why design for environment makes ‘cents’ in the electronics industry by pamela j. gordon, cmc...
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Why Why Design for Design for EnvironmentEnvironment Makes ‘Cents’ Makes ‘Cents’
in the in the Electronics Industry Electronics Industry
by Pamela J. Gordon, CMCby Pamela J. Gordon, CMC
President, Technology Forecasters President, Technology Forecasters Inc.Inc.
April 19, 2006April 19, 2006
A One-Slide History of TFI A One-Slide History of TFI Information, Insight, Interaction for Effective Information, Insight, Interaction for Effective
Manufacturing RelationshipsManufacturing Relationships
www.TechForecasters.com
Founded 1987
1995: World-Class Outsourcing Guide; Customer Retention Research
1999: 1st Quarterly Forum
2001: ODM; added China-based research
2006: Buyers’ Guide
1990: 1st Contract Mfg. from a Global
Perspective report
2002-3: Pricing Model and
2001: published book
DfE DfE Almost AlwaysAlmost Always Results in Results in ProfitProfit
Hundreds of examples in electronics Hundreds of examples in electronics industry and othersindustry and others
Design for…Design for…
Red
uce
s E
xpen
ses
Incre
ase
s R
eve
nu
e
Com
petitive
Ed
ge
Red
uce
s Risk
Eliminating hazardous substancesEliminating hazardous substances XX √√ √√ √√Simplifying disassembly / Simplifying disassembly / maximize recyclingmaximize recycling √√ √√ √√ √√
Reducing energy consumptionReducing energy consumption √√ √√ √√ √√
Lifecycle EfficiencyLifecycle Efficiency √√ √√ √√ √√Process Efficiency: in Process Efficiency: in manufacturing & other operationsmanufacturing & other operations √√ √√ √√ √√
√ √ = Yes = Yes / / √√ = Some = Some / / X X = No= No
Then, why are most Then, why are most electronics companies electronics companies slow to adopt Design slow to adopt Design
for Environment?for Environment?
Let’s see what recent Let’s see what recent benchmarking studies tell benchmarking studies tell
us…us…
One Way to Make One Way to Make CentsCents::--Benchmarking Studies--Benchmarking Studies
Quickly compare own environmental strategies Quickly compare own environmental strategies and progress with those of numerous othersand progress with those of numerous others
Assess approaches of suppliersAssess approaches of suppliers Elicit attitudes, needs of customersElicit attitudes, needs of customers Find best practices, identify leadership positionsFind best practices, identify leadership positions
5 TFI benchmarking studies; 250 respondentsPrimarily telephone interviewsOEMs, CMs, ODMs, component suppliers, recyclers, design firms, governments Funded by members of the Quarterly Forum (of which Agile Software is a Corporate Sponsor)
Tod
ay
OEM Plans to Design for OEM Plans to Design for Easier Disassembly, Reuse, & Easier Disassembly, Reuse, &
RecyclingRecycling
Other2%
3rd party redesign
2%
Our CM to redesign
8%
Redesign in-house
23%Will not redesign
65%
Concern About Recycling Concern About Recycling Requirements in Other Requirements in Other
Regions*Regions*
Uncertain29%
No concern for other regions
12%
Concern for other regions
59%
*Regions on next slide
Non-EU Regions of Concern Non-EU Regions of Concern Regarding Recycling Regarding Recycling
RequirementsRequirements
0 10 20 30 40 50 60 70 80
APAC
USA
Canada
Oceania
CALA
%
APAC = Asia Pacific
CALA = Central and Latin America
% of respondents (>1 response)
Are You Considering Are You Considering Remanufacturing Some of Your Remanufacturing Some of Your
ProductsProducts??--Once Used by One Customer, then --Once Used by One Customer, then
Offering for Sale to Other Customers?Offering for Sale to Other Customers?Considering
re-mfg18% Not
considering re-mfg54%
Uncertain28%
According to Component According to Component Suppliers InterviewedSuppliers Interviewed
In the lion’s share of cases, compliant In the lion’s share of cases, compliant components will not be more expensivecomponents will not be more expensive
