As manufacturers struggle under the weight of regulatory compliance, a growing number of IT experts and business strategists are making the case that Product Lifecycle Management (PLM) is a natural fit for helping to automate and manage the process as part of the early design phase.
With regulations varied across industries and countries (not to mention across states, in some cases), manufacturers -- particularly those that build and sell product on a global basis -- are faced with a logistical nightmare: to aggregate and track all the required data and produce reports that establish and track compliance. Manufacturers of cell phones or computers that sell product in Europe or China, for example, need to meet recycling targets as part of the European Union's new WEEE (Waste Electrical and Electronic Equipment) regulations. Eventually, they will need to comply with guidelines established by RoHS (Restriction of Hazardous Substances).
Car companies are facing similar concerns brought on by the End of Life Vehicle Directive (ELV). Medical device makers are looking at electronic signature requirements resulting from the Federal Drug Administration's CFR Part 11 compliance, and the list goes on.
Further complicating matters is the fact that some manufacturers could be required to comply with multiple regulations, each of which would vary depending upon the standards of a particular region. With most companies depending upon an extended supply chain to produce parts or assemblies used in their end product, keeping tabs on what is and isn't compliant can exceed a manufacturer's control if automation is not present.
"There are so many variations -- if it was only one country or the whole world had the same set of standards, companies could make one product that complies," says Eric Karofsky, senior research analyst for PLM at AMR Research Inc. (Boston). "But every country has different restrictions, which makes for a huge data-collection and data-management burden."
It's clear manufacturers are turning to technology as a solution to the problem. According to a recent report by AMR, U.S. companies plan to spend $15.5 billion on compliance this year alone, with the grand total to hit around $80 billion between now and 2009. The lion's share of that figure will go to technology purchases and people to use it. Nearly two-thirds of those surveyed said they plan to add or improve their current compliance-management systems.
What's not as apparent, however, is what kind of enterprise system is best suited to manage compliance. Some make the case that ERP or MES systems are the place to tackle compliance since they're closely tied into all of the manufacturing steps related to building a product. Others say proprietary compliance management systems are the best bet. Yet a growing constituency of experts and manufacturers argues that those systems address compliance too late in the process, putting companies at risk for substantial time-to-market delays and huge penalty costs if non-compliance is not found and resolved early in the design phase. (Check out the final installment of Managing Automation's three-part webcast series on managing regulatory compliance by clicking here.)
"Compliance isn't just something you test products for afterwards -- you actually have to design for compliance," says Eric Larkin, chief technology officer and co-founder of Arena Solutions Inc. (Menlo Park, CA). "Requirements have to be applied to a product early on in the design stage because otherwise, you may end up designing around components or subassemblies that can't be made compliant."
PLM is the answer to compliance management, Larkin and others contend, because it's already employed as the system to manage the product record. "A PLM system is fundamentally about managing the documentation and design around a product," he explains. "ERP may tell you what parts are in a product, but it doesn't tell you what the design of those parts is and whether the design meets compliance requirements. A product record is where you go to get that information."
And that's the key point: Using PLM to drive compliance management is no different than using the technology to manage any aspect of the engineering process, experts maintain. It's all about leveraging technology to support new and improved ways of doing business. Manufacturers must make sure the right design information is properly captured and expressed -- and that engineers inside and outside the organization follow the PLM system's design dogma to remain in compliance with proliferating global regulations.
At Lockheed Martin Aeronautics Co. (Ft. Worth, TX), having capabilities within the PDM (Product Data Management) piece of the PLM system to address ITAR (International Traffic and Arms Regulation) compliance was essential given the aerospace and defense manufacturer's extended, global design chain on the Joint Strike Fighter project. The project, on which there are engineers from eight countries, is the first U.S. weapon system that is being built and designed with help from international players, and Lockheed Martin is using TeamCenter from UGS Corp. as its product development platform and availing itself of the built-in compliance functionality. ITAR compliance comes into play any time non-U.S. citizens have exposure to documents pertaining to weapon systems.
"TeamCenter allows us to manage not only product data, but also allows us to manage the users and partners as well as export the compliance authorizing documents all within one application," says Scott Riggs, systems integration analyst for Lockheed Martin. "With the rules engine within the system, we're able to identify who should see what information, what export authorizing documents are available, and who has the ability to apply them. I don't know that I could manage ITAR data if it wasn't part of the [PLM] system."