHS is just the beginning. There are other RoHS-like regulations that'll be coming down."

So what our tool allows you to do is to configure the system to say, "I need to worry about regulations A, B and C." Then specify that regulation A requires that type of evidence, regulation B requires that and so on. Then you map those requirements to an item or an entire assembly in Arena. Then you can run analytics -- you can, for example, select a dropdown menu in a 4,000-part router and say, "Show me RoHS compliance." The system will look at the parts and say, "It's 42% RoHS-compliant, 20% unknown, 38% failure." But if you select WEEE [the directive for Waste Electrical and Electronic Equipment] on the dropdown menu, it might say, "Out of all the parts, these five aren't compliant." Basically, you put a filter on the product and see how far along you are in meeting the requirements.

Arena Solutions' compliance management module lets users configure the system to address specific regulations.

Will RoHS have an impact on the integration of ERP (enterprise resource management) and PLM? Or will the added complications discourage people from considering such integration initiatives?
Compliance is product documentation and business-process control. You have to track it in PLM; you can't do it in ERP. If you put a good quality-control system in place, the need to involve ERP decreases. You might flag a certain part as noncompliant in the ERP system so you won't purchase it. If you put a good compliance management solution in your PLM system, the system won't let you use a noncompliant part in production. Do I think ERP and PLM integration is important? Yes, I do. But I don't think RoHS will change it that much. What people are discovering is that you can't solve PLM problems with ERP, and compliance management is a core element of PLM.

About the Author: Kenneth Wong

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