Vendor Interview – Comply or Die Series
Over the past few weeks, Rob Smith of WhichPLM has provided a deep insight to the ‘green’ Trident of governance looking at the issues of Corporate Governance, Environmental Regulation and Ethical Compliance for current generation multinational business. WhichPLM has reached out to a number of the key PLM vendors to obtain their view on the topic and ascertain how their solutions can leverage some of the issues faced by their customers…
WhichPLM: With the recent downturn in global economies, are you finding that your customers [international apparel organisations] have recovered quicker than some other industries with less resilient products portfolios and what do you believe are your customer’s key business drivers now moving forward?
Beth: We have seen our customers in the apparel industry rebound recently, though competition remains intense and rising commodity prices are beginning to squeeze margins. Apparel companies must innovate continuously, expand product lines into new growing markets in India and Asia, while maintaining quality amidst a patchwork of changing regulations. The product development process must be robust and streamlined to remain competitive and profitable, and product sustainability and compliance has to be incorporated throughout the entire design and development cycle.
WhichPLM: Do you see green-socio-economic compliance as being high on their list of concerns facing the business? Furthermore, are these issues something that PTC themselves as a business are re-evaluating?
Beth: Yes, these concerns remain high on the list for both PTC and our customers. Whereas previously, this was managed by individual managers using mostly ad hoc point solutions, these concerns are no considered in isolation by any leading company. The processes of regulatory compliance, environmental performance, and ethical sourcing require cross-functional teams using integrated tools to successfully manage these product requirements throughout the product lifecycle. Through both new product development as well as acquisition, PTC is building the tools necessary to support this integrated approach.
WhichPLM: The majority of brands are operating on an international basis with the lifecycle crossing many jurisdictional boundaries. Is there a strong enough vision or clear enough structure of regulation being formed and communicated by governments and industry regulators?
Beth: The current regulatory patchwork has developed in the absence of any strong, committed leadership among nations or industries. We are reaching the point where harmonization and standardization of regulations will be necessary to ensure enforceability of the rules. Some industries are beginning to self-organize along these principles, as the burden of responding to not only country-specific regulations but even customer-specific requirements has simply become untenable. Standards are needed, and companies are beginning to band together to form them in the absence of government or industry leadership.
WhichPLM: REACH, WEEE, RoHS are relatively new regulations that currently impact apparel industries (albeit mildly), how long before you expect to see stronger regulation for your industry sector?
Beth: REACH has the potential to grow into a considerable challenge for some apparel brands as the list of SVHC’s grows rapidly. Apparel manufacturers should be more concerned, however, of non-regulatory requirements arising from customers and consumer groups. This already represents a large amount of the reporting burden for brands, and it is getting more complicated. We’re starting to see a real risk emerge of customers and consumers knowing more about what’s in a product than the manufacturer themselves know. If a watchdog group identifies and publicizes a controversial substance in your product, it may not matter if the substance is banned or not, you have to deal with the fallout. This certainly rocked the re-usable water bottle market in the case of BPA. The same thing applies to supply chain labor practices, which we’ve also heard multiple horror stories about. The point is, regulated or not, brands should be the experts on all aspects of their products.
WhichPLM: As an apparel specific PLM vendor, do you believe that green-socio-economic compliance has a significant role in the future development of PLM systems?
Beth: Yes, “green” compliance and performance is becoming a core measure of product quality, and the compliance risk of the product is largely determined in the earliest stages of product development. Product compliance is largely a function of what a product is made of, and thus compliance data must be linked to the Bill of Materials rather than the design drawings, so the PLM system is the natural home for this information. Designers, product managers, marketers, and merchandisers all need access to compliance data and other product analytics, so it makes sense to pull it into the familiar PLM system rather than introducing a new work environment for users.
WhichPLM: Do you take a view that compliance should be exclusively dealt with in PLM or does it extend beyond PLM such as ERP and the much wider business strategy?
Beth: Some types of relevant but non-product specific compliance data should probably be mastered in an ERP system, such as supplier certifications, but it should still be accessible in the PLM system through integration. Product development ultimately should be core to business strategy, and compliance is a necessary part of good product development, so the PLM process should deal with it using the best available technology.
WhichPLM: At what stage in the development roadmap are you with green-socio-economic compliance? Do you consider yourself as a pioneer for this sector, or are you taking the prudent approach to see how the industry initially responds?
