To Comply or Not to Comply: It’s Not Really a Question

By BARB SCHMITZ | Published: JAN 9, 2012

To remain competitive and avoid downstream legal headaches and costly recalls, manufacturers must understand, accept and deliver quality and regulatory compliance at levels that not only satisfy their customers but government and regulatory commissions. A strict adherence to industry and regulatory requirements benefits companies by putting emphasis on auditing processes that can translate to increased revenue, profits, and customer satisfaction.

While adhering to a growing number of government and industry regulations and requirements complicates the business of designing, producing and selling new products, compliance efforts also keep consumers safe and protect the environment. Though many manufacturers view regulatory compliance as a necessary evil to doing business, implementing effective compliance and quality management processes can translate to increased sales, manufacturing and service strategies.

According to a study conducted by the Small Business Administration’s Office of Advocacy, federal regulation is estimated to cost more than $1 trillion annually, and U.S. manufacturers will pay a hefty portion ($162 billion) of the $648-billion total cost for environmental, economic, workplace, and tax-compliance regulation. In fact, last year the National Association of Manufacturers continued congressional lobbying efforts to reduce the regulatory burdens on U.S. manufacturers, which it views as “critical to the country’s economic recovery.”

While complying is often expensive and time-consuming for organizations, non-compliance with industry data standards such as ISO9100 or those imposed by the FDA, regulations can have even more dire and costly consequences. Regulatory non-conformance at its worst can lead to product recalls or expensive litigation that can have a disastrous financial impact to a manufacturer as well as loss of confidence among consumers.

Automated solutions aid compliance efforts

A host of automated software tools help organizations comply and maintain quality standards more easily than ever. Let’s take a look at a few best practices for improving your organization’s compliance efforts and how automated quality management tools can help.

Overhaul processes. The beginning of the year is a great time to re-evaluate or re-define supply chains, production processes, and quality-assurance procedures to identify problems and cut bottlenecks out of existing processes. By performing internal audits and implementing new ways to measure quality and compliance, manufacturing teams gain better insight into what processes are under-performing and why.

Take a closer look at your suppliers. Maintain a high level of supply chain quality standards to ensure that your suppliers are consistently meeting your needs and ultimately the needs of your customers. Automated tools enable manufacturers to tie inspections and audit data back to supplier rating results. By defining the processes that interlink inspection and audit to supplier ratings, manufacturers can encourage each supplier to implement specific improvement strategies.

Be proactive, not reactive. Error detection and prevention is often key to avoiding future non-compliance headaches. Compiling accurate records of corrective actions is crucial to preventing the reoccurrence of defects. Automated tools provide a vital closed-loop mechanism for initiating, implementing, and verifying the effectiveness of changes resulting from the non-compliance process.

Integrate quality and compliance data. When manufacturers rely on manual processes to control quality and compliance efforts, that information often becomes fragmented and useless on an enterprise-level. Automating the process enables the integration of fragmented databases, data sets, historical performance data, supplier audit results, non-conformance history, and corrective-action reports. Once a single compliance system of record is established, manufacturers can effectively define and execute quality management strategies.

Make compliance forethought, not afterthought. Because speed to market is imperative to gaining a competitive advantage today in most markets, it’s important to closely link the regulatory group with product development efforts from early strategy and concept development stages. This enables the regulatory function to identify and include regulatory requirements for new markets into product development plans early and avoids the reactive scramble and design changes when country-specific requirements are identified after the early design is completed.

Turn compliance into competitive advantage. Instead of focusing on clearing the next regulatory hurdle, look at regulatory compliance as an opportunity to more clearly define how you can make your product quality and product compliance strategies more in line with customers’ needs. When regulatory compliance requirements are fulfilled within the context of market- and customer-driven quality initiatives, both the manufacturer and the customer wins.

New Regs Tighten Compliance for Medical Devices Manufacturers

By AMY HORGAN | Published: NOVEMBER 16, 2011

There are amazing things going on in the medical devices industry today, as evidenced by stories of war vets returning from Afghanistan with prosthetic limbs, and the 50-year-old Englishman who last month become the world’s first patient to have a Smartphone built into an artificial arm.

But as these medical devices become more common and complex, so are demands from consumers and government agencies about product quality and environmental safety.

Just within the past few months, compliance to RoHS, the European Restriction of Hazardous Substances regulation, has become a serious challenge for medical device manufacturers. It’s a challenge that could have very expensive and damaging consequences for companies which fail to comply.

RoHS first went into effect in 2006. It mandates that producers of certain categories of electrical and electronic equipment are not allowed to place products on the European market if they contain six banned substances: lead, mercury, hexavalent chromium, cadmium, and polybrominated biphenyls and polybrominated diphenylethers flame retardants.

