Why design for environment makes cents in the electronics industry
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Why Design for Environment Makes ‘Cents’ in the Electronics Industry. by Pamela J. Gordon, CMC President, Technology Forecasters Inc. April 19, 2006. A One-Slide History of TFI Information, Insight, Interaction for Effective Manufacturing Relationships. 2006: Buyers’ Guide.

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Why design for environment makes cents in the electronics industry

Why Design for Environment Makes ‘Cents’ in the Electronics Industry

by Pamela J. Gordon, CMC

President, Technology Forecasters Inc.

April 19, 2006


Why design for environment makes cents in the electronics industry

A One-Slide History of TFI Information, Insight, Interaction for Effective Manufacturing Relationships

2006: Buyers’ Guide

2001: published book

2001: ODM; added China-based research

2002-3: Pricing Model and

1999: 1st Quarterly Forum

1990: 1st Contract Mfg. from a Global Perspective report

1995: World-Class Outsourcing Guide; Customer Retention Research

Founded 1987

www.TechForecasters.com


Dfe almost always results in profit hundreds of examples in electronics industry and others

DfE Almost Always Results in ProfitHundreds of examples in electronics industry and others

√ = Yes / √= Some / X = No


Then why are most electronics companies slow to adopt design for environment

Then, why are most electronics companies slow to adopt Design for Environment?

Let’s see what recent benchmarking studies tell us…


One way to make cents benchmarking studies

One Way to Make Cents:--Benchmarking Studies

  • Quickly compare own environmental strategies and progress with those of numerous others

  • Assess approaches of suppliers

  • Elicit attitudes, needs of customers

  • Find best practices, identify leadership positions

5 TFI benchmarking studies; 250 respondents

Primarily telephone interviews

OEMs, CMs, ODMs, component suppliers, recyclers,

design firms, governments

Funded by members of the Quarterly Forum

(of which Agile Software is a Corporate Sponsor)

Today


Oem plans to design for easier disassembly reuse recycling

OEM Plans to Design for Easier Disassembly, Reuse, & Recycling


Concern about recycling requirements in other regions

Concern About Recycling Requirements in Other Regions*

*Regions on next slide


Non eu regions of concern regarding recycling requirements

Non-EU Regions of Concern Regarding Recycling Requirements

% of respondents (>1 response)

APAC = Asia Pacific

CALA = Central and Latin America


Why design for environment makes cents in the electronics industry

Are You Considering Remanufacturing Some of Your Products?--Once Used by One Customer, then Offering for Sale to Other Customers?


According to component suppliers interviewed

According to Component Suppliers Interviewed

  • In the lion’s share of cases, compliant components will not be more expensive

  • The opposite will be true after July 1, 2006

  • Tie RoHS transition to cost-reduction plan

  • Components are being designed with reuse in mind

  • Components: great place to start for efficiency

    • Economic gain throughout life cycle

  • Chemical reductions are key

  • Smarts from Freescale: (C. Marple)

  • DfE is like quality, manufacturability, test, etc.

  • Upfront design is more effective, easier, cheaper

  • “You get what you design”


According to contract manufacturers interviewed

According to Contract Manufacturers* Interviewed

  • Better business model to shift all the way to RoHS 6

    • --Rather than to RoHS 5 then having to shift again

  • Now starting to charge customers more for non-RoHS compliant products

  • Design for Environment (DfE) offered by nearly all large CMs and ODMs

    • And by some mid-sized and smaller CMs

    • Stressing cost savings

* And Original Design Manufacturers (ODMs)


Benchmarking study highlights cms and odms

Benchmarking Study Highlights- CMs and ODMs -

  • Environmental services (Nov. 2005)*

  • Two-thirds simplify disassembly / maximize recycling

  • One-half reduces energy consumption

  • Only one or two help with government interface

    • Exemptions to Europe’s Restriction of Hazardous Substances (RoHS) Directive

    • Registration for Europe’s Waste Electrical and Electronic Equipment (WEEE) Directive