The opposite will be true after July 1, 2006The opposite will be true after July 1, 2006 Tie RoHS transition to cost-reduction planTie RoHS transition to cost-reduction plan Components are being designed with reuse in Components are being designed with reuse in
mindmind Components: great place to start for efficiencyComponents: great place to start for efficiency
Economic gain throughout life cycleEconomic gain throughout life cycle Chemical reductions are keyChemical reductions are keySmarts 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 According to Contract Manufacturers* InterviewedManufacturers* Interviewed
Better business model to shift all the Better business model to shift all the way to RoHS 6way to RoHS 6 --Rather than to RoHS 5 then having to shift --Rather than to RoHS 5 then having to shift
againagain Now starting to charge customers more Now starting to charge customers more
for non-RoHS compliant products for non-RoHS compliant products Design for Environment (DfE) offered Design for Environment (DfE) offered
by nearly all large CMs and ODMsby nearly all large CMs and ODMs And by some mid-sized and smaller CMsAnd by some mid-sized and smaller CMs Stressing cost savingsStressing cost savings * And Original Design
Manufacturers (ODMs)
Benchmarking Study Benchmarking Study HighlightsHighlights
- CMs and ODMs -- CMs and ODMs - Environmental services (Nov. 2005)*Environmental services (Nov. 2005)* Two-thirds simplify disassembly / Two-thirds simplify disassembly /
maximize recyclingmaximize recycling One-half reduces energy consumptionOne-half reduces energy consumption Only one or two help with government Only one or two help with government
interface interface Exemptions to Europe’s Restriction of Exemptions to Europe’s Restriction of
Hazardous Substances (RoHS) DirectiveHazardous Substances (RoHS) Directive Registration for Europe’s Waste Electrical and Registration for Europe’s Waste Electrical and
Electronic Equipment (WEEE) DirectiveElectronic Equipment (WEEE) Directive
*Funding: TFI Quarterly Forum member
According to OEMs According to OEMs InterviewedInterviewed
Hundreds of cases in which design Hundreds of cases in which design for efficiency has reduced costsfor efficiency has reduced costs
Competitive edge: Japanese Competitive edge: Japanese companies’ different approach companies’ different approach
Still most don’t see need for DfEStill most don’t see need for DfE
Ways to Minimize RoHS Ways to Minimize RoHS CostsCosts Use contract manufacturer / original design Use contract manufacturer / original design
manufacturer way ahead of curvemanufacturer way ahead of curve When possible, convert non-compliant parts to When possible, convert non-compliant parts to
compliant onescompliant ones so long as the conversion process is so long as the conversion process is
verified by third-party lab (e.g., E-Certa)verified by third-party lab (e.g., E-Certa) Employ software tools forEmploy software tools for
Efficient tracking of compliant partsEfficient tracking of compliant parts Design-and-manufacturing changes, and Design-and-manufacturing changes, and Reporting of due diligenceReporting of due diligence
Use RoHS as a business opportunity toUse RoHS as a business opportunity to Weed out products whose time is really up – before the Weed out products whose time is really up – before the
deadline, for many economic benefitsdeadline, for many economic benefits Tighten component selection and procurement Tighten component selection and procurement
processesprocesses ““While the patient is open…” While the patient is open…” (Dan Henes, (Dan Henes,
Celestica)Celestica)
Converting leads, with due diligence
Unpeeling the Onion Unpeeling the Onion Degrees of approach to design for Degrees of approach to design for
WEEEWEEENo product redesign
Design for disassembly
Use recyclable materials
Reuse / Upgrade in next gen’s
Lease products only
Materials that “self recycle”No product Minimal product
Common Common MisunderstandingMisunderstanding
““WEEE is one of those regulations WEEE is one of those regulations that cost us more money, right?”that cost us more money, right?”