This past July the European Union revised RoHS to include previously-exempt medical devices manufacturers. Beginning in 2014 the new RoHS recast will apply to medical devices and monitoring and control instruments.

But RoHS isn’t the only new regulation targeting the medical devices industry. Another is theSustainability Scorecard from the California-based Kaiser Permanente health care organization. This scorecard—similar to Walmart’s sustainability index—requires that medical suppliers provide environmental data for equipment and products used in Kaiser’s hospitals, medical offices and other facilities. Add to that the EU’s 2007 REACH (Registration, Evaluation, Authorisation and Restriction of Chemical substances) and the need for effective product data management for the medical devices industry has never been more critical, or challenging.

As Jim Brown, industry analyst with Tech Clarity, notes in Tech-Clarity Perspective: Making Product Development Trade-offs Designing Products for Compliance, Cost, and Sustainability,the number-one difficulty for device makers involves collecting timely and accurate data from suppliers. Brown says that these new standards have registered little improvement in comparison with previous benchmarks over the last two years.

On the upside, Brown says, some other top concerns—lack of awareness and lack of understanding of compliance requirements—seem to have eased. This shows that the industry is making progress. Other encouraging news, according to Brown, is that fewer companies are suffering from lack of resources to address environmental compliance.

Failing to comply with regulations is more than a slap on the wrist. At the very least companies can face recalls, brand damage, costly redesigns, and scrapped parts. The stakes are high, with potentially millions of dollars of revenue at risk.

In order to satisfy regulations, manufacturers must provide regulators with detailed reports demonstrating product compliance, while keeping up with frequent changes in product designs, parts, suppliers, and in the regulations themselves – an enormous data management challenge.

Manufacturers defining supplier data-collection needs have to factor in ever-changing environmental regulations. Just as environmental compliance is a process and not an event, the same is true for environmental data acquisition and management.  The data acquisition process is particularly important to get right, as the need for substance and material data from suppliers is growing.

Successful compliance programs require both a strategy and a process to improve data capture to attain the information needed and continually improve upon it without overburdening already scarce resources.

How is your company dealing with the challenge of regulatory compliance and data management?

Further information:

• RoHS2 Compliance: Is Your Company Ready?
• Best Practices for Collecting Product Material and Compliance Data

Feds Raid Gibson Guitar amid Allegations of Illegal Rare-Wood Exports

By SCOTT MCCARLEY | Published: NOVEMBER 14, 2011

Gibson Guitar is best known for the legendary Les Paul guitars and the musicians who play them, including Jimmy Paige, B.B. King, Slash and Paul McCartney. But lately, Gibson’s been feeling the heat from the Feds after being raided on allegations of illegally importing ebony from India and failure to comply with the Lacey Act. This is the second time in two years that Gibson factories have been raided for non-compliance with this regulation.

The Lacey Act bans the import of illegally harvested wildlife and plants. It requires companies to make detailed disclosures about wood imports and forbids the purchase of goods exported in violation of a foreign country’s laws. And, as with other regulations, the price of non-compliance is high. Henry Juszkiewicz, CEO of Gibson, told the Wall Street Journal that the government raids over alleged violations of the Lacey Act have cost Gibson roughly $1 million in seized products and production disruptions alone.

The story has many interesting facets and demonstrates the risks manufacturers face from evolving compliance regulations and the complexities involved with a global supply chain.

The Lacey Act requires Gibson and others like it to track every species of wood used in all components of its guitars. It’s not enough to know that the guitar has spruce and maple in it. It’s also necessary to know what the bridge is made of, for instance. Records must show where wood is harvested and where components are made.

Numerous other regulations—such as REACH, RoHS, CA Proposition 65 and even the new Conflict Minerals law—require manufacturers to collect the same type of information for all components, whether it is to ensure that products don’t contain hazardous levels of toxic substances or to prevent use of minerals mined in areas of armed conflict and human rights abuses.

On the surface, collecting this information may seem daunting, though it need not be.

Today’s PLM (product lifecycle management) solutions and associated technologies enable manufacturers to automate the collection of product data from the supply chain and then report against multiple compliance requirements.

It’s good business for manufacturers to know exactly what’s in their products and where it came from. The value of this data goes far beyond compliance. For example, only when armed with this information can manufactures properly mitigate the risk of supply-chain disruptions and forecast cost changes based on fluctuations in the price of rare materials.