*Funding: TFI Quarterly Forum member


According to oems interviewed

According to OEMs Interviewed

  • Hundreds of cases in which design for efficiency has reduced costs

  • Competitive edge: Japanese companies’ different approach

  • Still most don’t see need for DfE


Ways to minimize rohs costs

Ways to Minimize RoHS Costs

  • Use contract manufacturer / original design manufacturer way ahead of curve

  • When possible, convert non-compliant parts to compliant ones

    • so long as the conversion process is verified by third-party lab (e.g., E-Certa)

  • Employ software tools for

    • Efficient tracking of compliant parts

    • Design-and-manufacturing changes, and

    • Reporting of due diligence

  • Use RoHS as a business opportunity to

    • Weed out products whose time is really up – before the deadline, for many economic benefits

    • Tighten component selection and procurement processes

  • “While the patient is open…” (Dan Henes, Celestica)

Converting leads, with due diligence


Unpeeling the onion degrees of approach to design for weee

Unpeeling the Onion Degrees of approach to design for WEEE

No product redesign

Design for disassembly

Use recyclable materials

Reuse / Upgrade in next gen’s

Lease products only

No product

Materials that “self recycle”

Minimal product


Common misunderstanding

Common Misunderstanding

“WEEE is one of those regulations that cost us more money, right?”

Other companies have used design for reuse/recycling for competitive advantage…


Competitive benefits cost reductions

Competitive Benefits:Cost Reductions

  • Business benefits of product rationalization

  • Maximize profitability “Once the patient is open”

  • Reusing modules, for savings & customer loyalty

  • Smaller, lighter, faster, more reliable, etc.

  • Cost to manufacture, Cost to use

  • Customer satisfaction:

    • Reliability, longevity

    • Easy of returning


Redesign for reuse recycle and profit mechanical

Redesign for Reuse/Recycle and Profit: Mechanical


Redesign for reuse recycle and profit mechanical continued

Redesign for Reuse/Recycle and Profit: Mechanical (continued)


Redesign for reuse recycle and profit material

Redesign for Reuse/Recycle and Profit: Material


Redesign for reuse recycle and profit material continued

Redesign for Reuse/Recycle and Profit: Material (continued)


Redesign for reuse recycle and profit extend life

Redesign for Reuse/Recycle and Profit: Extend Life


Upping the competitive ante

Upping the Competitive Ante

  • Example: Acer and CSR

  • Accessing markets and B2B customers

  • Countering competitors’ failures

  • Keeping up with competitors’ successes

  • Risk avoidance (peak oil, etc.)

  • Customers’ selections

  • Competitive view of environmental leadership: Celestica

    • “We want to be viewed in the industry as the green leader and gain market share.”

    • “The one who does it first will get a warm reception from market place.”

    • “A lot of people look at letter of law and think they can just survive, or we can get business advantage.”


Recommendations regulators

Recommendations- Regulators -

  • As with EuP* invite industry to develop & present best practices

  • Harmonize requirements for recycling & other environmental issues between regions.

  • Promote voluntary recycling & other environmental steps, using Japan’s model—declare deadline beyond which regulation will be necessary should voluntary measures not be met.

  • Ensure adequate time between approval of laws & deadlines.

  • Have pilot producers & software companies “engineer” compliance process, for least “red tape” & most effective compliance by all.

*Energy-using Products


Recommendations electronics industry

Recommendations- Electronics Industry -

  • Create collectives not only for recycling products, but also for design for disassembly, reuse, and upgrade

    • Jointly fund and share methodologies

    • …for ease of implementation, standardization, & profitability for all concerned

  • Participate with European Commission as it finalizes EuP Directive.

