Comply with Confidence

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1 Comply with Confidence PLM Solutions for Design for Environmental Compliance your world in formation

2 Contents 3 Executive Summary 4 European Union Directives Evolution 5 REACH Compliance Regulations Change Most Frequently 6 How PLM Helps Design for Environmental Compliance Collection and Integration Analysis Reporting 9 Implementing an Integrated Design for Compliance 10 Agilent: Protecting $1B in Revenue with ENOVIA MCC Customer Overview Challenge Solution Benefits 11 Conclusion 2 An Enovia PLM Whitepaper

3 Executive Summary The global marketplace is pressuring companies regardless of industry to adhere to environmental compliance regulations. Each passing year those environmental regulations become more complex and costly to manage, frustrating many enterprises with millions of dollars at stake. Whether the product is as simple as children s jewelry or as intricate as automobile parts, compliance regulators globally are scrutinizing the substances that appear in products we use daily. Consumer awareness toward protecting the environment and buying chemically-safe products is pushing legislators to raise the compliance bar more often. There is no turning back. Companies that fail to comply face stiff fines, loss of business, increased governmental scrutiny and in many cases, a public relations nightmare that taints the company brand for consumers and shareholders. Because of this heightened awareness, regulatory compliance is the concern of all stakeholders from engineers to executives to consumers. An AMR research report that highlights two of the European Union (EU) compliance directives, RoHS and WEEE, states: Not meeting these two directives could cost companies millions. They must be taken seriously and be an executive level priority. 1 The popularity of these directives with consumers and government agencies has drawn places such as California, China and Korea to implement similar initiatives. Universally the goal is to reduce the amount of hazardous materials in new products and to recycle all the materials at the end of the product s life. This whitepaper addresses how Product Lifecycle Management (PLM) technology, including a complianceenabled solution, helps to remove much of the risk involved with ensuring that enterprises will satisfactorily meet those evolving regulations. Dassault Systèmes ENOVIA Materials Compliance Central (MCC) delivers an electronic supplier interface allowing self-management reporting. The software supports unlimited customer or compliance definitions, and provides recycle material content (post-industrial and/or post-consumer) data management. The ENOVIA solution enables complete visibility across the four critical phases of material compliance management related to all purchased parts and subassemblies found in new products: Collection, Integration, Analysis and Reporting. By providing full PLM capabilities, the ENOVIA software allows companies to integrate design for compliance strategies for ensuring compliance throughout the product development process. RoHS and WEEE, like their siblings, REACH and ELV, continue to evolve; and as research brings more information to light regarding chemical, material, and product safety, these regulations are becoming increasingly strict. Companies with European business ties must comply or withdraw from the marketplace. 3 An Enovia PLM Whitepaper

4 European Union Directives Evolution The European Union (EU) began the movement toward an eco-friendlier manufacturing environment with the introduction of several directives that today are so well known that only acronyms are necessary REACH, RoHS, ELV, and WEEE The value these regulations delivered over the years has prompted California, Japan, Norway, Australia, South Korea, and China to implement, or at least consider implementing, their own versions of the EU s directives. Regulatory compliance, which was originally focused only on high-tech electronics and automotive, today has no industry boundaries. Industries such as Consumer Product Goods (CPG) and Energy are just two examples of industries that are now part of the mix and facing added challenges. For example, Europe s soaps and detergent sector has supply chain communication concerns meeting the December 1, 2010 REACH requirement for registering high hazard or high volume substances. 2 Substances produced or imported into the EU in quantities greater than 1,000 tons per year must be registered before the end of the year, as must small amounts. Later deadlines of December 2013 apply to substances produced (or imported) in tons quantities and 1-99 ton quantities, respectively. The EU is also encouraging industries, governments, and non-governmental organizations (NGOs) in Energy to set up a process for certifying sustainable biofuels. This action is in keeping with the EU Renewable Energy Directive, slated for implementation in December 2010, which requires reducing greenhouse gas emissions. The EU recommends voluntary schemes that use independent auditors to check the entire production chain of the biofuels and sets a standard for fraud-resistant and reliable auditing. 3 Acronym Full Name and Short Description REACH The Registration, Evaluation and Authorization of Chemicals (REACH) Directive applies mainly to chemical manufacturers and Consumer Packaged Goods (CPG) companies who are selling chemicals or preparations (blends) of chemicals. RoHS Restrictions on the use of certain Hazardous Substances (RoHS) Directive bans placement into the EU market of new electrical and electronic equipment containing more than designated maximum allowable levels of lead, cadmium, mercury, hexavalent chromium, PBB and PBDE ELV The European End of Live Vehicle (ELV) Directive requires vehicle manufacturers to remove heavy metals such as lead and mercury from vehicle components. The directive also dictates ELV material recovery or re-uses rates of over 85% of the whole vehicle beginning in 2006 and over 95% beginning in WEEE The European Waste Electrical and Electronic Equipment (WEEE) Directive applies to a wide range of electronic and electrical products. WEEE encourages the collection, treatment, recycling and recovery of waste electrical and electronic equipment. WEEE 4 An Enovia PLM Whitepaper