A robust PLM system with an exhaustive audit trail for each product component— showing who made it, what it is made of, and where it was made—can provide the due diligence necessary to prove compliance, and help identify and resolve potential compliance issues before they become costly problems.

Gibson continues to make headlines as the company responds to the allegations and the government presses on with a criminal investigation. Gibson contends it has not violated the Lacey Act.

Juszkiewicz defends Gibson in a Huffington post editorial. “The recent raid of Gibson, however, did not come about because the wood was illegally harvested. Rather, the U.S. government alleges that the wood was imported in violation of an Indian export restriction designed to keep wood finishing work in India. To make matters worse, although the Indian government certified that the wood was properly and legally exported under this law, the U.S. Fish and Wildlife Service substituted its own opinion and reinterpreted Indian law.”

Scott Paul, a Greenpeace official in New York responsible for forestry issues, sums up Gibson’s positive environmental efforts and the complexity of compliance in a Wall Street Journal article, pointing out that Gibson has done “great work” to promote better forestry practices. The question, he said, goes to whether Gibson did everything possible to avoid buying wood from dubious sources.

Global Retailers Tighten Control after Chemicals Outcry

By PER-JOHAN LUNDIN | Published: SEPTEMBER 5, 2011

Trust is important. It’s difficult to earn and can be lost very quickly. For any global manufacturer trust is essential in order to build a strong brand and a sustainable business.

When products fall short of consumer expectations—proving dangerous to personal health or the environment—news spreads quickly via the internet and social media, with damaging effects to a company’s brand, reputation and business. 

The fashion industry seems particularly susceptible to these kinds of faux pas. Reports like “Dirty Laundry 2: Hung out to Dry ” recently published by Greenpeace reveal the presence of hazardous substances in clothing and textile products of the top 15 global retail brands. According to the authors, these substances have “hormone-disrupting properties that build up in the food chain, and can be hazardous even at very low levels”.

And last month, IC Companys A/S, Denmark’s largest publicly traded clothing company, had to admit blame after it sold garments with excessive chemical residues.

So where do things go awry?

In today’s fast paced world, consumers expect new products to be released quickly, at high-quality and low-cost and be available practically everywhere. Consequently products are developed and produced in a global supply chain which involves myriad contributors. It is understandable then that retailers have difficulties keeping an overview of all chemical substances being used in the process of making their products.

Yet the expectation of the general public remains that the company that brings a product to market is ultimately responsible for all compliance issues, including all of the materials and substances used in it, even those provided by suppliers.

IC Companys, for one, reacted swiftly and professionally to its failure. In a press release issued on August 18, 2011, it announced that it intends to “implement a new sourcing structure … to reduce the number of suppliers and improve efficiency.” According to the announcement, a number of new processes will be put in place to enable better control of product development, with stricter requirements for suppliers.

These changes should go some way to mitigate the risk of non-compliant products reaching the market, and other retailers should pay heed. Perhaps IC Companys will embrace a product analytics strategy whereby it can automatically consolidate information about the materials and substances that are used by different suppliers. Such a solution would enable systematic monitoring and eliminate hazardous substances from their supply chain.

A company that takes serious actions to control and eliminate the use of dangerous substance will show the consumer its true colors and continue to be a trusted brand.

LED Lighting Replaces Old Technology on Highways

By NANCY PARDO | Published: AUGUST 25, 2011

Are we finally seeing the light when it comes to LEDtechnology?

LED lighting has been around for a while, in our cell phones, homes and cars. LED lights are generally accepted to be more environmentally sound and to last much longer—LED headlamps on newer car models will last the entire life of the vehicle and won’t drain the battery like conventional lights.

Widespread adoption of LED lighting however has been slow, mainly because of the up-front purchase cost. But with the onslaught of stricter environmental regulations and a push towards energy efficiency LEDs are receiving renewed interest.

Recently, the United Kingdom made its first real foray into LED lights for a major traffic route, introducing 70 LEDs at the junction between Bath and Bristol. The lights automatically adjust brightness levels according to the time of day and the number of vehicles on the route. The expectation is that the new lighting will make the route safer for drivers and cyclists as well as cutting the carbon footprint and easing the electricity costs to local taxpayers.

The UK isn’t the only country forging ahead. Earlier this year Philips supplied 293 LED lights for a stretch of highway near Amsterdam.

A dimming system on the Amsterdam lights raises and lowers the light as needed and also adjusts during rainfall. A nifty trick that UK-based Philips Lighting claims is safer and more cost-effective than switching conventional lights on at night and completely off during the day.

“LEDs are the future. The running costs of LED streetlights are 70 percent lower than lights with conventional lamps,” Andy Gowen, Director of Philips Outdoor Lighting Solutions, told LEDs Magazine.  