Beth: We have many years of experience in the product environmental compliance space with electronics and automotive industry clients, who have been regulated through RoHS, WEEE, and JIG since the early 2000’s. We developed pioneering technology to service the needs of these industries, and our offerings for the apparel industry benefit from the relevant experience gained in these other challenging sectors. In many ways, we feel like we are perhaps ahead of the industry with our offering, but the industry is reaching a tipping point as more regulations start to affect apparel products.
WhichPLM: As of today, does your current solution have any features that could be classed as green-socio-economic functionality available and enabled for consumers to utilise and what benefits do you envisage those providing?
Beth: Our Insight product family is built from the ground up as a “green” product development solution. We have taken a modular approach to providing enterprise software solutions to both current and emerging challenges in green product development. This begins with regulatory compliance- ensuring that products can be manufactured and shipped without costly delays and recalls. Our Insight Environmental Compliance product enables customers to automate and streamline their compliance data acquisition, management, and reporting through a dedicated platform integrated with existing PLM and ERP systems. We track many regulations such as RoHS, WEEE, REACH, and CPSIA, and our software grades product BOMs against these rules, returning verdicts for compliance and enabling “what-if” scenarios. This enables customers to mature past simple document management of supplier compliance declarations, which is not sufficient due diligence to ensure the compliance of a product. Our software turns test results into quantified data on material content, which allows calculations of concentrations and masses to be compared against threshold limits, presence/absence rules, and reporting requirements for both regulatory requirements as well as customer requests. Our Insight LCA module leverages this “Bill of Substances” data along with the BOM data from the PLM integration to provide a scalable solution for calculating the relative environmental impact of designs. This is measured in terms of carbon footprint, embodied energy, water consumption, and other metrics. The Insight product family is already benefitting dozens of customers by enabling them to scale their green product development processes and meet the increasingly complex demands for disclosure and transparency about their products’ “green-socio-economic” attributes.
WhichPLM: Would full traceability of the supply chain through PLM simply give apparel brands the ability to distance themselves from accountability or is there still a wider need for the brands to educate and work with suppliers to ensure the ‘best practices’ are maintained?
Beth: Supply chain traceability would give brands the ability to do far more than merely shed accountability. Modern brands are the stewards of entire production ecosystems, and full traceability would allow for more meaningful innovation to take place from the field all the way to the consumer. This intention can produce a higher quality product with a story to go with it, thereby differentiating the product in a crowded marketplace. While it is arguable whether consumers will pay a premium for those “best practices”, it is generally true that they will choose them when given the chance. No consumer wants the culpability of supporting sweatshop labor, Amazon deforestation, or slavery in the Congo through their purchases. Consumers and watchdog groups don’t care whether an apparel brand directly employs these practices; they expect brands to set standards for their entire supply chain. If an NGO can discover that a vendor in your supply chain is guilty of unethical or damaging practices, they will assume that you could have discovered the same thing and therefore must know about it. So distancing your company is not enough, real performance is expected. For manufacturers who make an earnest effort to improve the performance and impacts of their supply chain, there is a significant challenge in credibly communicating these improvements to their customer base. This is where a solution such as PTC’s FlexPLM and Insight can be of great benefit. Credible claims must be substantiated with data and information, because customers are already weary of “greenwash”. Collecting and managing this information is complex, but software can make it much easier for traditionally small teams of “product stewards” to identify trouble spots in their supply chain, communicate new requirements to suppliers, track improvements season over season, provide customers with product attribute data, and so on. Since the brand bears full exposure to the customer, it is the brand’s responsibility to set expectations and propagate them throughout their supply chain.
WhichPLM: Finally is green-socio-economic compliance simply a new tick box for apparel brands/system vendors to promote in the market or do you see it a true investment in the supply chain delivering a lot of added value?
Beth: Our experience indicates that the first wave of “green” awareness resulted in new fodder for marketing and consumers ultimately caught on to the emptiness of some of the claims. Today, brands and consumers are still interested, but wiser, and real results are required. Brands can’t put a few solar panels on their roof and call their products “sustainable”. Compliance must be part of the design of the product, and evidence for this must be presented. When done well, there are numerous win-win scenarios possible that result in less environmental impacts, less waste, less cost, and a higher quality product that consumers feel good about purchasing.