Avoiding The High Costs Of Environmental Noncompliance


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Avoiding The High Costs Of Environmental Noncompliance

  1. 1. Avoiding the High Costs of Environmental Noncompliance Ray Lizotte, Director, Environmental Stewardship Office, APC by Schneider Electric John Fox, Director, Product and Market Strategy, PTC
  2. 2. Today’s presentation – what you will learn Overview Recent regulatory and market trends that put your products at risk Best practices How leading manufacturers are reducing these risks Case study APC by Schneider Electric Software demonstration PTC InSight Environmental Compliance 2 © 2009 PTC
  3. 3. More regulations, more complexity The task of getting and  Compliance is becoming more costly staying compliant is  and labor‐intensive.   increasingly complex.   It’s becoming more difficult to  manage compliance accurately – Greater risk of failures. 3 © 2009 PTC
  4. 4. More restricted substances and industries in scope 3,000+ Restricted Substances 200 180 160 140 SVHC 120 100 80 60 40 20 0 ELV RoHS JIG A & B REACH 1999 2006 2006 2008 4 © 2009 PTC
  5. 5. The cost of failure A $70 billion  Product shipments suspended 45 days consumer  Lost sales:  EUR 110,000,000 electronics  Reduced profits:  EUR 51,000,000 manufacturer A $1.6 billion  Flagship product removed from EU market telecom  No product shipments for several months equipment  Then, region‐specific product manufacturer A $90 billion  Greenpeace tested  product and found a hazardous substance computer  Remedial action manufacturer Public relations impact 5 © 2009 PTC
  6. 6. Challenge 1: Complex supply chains Supplier Sphere of  influence Finished Article Sphere of  influence 6 © 2009 PTC
  7. 7. Challenge 2: Complex products Compliance Standard Substances Substances Thresholds Supplier Part Masses Exemptions Supplier Part Substances Masses Company Part Supplier Part Substances Masses A single product may need to comply with Company Part Supplier Part Substances multiple Masses environmental standards. Substances Supplier Part Masses Company Part Substances Supplier Part Masses A product consists of Supplier Part Substances multiple company parts (3 Masses shown) each sourced from one or more suppliers. Each supplier part may have a different chemical makeup, which will impact compliance 7 © 2009 PTC
  8. 8. Challenge 3: Constant change Bills of Material (BOMs) Supplier parts are changing are changing Where are my risks? Are my products compliant? Can I prove it? Compliance standards are changing 8 © 2009 PTC
  9. 9. Manual methods are costly and ineffective ILLUSTRATIVE 2 weeks – 1 person Print BOMs from Manually enter BOMs into local database Excel, Review and sort Get Item Remove Manually Manually Send Debug Master list and obsolete Receive calculate Archive identify list Table A & load AVL list of mfg and non- Table A and record docs in of mfg parts requests status part numbers applicable from compliance paper file and to into from local items (e.g. supplier status of at plant suppliers suppliers PDD database cartons) product ~ several weeks, Redundant requests, manual ~ several weeks, 2 people validations, iterations 2 people These ad hoc solutions are generally inefficient and ineffective They tend to focus on one regulation and one region (e.g. the first 15 SVHC) They tend to create a static and hard-to-access information silo 9 © 2009 PTC
  10. 10. Best practices: capability framework Track Acquire data Identify and regulations and manage mitigate risks and manage supplier standards performance Track multiple, evolving  Capture material and  Perform product and  regulations chemical data – program risk  balance risk and cost assessments and take  corrective action Develop, codify, and  Monitor and improve  Comply with  maintain a proactive  the performance of  government  corporate standard suppliers regulations and  customer requirements Business Process Build environmental  Make data accessible in  and System performance  appropriate form to all  Integration management into  stakeholders standard processes 10 © 2009 PTC
  11. 11. 11 © 2009 PTC
  12. 12. Company Profile Residential Business Networks Data Centers Building, Industry, And Infrastructure © 2009 PTC
  13. 13. Environmental Stewardship Office Raymond P. Lizotte, Jr. Director, Environmental Stewardship Office, APC by Schneider Electric APC Corporate Mission Enabling our customers to power, cool, and protect their critical systems in the most simple, reliable, and environmentally friendly way Environmental Stewardship Office Establish capable business processes that support achieving environmental requirements © 2009 PTC