Other companies have used Other companies have used design for reuse/recycling for design for reuse/recycling for competitive advantage…competitive advantage…
Competitive Benefits:Competitive Benefits:Cost ReductionsCost Reductions
Business benefits of product rationalizationBusiness benefits of product rationalization Maximize profitability “Once the patient is open”Maximize profitability “Once the patient is open” Reusing modules, for savings & customer loyaltyReusing modules, for savings & customer loyalty Smaller, lighter, faster, more reliable, etc.Smaller, lighter, faster, more reliable, etc. Cost to manufacture, Cost to useCost to manufacture, Cost to use Customer satisfaction: Customer satisfaction:
Reliability, longevityReliability, longevity Easy of returningEasy of returning
Redesign for Reuse/Recycle Redesign for Reuse/Recycle and Profit: and Profit: MechanicalMechanical
Examples of Examples of TechniquesTechniques
Business AdvantagesBusiness Advantages
Easily detachable parts Easily detachable parts Original assembly faster, Original assembly faster, easier, less training easier, less training
Simpler designSimpler design Removes complexities Removes complexities reduces time, costreduces time, cost
Reduce 10% screws and Reduce 10% screws and 5% parts ea. year5% parts ea. year
Smaller bill of materials Smaller bill of materials (BOM), shorter assembly (BOM), shorter assembly timetime
Re-designed function, Re-designed function, using new component: using new component: 50% hardware reduction50% hardware reduction
40% cost reduction40% cost reduction
Redesign for Reuse/Recycle Redesign for Reuse/Recycle and Profit: and Profit: Mechanical Mechanical
(continued)(continued)Examples of Examples of TechniquesTechniques
Business AdvantagesBusiness Advantages
PCBs, wires and cabling PCBs, wires and cabling (copper), toner (copper), toner cartridges, plastic are cartridges, plastic are easily separableeasily separable
Recover more value from Recover more value from reuse, recyclingreuse, recycling
Detach all parts in a Detach all parts in a single direction (e.g., all single direction (e.g., all parts would unscrew to parts would unscrew to the left)the left)
Shorter assembly time Shorter assembly time (less time and motion (less time and motion included in contract included in contract manufacturer bid)manufacturer bid)
Place battery on top of Place battery on top of board (not bottom)board (not bottom)
Removed in seconds Removed in seconds rather than minutes to rather than minutes to undo screws undo screws
Redesign for Reuse/Recycle Redesign for Reuse/Recycle and Profit: and Profit: MaterialMaterial
Examples of Examples of TechniquesTechniques
Business AdvantagesBusiness Advantages
Fewer blended materials Fewer blended materials for housing; use for housing; use materials that can be materials that can be recycled as a whole recycled as a whole
Homogenous materials Homogenous materials can can sometimessometimes be less be less expensiveexpensive
Labels of same material Labels of same material as housing, eliminating as housing, eliminating label removal (JEITA)label removal (JEITA)
Appearance sleeker, Appearance sleeker, more attractivemore attractive
Free of restricted fire Free of restricted fire retardants and other retardants and other substances that hinder substances that hinder recyclingrecycling
Meet RoHS and Meet RoHS and substance bans by substance bans by individual countries and individual countries and customerscustomers
Redesign for Reuse/Recycle Redesign for Reuse/Recycle and Profit: and Profit: Material (continued)Material (continued)
Examples of Examples of TechniquesTechniques
Business AdvantagesBusiness Advantages
Marking materials Marking materials according to recyclables according to recyclables
Easier to see and track Easier to see and track materials for recyclingmaterials for recycling
Reduction of paints on Reduction of paints on plastic housing; plastic housing; decreases impurities to decreases impurities to foster efficient recycling. foster efficient recycling.
Paints are Paints are expensive/toxic; painting expensive/toxic; painting equipment and time are equipment and time are costly; clean up and costly; clean up and permits required. permits required.
Use recycled plasticUse recycled plastic Can cost 50% less than Can cost 50% less than virgin materialsvirgin materials
Avoid waste from Avoid waste from consum-mables (e.g., Fill consum-mables (e.g., Fill pots of ink)pots of ink)
Less cost in Less cost in manufacturing, freight, manufacturing, freight, and recycling. and recycling.
Redesign for Reuse/Recycle Redesign for Reuse/Recycle and Profit: and Profit: Extend LifeExtend Life
Examples of Examples of TechniquesTechniques
Business AdvantagesBusiness Advantages
The parts that are least The parts that are least durable are replaceabledurable are replaceable
Competitive Competitive differentiation owing to differentiation owing to longer-life products longer-life products
Reduce number of Reduce number of moveable partsmoveable parts
Reduces some of most Reduces some of most complex & expensive complex & expensive parts parts
Design remaining Design remaining moveable parts (often moveable parts (often breakable) to be more breakable) to be more durabledurable
Puts off costs for repair Puts off costs for repair and recyclingand recycling
Provide upgrades in Provide upgrades in memory and software memory and software drivers via producer’s drivers via producer’s web site web site
Smaller BOM, avoid Smaller BOM, avoid handling & rising handling & rising shipping costs, greater shipping costs, greater functionality more easilyfunctionality more easily
Upping the Competitive Upping the Competitive AnteAnte
Example: Acer and CSRExample: Acer and CSR Accessing markets and B2B customersAccessing markets and B2B customers Countering competitors’ failuresCountering competitors’ failures Keeping up with competitors’ successesKeeping up with competitors’ successes Risk avoidance (peak oil, etc.)Risk avoidance (peak oil, etc.) Customers’ selectionsCustomers’ selections Competitive view of environmental leadership: Competitive view of environmental leadership:
CelesticaCelestica ““We want to be viewed in the industry as the green We want to be viewed in the industry as the green
leader and gain market share.”leader and gain market share.” ““The one who does it first will get a warm reception The one who does it first will get a warm reception
from market place.”from market place.” ““A lot of people look at letter of law and think they can A lot of people look at letter of law and think they can
just survive, or we can get business advantage.”just survive, or we can get business advantage.”
