It didn't take long for APC to figure out that it was going to be affected by the European Union's new ban on hazardous substances in electrical products. A provider of power and cooling products for commercial and residential customers, the company was squarely in the sights of EU regulators.
The rule known as RoHS, for Restriction of certain Hazardous Substances, took full effect in July 2006, as part of a broader regulatory regime called WEEE, for Waste Electrical and Electronic Equipment. Both were intended drastically to cut back on dangerous substances within many products sold or moved in the EU. They were also likely to trigger similar restrictions elsewhere around the world, according to Raymond Lizotte, director of the environmental stewardship office of APC in West Kingston, R.I. So the company had to act fast.
The problem was that APC's internal procedures weren't set up to make that effort easy, or even possible. A look at its own business operations and IT infrastructure quickly convinced the company that it had no single place to manage the information that was necessary for compliance. Responsibility was spread among multiple functions, and there was no clear way to ensure that APC was following the dictates of European regulators at every step of the supply chain, from product design all the way to returns.
Acquired in 2007 by Schneider Electric, a $25bn multinational, APC sells a wide range of products, including uninterruptible power supplies, cooling units, racks and supporting software. It turns out between 6,000 and 8,000 unique SKUs, depending on how they're counted. Taking all components into account, that adds up to some 300,000 individual products that must be tracked and made RoHS-compliant. And while that number is dwarfed by the parent company's item master of more than one million items, it's high enough to give rise to some huge headaches - and potentially huge fines - if compliance isn't handled properly.
Lizotte's first project upon coming onboard in 2004 was to create an internal process for conforming to the new requirements. Right away, APC determined that it had neither the desire nor the resources to build such capability itself. So it began looking for an outside software provider that could meet its needs.
There were half a dozen vendors with some form of compliance-oriented software. APC had two main objectives in mind: the tool had to be reasonably priced, and be easily usable by everyone in the company on a daily basis. In the end, says Lizotte, only one application fit the bill: a product from Needham, Mass.-based PTC called InSight.
APC was drawn to InSight by its ability to pull compliance-related data from existing Oracle Corp. enterprise resource planning and database software, as well as from a product development management (PDM) tool based on IBM's Lotus Notes. The integration freed APC from having to input that data separately. Moreover, the system can link directly to all key business processes, so that compliance gets factored into every step of development. A product can't be designed or sold until it has met the RoHS criteria, Lizotte says.
APC's suppliers provide the basic data on the content of products and components. PTC InSight downloads an information request, which APC sends out to each supplier. Once the responses are validated, they are automatically loaded into APC's database for use by all parties. A spreadsheet program allows for the upload of up to 10,000 parts from a single manufacturer at a time.
Even with the supporting software, managing compliance data is no easy task. APC has set up a global network of "superusers," primarily in the Philippines and India, whose job it is to validate input from the several hundred engineers who are in direct contact with suppliers. InSight allows the company to enter the precise information that's needed for compliance, while ensuring that it's of the highest quality.
At the outset, the system was geared exclusively toward RoHS. Subsequently, APC has had to revise its supplier queries in line with new regulations, including Europe's REACH (for Registration, Evaluation, Authorization and Restriction of Chemicals) and strict rules for selling into the Japanese market. Each year, APC goes back to its entire supply base in order to recertify compliance of all components.
That's especially important, Lizotte says, given the ever-changing nature of international regulations on hazardous materials content. "We find ourselves having to ask very different questions," he says.
Getting the software up and running wasn't without its challenges. Implementation was relatively straightforward, Lizotte says. "The InSight installer came to our facility with a disk, plugged it in, and within 15 minutes it was working with our Oracle [ERP] instances."
Integrating with the Lotus Notes PDM application was another matter entirely. Lizotte says APC had to manipulate the data extensively in order to create a sequential database that would work smoothly with the new software. "At the time we did this, I don't think anyone had ever tried to convert Lotus Notes into something that could be read by an Oracle database," he says. "It posed a lot of problems."
Eight weeks of problems, to be precise. Since then, Lizotte says, APC has had no trouble keeping the program running. Updates, he adds, have been "smooth and painless."
APC's upper management is sold on the value of InSight, Lizotte says. Previously, company engineers were collecting data on Excel spreadsheets and managing it manually. That translated into administrative expense of so many dollars per part. In switching to the InSight software, the company originally had estimated a cost reduction of 10 to 15 percent.
The actual savings turned out to be much more. Lizotte actively manages around 200 parts a week, with an estimated cost of $20 per part for data receipt and upload into the system. Expenditures under the old system were easily twice that amount, he says.
He expects PTC InSight to play an even more important role in the future, as companies work to forge green supply chains. The tool could be used to calculate the carbon footprint of a manufacturer and all of its suppliers.
For now, Lizotte says, "I'm highly impressed with the software.... This is a solution, and it works."
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