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Striving for Upstream Compliance


Striving for Upstream Compliance, by Beth Stackpole, Contributing Editor

Talk about a flashback to the late 1990s. Just as manufacturers scrambled to ready their IT systems for the Y2K changeover, many are again in reactive mode, prepping their product development and other departments to meet requirements for regulatory compliance.

 But cutting-edge companies are going beyond short-term compliance. They are starting to rethink their processes for products under development. Instead of coming at compliance as an after-the-fact checkbox item, these manufacturers are reengineering their business processes and systems to make compliance an integral part of the early design stage. In phase two, companies address compliance just as they would any other design requirement — for example, design for cost or for manufacturability. Part of the impetus is to establish formal and traceable business processes to avoid missteps that could lead to regulatory fines, product shutdowns, or PR meltdowns reminiscent of what Mattel experienced this summer when it recalled lead-containing toys built by some of its Chinese suppliers. Perhaps the more compelling argument for a design-for-compliance strategy is that addressing the requirements early in the design phase is far more cost-effective and efficient than being forced to make changes closer to production. "The benefits of designing for compliance are immeasurable," says a spokesman for Siemens PLM Software, which offers product lifecycle management (PLM) software, including CAD and digital manufacturing applications. "When you factor it in at the very beginning, you automatically know what pool of suppliers to choose from, what pool of components to choose from, and what processes to use downstream to manufacture the product. You start to cut out all the potential dead ends you may run into downstream, and cut back the iterative process." Nevertheless, although most companies acknowledge a design-for-compliance strategy as the end game, few are on track to achieve it. For one thing, manufacturers are still trying to get a handle on which compliance directives impact their products and markets, and which exemptions apply. Formulating the kinds of process changes required to push compliance work upstream is another big hurdle as are cultural issues that keep organizations from fully embracing new practices required to address compliance in their overall design objectives. Finally, compliance issues aren't top-of-mind for C-level executives, as they were in the rollup to the July 2006 deadline for the European Restriction of Hazardous Substances (RoHS) and Waste from Electrical and Electronic Equipment (WEEE) directives. Now that the initial groundwork has been laid, some of the pressure is off. "[Compliance] is a big, hairy problem for customers that doesn't always get the attention it should," says Chad Hawkinson, vice president of product strategy for PTC, which offers PLM and CAD software. "In many cases, management asks if a company is compliant and when the answer comes back yes, they move on. They don't necessarily ask: How do we know we're compliant and are we investing in technology so we're sure we don't make mistakes?"  Data Collection Scramble So how does a first-pass run at compliance differ from a full-blown design-for-compliance strategy? In the first go-around, most companies typically focus on compiling information about their materials composition and tracking their product structure so they can validate compliance, qualify for a certificate, and push product out the door. Building checkpoints into the manufacturing process to validate compliance information is part of this stage as is working with suppliers to collect their compliance data, a task typically performed by procurement specialists and, on occasion, engineers.