RecommendationsRecommendations- Regulators -- Regulators -
As with EuP* As with EuP* invite industry to develop & present invite industry to develop & present best practicesbest practices
Harmonize requirements for recycling & other Harmonize requirements for recycling & other environmental issues between regions.environmental issues between regions.
Promote voluntary recycling & other environmental Promote voluntary recycling & other environmental steps, using Japan’s model—declare deadline steps, using Japan’s model—declare deadline beyond which regulation will be necessary should beyond which regulation will be necessary should voluntary measures not be met. voluntary measures not be met.
Ensure adequate time between approval of laws & Ensure adequate time between approval of laws & deadlines.deadlines.
Have pilot producers & software companies Have pilot producers & software companies “engineer” compliance process, for least “red tape” “engineer” compliance process, for least “red tape” & most effective compliance by all. & most effective compliance by all.
*Energy-using Products
RecommendationsRecommendations- Electronics Industry -- Electronics Industry -
Create collectives not only for recycling products, Create collectives not only for recycling products, but also for but also for design for disassembly, reuse, and design for disassembly, reuse, and upgradeupgrade Jointly fund and share methodologiesJointly fund and share methodologies ……for ease of implementation, standardization, & for ease of implementation, standardization, &
profitability for all concernedprofitability for all concerned Participate with European Commission as it Participate with European Commission as it
finalizes EuP Directive. finalizes EuP Directive. EU wants to examine best practices EU wants to examine best practices Include standards for data collection and Include standards for data collection and
management management earlyearly Set precedent for not only future EU regulations Set precedent for not only future EU regulations
but also environmental & social requirements by but also environmental & social requirements by other regionsother regions
Recommendations for Recommendations for OEMsOEMs
- and for CMs offering design services-- and for CMs offering design services- Design products—from the start—according to Design products—from the start—according to
reuse, upgrade, & recycling “rules” provides reuse, upgrade, & recycling “rules” provides numerous financial & competitive benefits: numerous financial & competitive benefits:
Quick, efficient, & cost-saving disassemblyQuick, efficient, & cost-saving disassembly
Multiple reuse & upgrade of product (thus Multiple reuse & upgrade of product (thus extending revenue opportunities)extending revenue opportunities)
Maximum recycling value (for revenue increase)Maximum recycling value (for revenue increase)
Profitable by‑product of “design for disassembly” is Profitable by‑product of “design for disassembly” is quicker, more efficient, & less costly original quicker, more efficient, & less costly original assemblyassembly
Invest a few thousand dollars in training design Invest a few thousand dollars in training design engineers (electrical, mechanical, & system) in engineers (electrical, mechanical, & system) in DfE best practicesDfE best practices
TFI DfE Workshop, Toronto, Sept. 2005
Recommendations for Recommendations for OEMsOEMs
Explore Models for Upgrade, Reuse, and Explore Models for Upgrade, Reuse, and DematerializationDematerialization Managers at electronics companies with ‘throw away’ Managers at electronics companies with ‘throw away’
products say, “Reuse doesn’t apply to our products.” products say, “Reuse doesn’t apply to our products.”
Multifunctional teams can sketch out ways model can Multifunctional teams can sketch out ways model can be used for competitive gain, cost savings, and be used for competitive gain, cost savings, and enhanced customer loyalty.enhanced customer loyalty.