  14. 14. APC adaptation to a new paradigm The emergence of Product-focused environmental regulations forced APC to adapt. • Define design requirements • Part and supplier data management • Design products to conform • Business process and system integration Failure can be a Big Problem! Regulators, customers, competitors, BIG PROBLEM! NGOs, inspect products for compliance. © 2009 PTC
  15. 15. Example: Japan Market Contents of Enclosed Fastener Kit © 2009 PTC
  16. 16. Example: Japan Market Over 1,000 tests of the 250 components that make up product. Fuse Holder Tie Wraps Ink in Box Connector Bezel clips Fasteners Screws in Receptacle Bobbin © 2009 PTC
  17. 17. Example: Japan Market Investigation determined that a supplier declared the part compliant, but it was delivered as noncompliant. Impact of nonconforming parts on 3000 VA UPS Customer views the failure to deliver RoHS compliant products as a “breach of contract.” “Ship holds” are placed on product deliveries until compliance status resolved. Approximately $14 million in revenue per quarter impacted. Cost to correct: approximately $650,000 Goal: Build sustainable business processes necessary to produce environmental products. © 2009 PTC
  18. 18. Building sustainable business processes APC selected PTC InSight Environmental Compliance as the primary tool for managing product environmental compliance Easy and cost-effective to maintain Integrates with existing business tools Allows the sharing of the data across the enterprise Specify Design Make Sell © 2009 PTC
  19. 19. Challenge: Compliance Data Isolated and Managed Manually Engineering Teams (Design, New Product Development) Factories Product (Purchasing, Compliance Manufacturing, Teams Quality) Marketing (Customers) “Ivory Tower” © 2009 PTC
  20. 20. Solution: Enable data sharing across the Enterprise InSight Engineering Environmental Compliance PLM Teams (Design, New Product Development) ERP Factories (Purchasing, Manufacturing, Web Quality) Product Marketing (Customers) Compliance Teams © 2009 PTC
  21. 21. Conclusions With InSight Environmental Compliance, APC has established the foundation to meet current and future environmental regulations Cost-effective to maintain Integrated into the way APC conducts daily business Provides easy access to compliance data across the entire enterprise Provides the data to defend the status of products. © 2009 PTC
  22. 22. Get the data Analyze and Manage the data Share the data Data  Ecosystem Data  InSight Analysis and  Program  acquisition Environmental  reports analysis /  Supplier  Compliance Suppliers  tracking • Environmental Data (Direct) • Compliance • IPC‐1752 Standards* Product  Suppliers  • Other  • Exemptions analysis /  (3rd Party) standards Risk  assessment Material  Databases Material  Legacy Data Product Info Part Info/AVL Content  (BOMs) (Item Master) Declaration  of final  • PLM product • ERP *Supported compliance standards include EU RoHS, China RoHS, WEEE, ELV, REACH and more 22 © 2009 PTC
  23. 23. What you will see in the demonstration Product/Sub‐assembly: Connector Fastener Company Parts: Integrated Circuit Supplier Parts: Environmental  (Substance) Data: ? Substances: CAS Numbers, Masses 23 © 2009 PTC
  24. 24. APC: Recommendations Leverage existing data sources Products are being tested for compliance and just one bad part renders the entire product noncompliant – all components need to be included Product-focused environmental requirements are now worldwide – don’t just focus on Europe Regulations are not going away – lay the foundation for a sustainable process now Failure to meet these requirements can have a real business impact © 2009 PTC
  25. 25. PTC: Recommendations Assess your capabilities in the 4 key areas Track regulations and manage standards Acquire data and manage supplier performance Identify and mitigate risks Business process and system Integration Look for ways to systematically reduce the costs of compliance and manage risks When considering software tools, look for a system that Automates routine, labor intensive, and error-prone procedures, like data collection and analysis. Co-exists with your existing product data management systems. Scales to support many shades of green Enables compliance to be integrated in your business processes 25 © 2009 PTC
  26. 26. Thank you. This concludes our event. Raymond Lizotte John Fox Director, Environmental Stewardship  Director, Product and Market Strategy Office PTC APC by Schneider Electric jfox@ptc.com rlizotte@APC.com www.linkedin.com/in/johnhfox 978‐670‐2440 267‐708‐0027 Learn more about the product  Learn more about InSight stewardship initiative at APC:   Environmental Compliance software:   www.apc.com/corporate/stewardship www.ptc.com/go/insightec 26 © 2009 PTC