 "Most companies gather the documents to prove compliance manually, keeping good, old-fashioned, paper-based records; collecting material spec sheets; and keeping a ledger or spreadsheet that says this product has these parts," the Siemens spokesman says. "Then, at the end, depending on the regulation, they need to scour all those documents to see, for example, if a product has any lead in it. It becomes very time-consuming, labor-intensive, and error-prone." The best way to avoid this circuitous route is to incorporate compliance objectives at the onset of the design process much as you might factor in weight considerations or quality criteria. "Design for compliance is similar to design for cost or design for quality. It's all about early visibility when products only exist virtually as designs in a file system or in memory," says Dries D'Hooge, senior director of product strategy and management for Oracle. Oracle now offers PLM software as a result of its acquisition earlier this year of Agile Software Corp. "That's when you can get a good notion about compliance, do what-if scenarios on the product, and make changes easily and cheaply." Beforehand, however, companies must fully understand what standards or regulations they must comply with. This may be clear for electronics makers, which are up against directives such as RoHS and WEEE, or automotive manufacturers, which must adhere to the guidelines under End of Life Vehicle (ELV) regulations. But the compliance canvas may be blurrier for industries such as medical device makers or in specific geographic regions, where exemptions may apply. Once the compliance objectives are clearly established, technology can play a key role in pushing compliance practices further upstream. PLM software, for example, can serve as a central repository for all compliance-related materials — everything from bills of materials to less formal PDF spec sheets and e-mails — giving everyone access to the same compliance status information. This way, people can make informed decisions on parts and materials early in the conceptual stage of design. Some PLM platforms, including Siemens' Teamcenter Environmental Compliance Module and the PTC Environmental Compliance Solution for Windchill, automatically link to databases containing information on compliance standards, such as RoHS, WEEE, and ELV, compare a product's bill of materials with the compliance standard, and then issue quick reports on pass/fail status. PLM's collaboration, process, and workflow control capabilities are also central to ensuring that compliance is integrated into the overall product development and introduction process, according to Mark Holman, senior vice president of operations and strategic development at PLM maker Arena Solutions Inc. Arena PLM also offers real-time visibility into the Avnet Promiere and HIS parts database, allowing engineers to see RoHS compliance information within the context of a BOM. "Without PLM or something like it, you typically have three or four people along the way checking the same documents multiple times to verify compliance status, and there is no place to hang that information," Holman says. "It's in a file cabinet, on some guy's desk, or in the Oracle ERP system. Everyone ends up looking for the same document again and again." PLM systems have a leg up on ERP and other systems to maintain compliance data for several reasons, Holman says. CAD or EDA systems have no capabilities for storing the collection of compliance data, and though ERP systems offer more options, engineers don't typically use those systems. "If you're checking for compliance in an ERP system, you've lost the opportunity to design for compliance," Holman says. "It's the equivalent of doing quality control when a product is at the end of the manufacturing line."For large companies, PLM, perhaps accompanied by a broader master data management (MDM) strategy, is the way to achieve a successful design-for-compliance strategy, says Mike Burkett, vice president PLM research at AMR Research Inc. Though PLM vendors propose the platform as the central repository, the truth is, there are many systems handling compliance- and product-related information and materials. "Instead of constantly reacting, forward-thinking companies are saying, 'Wouldn't it make sense to identify a data model that allows me to know all the attributes about a product and easily ID whether it meets new regulations and, if not, what needs to be changed?' " he says. "That's the more sophisticated IT approach and that's where MDM fits in. It's about how to make that connection between the data created in the PLM system and downstream data." For most companies, starting with PLM or even formulating new business processes around compliance will help move compliance efforts further upstream in the design process. Narragansett Imaging, a manufacturer of imaging subsystems for medical, defense, and machine vision applications, brought in Arena PLM to do just that. Prior to implementing the system a year ago, the company had no formal system for managing compliance. Engineers were responsible for ensuring that components met standards, collecting the appropriate evidence from the suppliers, and feeding that data into a document management system. With the new system, engineers can attach all of the compliance evidence collected directly to individual parts. Exemptions and other annotations can be noted in the system. "Any time we do a bill of materials, there's a column that tells us whether it's compliant or not," says Doug Sherman, Narragansett Imaging's vice president of engineering. "Also, there's a really quick search capability, so reuse is a lot easier. Everything is in one place." Establishing business processes that make compliance part of the initial design phase is saving Narragansett Imaging money over the long run — despite the challenges of building extra time into the process to accommodate the engineers' validation work. "The minute you transition something to manufacturing, you put the product under much tighter controls in terms of changing things or swapping out components [with an engineering change order (ECO)]," Sherman says. "Running and managing the ECO process takes a lot of time and people's effort, [and] therefore costs a lot of money. Making component changes at that stage to meet RoHS compliance costs a lot more than having engineers research and gather information on parts."Source:   Editorial from the December 2007 issue of Managing Automation,

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