At least one sponsoring executive At least one sponsoring executive Finance / cost accountingFinance / cost accounting MarketingMarketing Design / qualityDesign / quality Supply-chain / logisticsSupply-chain / logistics Legal / EHSLegal / EHS
Use forward-thinking softwareUse forward-thinking software
RecommendationsRecommendations- Continue to Learn Best - Continue to Learn Best
Practices -Practices - Next benchmark study: Next benchmark study: Due Diligence Due Diligence
Strategies for RoHS ComplianceStrategies for RoHS Compliance Compare approaches to RoHS due diligenceCompare approaches to RoHS due diligence Adopt best practices for a sound due diligence Adopt best practices for a sound due diligence
defense for RoHS defense for RoHS Invite your colleagues, customers, suppliers Invite your colleagues, customers, suppliers
to the next to the next Design-for-Environment Design-for-Environment WorkshopWorkshop June 7, San Diego June 7, San Diego
Highlights from guest speaker Manthos Economou Highlights from guest speaker Manthos Economou of Palm, Inc.of Palm, Inc.
Then, July 13 in BostonThen, July 13 in Boston
5 Recommendations for 5 Recommendations for Meeting Requirements Meeting Requirements
ProfitablyProfitably1.1. Get executive sponsorship up-front: Get executive sponsorship up-front: Use Use Lean and Lean and
Green Green argumensargumens
2.2. Maximize profitability, “once the patient is open”Maximize profitability, “once the patient is open”3.3. Take advantage of existing resources for design, Take advantage of existing resources for design,
mfg., logistics, return, disassembly, etc.mfg., logistics, return, disassembly, etc.4.4. Meet customers’ desires better than do Meet customers’ desires better than do
competitorscompetitors5.5. Realize this is not a single eventRealize this is not a single event
Add power reduction to requirements documentAdd power reduction to requirements document Reduce overall ecological footprint of materials, Reduce overall ecological footprint of materials,
processes, products, end of lifeprocesses, products, end of life
Management Approaches to the Management Approaches to the Market’s Environmental Market’s Environmental
RequirementsRequirementsMacro shifts in how we design, make, use, reuse, and dispose of products
Fire Drill: Ad hoc implementations for compliance
Com
petit
ive
adva
ntag
e
Tactical Strategic
Another basis for a Another basis for a prediction…prediction…
Environmental Environmental Compliance: Cost or Compliance: Cost or
Competitive Competitive Differentiator?Differentiator?
40 Years of Increasing Content 40 Years of Increasing Content Scrutiny, and Scrutiny, and $$ Affect on Affect on
IndustryIndustry 19701970 US Industries -- EPA established US Industries -- EPA established
‘‘70’s70’s Chemical Industry -- DDT banChemical Industry -- DDT ban’’80’s80’s Petroleum -- GasolinePetroleum -- Gasoline
‘‘80’s-90’s80’s-90’s Construction, wood products Construction, wood products ’’90’s90’s Food Industry -- “Nutrition Facts” tableFood Industry -- “Nutrition Facts” tableEach of these industries is just as profitable now (or
more so)
Extrapolate pattern of Extrapolate pattern of $$ affect into the future… affect into the future…
Now…Now… Electrical/Electronics, RoHSElectrical/Electronics, RoHSComing…Coming… REACH, IPP, EuPREACH, IPP, EuPPerhaps…Perhaps… Energy / Water / Emission MonitorsEnergy / Water / Emission Monitors
With Increasing With Increasing Scrutiny…Scrutiny…
Be ahead of the curveBe ahead of the curve Without “fire-drill” pressureWithout “fire-drill” pressure Competitive advantageCompetitive advantage
Use robust data collection and Use robust data collection and managementmanagement It’s not a one-time taskIt’s not a one-time task A good time to tighten processesA good time to tighten processes
Escalate environmental management Escalate environmental management to senior levels: to senior levels: it’s a corporate it’s a corporate strategystrategy
Some Last Words…Some Last Words…
“I don’t think DfE should be treated as “I don’t think DfE should be treated as extra or a separate entity, but rather a extra or a separate entity, but rather a part of the design process. It’s just like part of the design process. It’s just like quality – it’s not separate, but more a quality – it’s not separate, but more a
matter of individual responsibility.” matter of individual responsibility.” -Michael Lavesque, ESI (Ontario, Canada, -Michael Lavesque, ESI (Ontario, Canada,
design firm)design firm)
Design for Environment Workshop, February 2006,
at AER Worldwide
Thank you!Pamela Gordon
PGordon@TechForecasters.com
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