Could Green Mandates Lead to Innovation Blues?

28 Jun, 2006 By: Kenneth Wong

PLM developer Agile discusses environmental directives and their possible impact on manufacturing

PLM developer Agile Software is hosting a roundtable lunch on July 11 to discuss several issues that are bound to give heartburn to its global manufacturing clients. Titled "Beyond RoHS," the talk will cover not only the European Union's environmental directives -- WEEE (Waste Electrical and Electric Equipment) and RoHS (Reduction of Hazardous Substances) -- but also similar measures from Japan, China, Korea and Australia. Some of these new directives are even more stringent than those of the European Union.

Will supply-chain management become overburdened by compliance management? Will the time and effort required to count cadmium and lead stifle creativity? Dries D'hooghe, senior director of product strategy for Agile Software, responds to some of these questions.

Editor's note: Transcript edited for length and clarity.

Agile's compliance-management solutions currently use IPC-1752 as the default standard for materials declaration (developed by IPC, an electronics industry association). What if, after the international trade organizations' tug of war, a different format emerges as industry standard? Are you worried?

So far, it seems the IPC-1752 has all the powers behind it. The demand for it keeps pouring in. Now, are we afraid [another international standard] might come up? In a sense, yes, so we're not putting all our eggs in one basket. We'll always have the ability to support other emerging standards by customization. The IPC-1752 is not hard-coded into our system. It's one of the options -- the default option, an option that we prefer -- but we're not limited to supporting only this.

Give us an idea of how compliance management works in the global supply chain.

Depending on the region where the product is marketed, a U.S. supplier to an Asian company may be requested to provide [materials declaration] for the Japanese Green Procurement standards [from JGPSSI (Japanese Green Procurement Survey Standardization Initiative)]. In contrast to the IPC standard, the Japanese standard is in Microsoft Excel format. So if you get a Japanese Green Procurement request, your client is using Agile, and they allow you to directly interact with their system, you'll either get invited to download the spreadsheet or the spreadsheet may be e-mailed to you. In both cases, you'll fill out the JGPSSI spreadsheet, which comes with a full set of modules, validations and so on. Then you can either e-mail it back, or you have the ability to hit a button in the spreadsheet and upload the data directly into Agile. There's also an HTML pop-up to validate and sign off on what's captured into the system.

If you are using the IPC format with your supplier, the same happens as with the JGP, but you get an XML file instead of an Excel file. The supplier loads it in the form, responds to it, generates the export XML file and sends or uploads it to Agile.

The IPC format can be exported as an XML file, so it can be imported into Agile. In that case, you'll fill out an XML form that comes from Agile via e-mail. You can also invite the supplier to download it. So with the IPC-1752, it works out of the box. Some customers skip the XML step. They use the Adobe Forms Server to merge the XML data into a PDF, then send the PDF to the supplier. [Adobe offers a set of server products for hosting PDF forms. For more, see Adobe Document Services.]

What's the possible impact of these environmental directives on lean manufacturing (the elimination of waste in every area of production) and other best practices?

Looking at the broader philosophy behind lean manufacturing, environmental compliance initiatives go hand-in-hand with lean manufacturing. In terms of having to scrap certain things, having to rework things, yes, it'll have an impact on manufacturers until the products are in compliance. I would call it a short-term pain to get long-term lean manufacturing benefits. For best practices, there'll definitely be changes. For instance, you'll have to validate early on that the design is not just manufacturable but also in compliance. So design engineers will be burdened with more design constraints. They'll have to design not only for supply chain and manufacturability but also for recycling, disassembly, environmental impact and others. Design cycles are also shrinking; therefore, in my opinion, there's an opportunity to help the design engineers evaluate their products for all these constraints so they don't go down the wrong path.

Pessimists might argue that because manufacturers will be too busy dealing with compliance and materials reporting, they won't have time or energy left to devote to innovation. Is that a valid argument?

It's valid to some extent. Design engineers have always been under a lot of constraints, but now there are added constraints. What smart companies should do is to mitigate, to give [design engineers] tools to evaluate designs very quickly, very early on, even when designs are still just CAD drawings, so they can see if the components and materials they're selecting are compliant. Or, in the approach we're taking, you push information from PLM systems to the CAD system, so when designers are selecting a part, the system will issue a prompt: "You should know this part is not RoHS-compliant." So, even in their creative mode, you prevent [bad decisions] and mitigate the risk.

But I do agree, you're not using all the resources in the way you should -- which is to develop new products. This is where I think technology can help.

Will these new directives complicate the integration of enterprise applications -- for instance, ERP (enterprise resource planning) and PLM (product lifecycle management)?

Overall, compliance requires more integration. Noncompliance is usually discovered by component engineers, because they get notified by the component manufacturer or materials supplier. This needs to be communicated throughout the enterprise. The other parts of the organization -- the supply chain people -- don't live in your PLM system but in ERP. They may need to issue stop-shipment orders on all products containing that part. They may need to notify customers. Marketing needs to get involved to remove the product from the price lists. Therefore, in my view, it requires tighter integration between systems.

The second way you might have a compliance issue is when a customer complains something is not compliant. This issue is coming from the supply-chain side. Here, you need to be able to push it back to engineering in their PLM system so the noncompliance can be designed out.

Now, the other issue is, do you do your compliance first, and then do the ERP integration later? I think that's the smarter approach.

Has compliance created some unexpected trends?

Since Agile has introduced the ability to manage compliance through specifications in the PLM system, our customers are thinking about broadening it to general product compliance including whether it's FDA [for medical device makers] or FCC [for telecommunications device makers] compliance. They start applying the closed-loop processes for environmental compliance to other areas. That's an interesting development. Environmental compliance has taught them that those standards need to be tightly integrated into the product definition. The other is in packaging. There're packing requirements in several countries, where cardboard and foam that are used need to be recyclable. In certain countries, you have to recycle the plastic and cartons in which you ship the product. All this has an impact on the whole product and packaging. Companies are starting to manage this in the PLM system.

About the Author: Kenneth Wong