5 REACH Compliance Regulations While the EU has several regulatory compliance directives that enterprises must comply with, the REACH directive is evolving and changing the most frequently. REACH was a major reform of the EU chemicals policy, affecting all global supply chains that produce and use chemicals whenever some part of that supply chain comes through the EU. The directive ensures environmentally safe products by shifting the burden of proof away from countries proving that certain chemical substances are hazardous to chemical manufacturers proving that all of their chemical substance products are safe for all intended uses. Implemented in 2007, REACH will require the complex and detailed registration of thousands of substances, starting with the most toxic and highest volume chemical substances. Providing such certification and ensuring compliance means that both OEMs and their suppliers must achieve a high level of knowledge regarding the specific materials and substances that make up each part and component of the products that they sell. This is a daunting task for companies that sell diverse and complex products, each of which may consist of thousands of parts, materials and substances. However, achieving such product data knowledge can positively affect a company s competitive positioning and help the company realize benefits in the following ways: y Assure certification to government agencies that products fall within new regulatory guidelines y Enable assessment of current products to make the most cost-effective end-of-life versus re-design decisions y Confirm to customers that parts and assemblies conform to new and emerging guidelines yavoid fines triggered by non-compliance y Prevent public relations miscues and negative customer perceptions that could last for years as the result of unsafe products reaching the market ymaintain preferred vendor status with customers y Win customers away from suppliers with lesser compliance reporting capabilities y Eliminate costly recycling and disassembly fees arising from high levels of restricted substances within products at end-of-lifeall of these problems have a direct impact on gross revenue and profits. REACH has the potential of causing significant supply chain disruption in the event that a Level n Supplier is no longer able to use or obtain a specific chemical substance because of an improper or missing registration. 5 An Enovia PLM Whitepaper

6 How PLM Helps Design for Environmental Compliance Underlying the various compliance regulations is the concept of due diligence, which requires that manufacturers implement processes to collect, integrate, analyze and report detailed materials and substance data related to all new products. There are four critical phases related to all purchased parts and subassemblies found in new products: y Collection of material compliance requirements from customers and markets y Integration of material and substance data from suppliers yanalysis of material and substance data readiness y Reporting of material and substance data compliance to customers, auditors and/or legal entities By performing these four phases early in the new product design process, companies improve time to market and reduce cost overruns related to compliance issues that surface during product revisions, new design considerations or retrofits, and new manufacturing implementations. Design for Environmental Compliance manages the four critical phases along the entire product lifecycle and in a more automated fashion. The unity between compliance data and the early design process occurs because of the integration of Product Lifecycle Management (PLM) technology with compliance data management solutions. Essentially, this capability enables companies to expand the scope of the product data managed within their PLM systems to include material compliance data. By integrating compliance data with their PLM systems, companies can view customer or market requirements, engineering bill-of-materials (EBOMs) data, manufacturing BOM (MBOM) data, and part material and substance data related to all product information all in a single system. This capability allows a rapid response to customer demands while at the same time understanding the overall functional, environmental, and cost impacts that various product configurations will have when designing for environmental compliance regardless of location. PLM technology and a compliance data management solution enables companies to discuss trade-offs and other issues at the beginning of product development, increasing customer satisfaction and streamlining new product introduction (NPI) and compliance efforts. When choosing a PLM technology and compliance data management solution, companies should look at the following characteristics and approaches related to the four critical business processes of material compliance management. Collection and Integration The collection of customer or market compliance requirements at an early design stage means that companies must understand the breadth and complexity of the specific chemical substance restrictions that comprise the various compliance definitions used to measure a product s compliance. Although the MBOM is of most concern from a regulatory point of view, the EBOM also needs appending with material and substance data to facilitate Design for Environmental Compliance. This capability enables design engineers to do their normal work easily and quickly while also providing them with the information needed to do design for compliance. In addition, data from a 6 An Enovia PLM Whitepaper