    • EU wants to examine best practices

    • Include standards for data collection and management early

    • Set precedent for not only future EU regulations but also environmental & social requirements by other regions


Recommendations for oems and for cms offering design services

Recommendations for OEMs- and for CMs offering design services-

  • Design products—from the start—according to reuse, upgrade, & recycling “rules” provides numerous financial & competitive benefits:

    • Quick, efficient, & cost-saving disassembly

    • Multiple reuse & upgrade of product (thus extending revenue opportunities)

    • Maximum recycling value (for revenue increase)

    • Profitable by‑product of “design for disassembly” is quicker, more efficient, & less costly original assembly

  • Invest a few thousand dollars in training design engineers (electrical, mechanical, & system) in DfE best practices

TFI DfE Workshop, Toronto, Sept. 2005


Recommendations for oems

Recommendations for OEMs

Explore Models for Upgrade, Reuse, and Dematerialization

  • Managers at electronics companies with ‘throw away’ products say, “Reuse doesn’t apply to our products.”

  • Multifunctional teams can sketch out ways model can be used for competitive gain, cost savings, and enhanced customer loyalty.

    • At least one sponsoring executive

    • Finance / cost accounting

    • Marketing

    • Design / quality

    • Supply-chain / logistics

    • Legal / EHS

  • Use forward-thinking software


Recommendations continue to learn best practices

Recommendations- Continue to Learn Best Practices -

  • Next benchmark study: Due Diligence Strategies for RoHS Compliance

    • Compare approaches to RoHS due diligence

    • Adopt best practices for a sound due diligence defense for RoHS

  • Invite your colleagues, customers, suppliers to the next Design-for-Environment Workshop

    • June 7, San Diego

      • Highlights from guest speaker Manthos Economou of Palm, Inc.

    • Then, July 13 in Boston


5 recommendations for meeting requirements profitably

5 Recommendations for Meeting Requirements Profitably

  • Get executive sponsorship up-front: Use Lean and Green argumens

  • Maximize profitability, “once the patient is open”

  • Take advantage of existing resources for design, mfg., logistics, return, disassembly, etc.

  • Meet customers’ desires better than do competitors

  • Realize this is not a single event

    • Add power reduction to requirements document

    • Reduce overall ecological footprint of materials, processes, products, end of life


Why design for environment makes cents in the electronics industry

Management Approaches to the Market’s Environmental Requirements

Macro shifts in how we design, make, use, reuse, and dispose of products

Competitive advantage

Fire Drill: Ad hoc implementations for compliance

Tactical Strategic


Environmental compliance cost or competitive differentiator

Environmental Compliance:  Cost or Competitive Differentiator?

Another basis for a prediction…


40 years of increasing content scrutiny and affect on industry

40 Years of Increasing Content Scrutiny, and $ Affect on Industry

1970US Industries -- EPA established

‘70’sChemical Industry -- DDT ban

’80’sPetroleum -- Gasoline

‘80’s-90’sConstruction, wood products

’90’sFood Industry -- “Nutrition Facts” table

Each of these industries is just as profitable now (or more so)

Extrapolate pattern of $ affect into the future…

Now…Electrical/Electronics, RoHS

Coming…REACH, IPP, EuP

Perhaps…Energy / Water / Emission Monitors


With increasing scrutiny

With Increasing Scrutiny…

  • Be ahead of the curve

    • Without “fire-drill” pressure

    • Competitive advantage

  • Use robust data collection and management

    • It’s not a one-time task

    • A good time to tighten processes

  • Escalate environmental management to senior levels: it’s a corporate strategy


Why design for environment makes cents in the electronics industry

Some Last Words…“I don’t think DfE should be treated as extra or a separate entity, but rather a part of the design process. It’s just like quality – it’s not separate, but more a matter of individual responsibility.” -Michael Lavesque, ESI (Ontario, Canada, design firm)


Why design for environment makes cents in the electronics industry

Design for Environment Workshop, February 2006,

at AER Worldwide

Thank you!

Pamela Gordon

[email protected]


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