LEDs Magazine reports that the Philips dimmable LED lighting installation will result in 40 percent reduction in CO2 emissions and a 40 percent energy reduction when compared to the previous lighting—a big deal in the Netherlands in particular where 60 percent of the energy consumed on motorways and waterways is used for lighting.

The highway lights provide better visibility for drivers because light is projected onto the highway rather than focused around the bottom of the lamppost. And similar to the UK project, Amsterdam hopes it will see significant cost returns based on low maintenance—LED lights last 50 times longer than their predecessors and also perform better in cold weather conditions.

It’s clear that LED technology addresses the three big issues of today—energy consumption, environment and budget deficit—in a very real way. According to The U.S. Department of Energy, widespread adoption of LED lighting by 2025 will reduce electricity demands from lighting by 62 percent, eliminate 258 million metric tons of carbon emissions and result in less material put into landfills.

In a January 2011 report put together for the US Department of Energy, Navigant—an industry consultant specializing in energy, healthcare, construction—found that switching the 52.6 million roadway lights in the US to LEDs in 2010 would have saved the equivalent of the annual electricity consumption of one and a half million American residential households.

So is there any downside to LEDs? Well, it’s taken a while for LED lighting to catch on commercially because it’s more expensive up-front than conventional lighting. But if one looks at the overall lifespan of LEDs the long-term cost savings seem clear.

And environmentally, long-lasting, mercury-free LEDs seem to beat out other types of lighting. However, a recent study at the University of California at Irvine found that some LEDs in car brake lights and headlights when crushed contain lead and arsenic in large enough amounts that they should be classified as hazardous material under both US federal and California regulations.

As LED lights gain in popularity, manufacturers should watch for new environmental complianceregulations in this arena.

Ideas on the Cheap: Outsourcing Innovation in the Medical Devices Industry

By NANCY PARDO | Published: JULY 25, 2011

The medical devices industry in the United States has long created top-notch lifesaving equipment built to work across the board in every possible scenario. The American market demands über devices with all the latest bells and whistles (whether necessary or not). But this ultra-expensive bigger-is-better model is turning off a global market. Emerging economies such as India and Africa just can’t afford to buy super-fancy medical devices designed for the American market.

The India Biodesign initiative at Stanford University is a powerful example of how a lower-cost product, stripped down to it’s bare nuts and bolts function, and designed to fit the needs of a specific demographic, can be much more effective in less affluent countries.

As part of the Stanford program, fellows from India spend time at Stanford studying the biodesign process. They then return to India to see how this process can be applied to real-world medicine in their country. Thanks to this initiative a new bone drill has been developed for the India market, similar to the US version in some respects, but very different in other ways, the bone drill can be manufactured cheaply with few parts and it’s easy to assemble and use. The bone drill works manually rather than using costly batteries.

It makes sense for the medical devices industry to embrace emerging economies as both consumers and a potential source of labor and innovation. According to an article published by theThe Economist back in January, companies such as Medtronic—a major manufacturer of medical devices—are investing heavily in China and India, “setting up research centers, hiring local talent and developing frugal inventions of their own.”

Medtronic recently partnered with a Chinese company and has already launched six innovative and inexpensive products inspired by its Chinese counterpart, according to The Economist report.

Perhaps, in light of skyrocketing healthcare costs in the US, investment in emerging markets will provide some cheaper medical alternatives. Yet foreign-made medical devices have yet to flood the American market, in part because safety regulations in India and elsewhere are not as robust as FDA regulations in the US.

There’s no doubt however that we’ll be seeing more and more innovation from and investment in emerging markets, with more attention paid to lining up compliance requirements across continents. And the next time you visit the hospital and get reusable sutures, you can thank Chinese innovation.

Understanding Product Development Trade-Offs

Developing Products with Cost, Compliance and Sustainability in Mind
When: On- Demand, view now!
Presenters: Jim Brown, President, Tech-Clarity
Serge Romano, Director of Client Services, PTC

Do you need to design innovative, market-leading products, while ensuring environmental compliance and sustainability?

You are not alone. PTC and Tech-Clarity show you how leading companies are now improving business performance by designing compliance, cost and sustainability into their product designs—from the outset.

You will:

• Survey data from engineering, environmental compliance, and sustainability leaders from over 100 manufacturers
• Understand the challenges manufacturers face in making design tradeoffs early in product development
• View insightful interviews from a leading software company and an innovative consumer electronics company, who now build compliance, sustainability, and cost into their design processes
• See proven solutions are using to help product developers balance these competing requirements to achieve optimal profitability