7 multitude of suppliers must exist in the same format and reside within a single, unified system for all stakeholders to view using varying levels of rights-based rules. To obtain accurate existing BOM data, the collection and integration system must import data automatically from the master BOM source system, whether that be a PLM or PDM system where the EBOM is mastered, or the Enterprise Resource Planning (ERP), where the MBOM may be mastered. Many enterprises employ their PLM Platform to master both EBOM and MBOM, which is fully supported with ENOVIA. A best-in-class material compliance solution should provide simple Web-based, Excel-based or PDF-based templates that are pre-populated enough to walk suppliers virtually through the entire declaration reporting process and minimize the length of required responses. To avoid costly losses in translation, the templates should specify the units of measure (such as inches or centimeters, gallons or liters and ounces or grams) and be rules-based to maintain adherence to a company s specific data formats. By storing all the data in a single PLM system, design engineers can view complete and up-to-date information about the following elements of product data: y Product requirements from the customer, including hazardous substance thresholds y EBOM and MBOM data y Internal and external supplier part numbers for each part/assembly ymaterial and substance data for each part/assembly y Material compliance exposure for the product to the component supplier level your world in formation 7 An Enovia PLM Whitepaper

8 Analysis The first step after receiving the supplier s compliance declaration data is to review this information to ensure its completeness and adherence to minimum quality standards. A compliance enabled PLM solution needs to have a variety of tools and methods by which to review the complex and detailed data being submitted by suppliers. These tools and methods are necessary to minimize the level of effort involved with assessing hundreds or thousands of supplier declarations. Once the review is completed, an automated method for tracking and notifying the suppliers of the decision to accept or reject their submissions is equally important, along with any compelling reasons for the decision. Once the PLM system integrates the hazardous material and substance data to the associated BOM structures, the data analysis must be fast and simple. Engineers striving to hit new product design targets have little time to analyze a wide range of hazardous substance data. Since customers and/or regulatory bodies mandate hazardous substance thresholds on homogeneous materials, individual parts, and entire assemblies, compliance solutions should offer the ability to analyze material level, part-level, and assembly level data automatically so that trade-offs and choices can be decided quickly during design. An automated analysis tool enables design engineers to request a variety of views, depending on the need. Given the increasing percentage of recycling and reclaiming of materials mandated by the EU s ELV and WEEE directives, companies will need to make threshold choices early and often. End-of-life product cost has the potential of being impacted by chemical substance compliance. Since most product companies outsource disassembly and recycling to third parties, the higher their hazardous substance levels, the higher the price of these third party services. Even if a part with hazardous substances does not push an assembly above a customer s required threshold, the existence of an over-the-threshold sub-part within the final product can still cost the supplier or OEM at the product s end of life. Companies can eliminate these end-of-life costs at the early design stage by using a PLM-based material compliance solution for analysis. Reporting Reporting is the final stage for any regulatory compliance business process and is the culmination of the collection, integration and analysis phases. A materials compliance data management solution should provide reporting capabilities that are flexible enough to adapt to the continuously evolving regulations, and unique customer demands. There can be numerous types of reports, and companies need to investigate the flexibility of reporting within a compliance solution, particularly since regulations change and will require new and different reports. Some examples of the type of reports necessitated today include: y Statement of Compliance/Certification (intended for external customers and government agencies) y Insufficient part data (helps customers understand which parts have not yet been reported as compliant) y Non-compliant suppliers (helps design engineers and purchasing personnel qualify eligible suppliers) y Percentage of all materials reported (helps a company understand how progress has occurred in reaching full compliance) y Compliance Scorecard for parts/assemblies (helps engineers recognize the most optimal parts and assemblies for use) 8 An Enovia PLM Whitepaper

9 Implementing an Integrated Design for Environmental Compliance Meeting environmental compliance throughout the product development process is necessary for companies that operate globally. Companies which adopt proactive environmental compliance strategies by integrating eco-design (Design for the Environment) technology alongside best-in-class product development business processes can realize a competitive advantage. Until recently, most companies have been reactive to environmental regulations by conducting compliance reporting and analysis late in the product development cycle, or even after entering production. This approach requires significant resources and is not integrated into the overall product lifecycle. ENOVIA Materials Compliance Central (MCC) enables companies to track, analyze, and report a product s environmental compliance (Figure 1). Product compliance engineers can view the material content information in the context of various BOM configurations, and they are also able to cross-reference this data against multiple regulations. By implementing ENOVIA MCC as part of an overall PLM strategy, companies can verify and integrate compliance regulations at every phase of the development process. Product companies can avoid late-stage design changes and explore ways of improving product designs while still meeting compliance requirements. Companies can also reduce or eliminate the use of hazardous materials and substances in their products, avoiding problems such as launch delays, recalls, fines, poor customer satisfaction, and a damaged public image. Reports can be generated that compare the compliance of manufacturing equivalents, list recyclable content, or evaluate best and worst case manufacturing location scenarios. Suppliers can be incorporated into the material compliance evaluation process to ensure that the component library contains the most current material compositions and compliance certifications for supplied parts. The net result is delivering innovative and environmentally compliant products that meet global market demands, and also improve the environmental sustainability image of your company. Figure 1: Adherence to Regulations throughout the Process 9 An Enovia PLM Whitepaper

10 Agilent: Protecting $1B in Revenue with ENOVIA MCC Agilent Technologies Inc. is the world s premier measurement company and a technology leader in communications, electronics, life sciences, and chemical analysis. The company employs 16,000 people in more than 110 countries and had net revenues of $4.5 billion in fiscal Headquartered in Santa Clara, CA, 60 percent of Agilent s revenue originates from outside the United States. Challenge y Demonstrate compliance with stringent environmental regulations for more than 1,800 products and 160,000 parts from more than 7,000 suppliers Solution y An automated, enterprise-wide materials compliance data tracking system from Dassault Systèmes ENOVIA provides a centralized compliance database on more than 160,000 parts Benefits y Approximately $1B in revenues protected by ensuring Agilent s preparedness for the European Union environmental regulations, compliance audits and customer inquiries With ENOVIA MCC, specialists can determine environmental compliance quickly, saving teams of people working for weeks collecting and analyzing information. Frank Elsesser, Director of Environmental Compliance, Electronic Measurement Group, Agilent Technologies For the complete customer case study, access: ngle/527/?chash=73bb29bd00a adf4d 10 An Enovia PLM Whitepaper

11 Conclusion Enabling a design for compliance strategy is key to ensuring that material composition information is available throughout the product development process. Without such a strategy, enterprises run the risk of failing to satisfy legal and regulatory requirements, leading to serious liability issues. A PLM approach, including a compliance-based solution, delivers the elements necessary for a successful design for environmental compliance strategy. Users can accomplish all deliverables related to collecting, integrating, analyzing, and reporting material compliance information in a single PLM platform and environment, eliminating translation errors and ensuring a single source of the truth. With PLM, companies can verify materials data against REACH, RoHS, ELV, and WEEE requirements at every phase of the product lifecycle from product development to manufacturing to end-of-life recycling. Key stakeholders can have access to material compliance information throughout the product lifecycle, giving them the tools to prove compliance or make corrections where needed. By changing a few basic business processes and establishing closer integration with suppliers, partners and customers, engineers and designers can have the information they need at their fingertips to ensure that the building blocks for the company s products and its success are compliant from the start. ENOVIA Materials Compliance Central enables the linkage of material and chemical substance compliance data to all product lifecycle processes supported within the ENOVIA PLM solution set. This capability helps enterprises drive hazardous substances out of their products and avoid a litany of problems slower time to market, product recalls, potential fines, product bans, poor customer satisfaction, and possibly a damaged public image. 11 An Enovia PLM Whitepaper

12 As a world leader in 3D and Product Lifecycle Management (PLM) solutions, Dassault Systèmes brings value to more than 130,000 customers in 80 countries. A pioneer in the 3D software market since 1981, Dassault Systèmes applications provide a 3D vision of the entire lifecycle of products from conception to maintenance to recycling. The Dassault Systèmes portfolio consists of CATIA for designing the virtual product - DELMIA for virtual production - SIMULIA for virtual testing - ENOVIA for global collaborative lifecycle management, EXALEAD for search-based applications- SolidWorks for 3D mechanical design and 3DVIA for online 3D lifelike experiences. For more information, visit Visit us at 3ds.com Dassault Systémes, All rights reserved. CATIA, DELMIA, ENOVIA, SIMULIA, Solidworks and 3DVIA are registered trademarks of Dassault Systèmes or it subsidiaries in the United States and/or other countries. All other trademarks and service marks are the property of their respective owners. WI-CWC 1107 An Enovia PLM Whitepaper