This week Arena Solutions will upgrade its SaaS PLM product, Arena PLM Fall '05 release, to include compliance management features. Also announced was the Arena PLM Enterprise Edition. Originally, Arena mainly targeted the SMB market.
Three of the most far-reaching government regulations will force manufacturers to "design for compliance," and to propagate those design requirements down to the smallest suppliers, according to Eric Larkin CTO at Arena.
The Food Allergen Labeling and Consumer Protection Act (FALCPA), with a January 2006 deadline from the Food and Drug Administration.FALCPA requires food processing and manufacturing companies to list on their labels the eight most common food allergens that may be contained in the finished product.
The Restrictions on the Use of Certain Hazardous Substances in Electrical and Electronic Equipment (RoHS) Directive, from the European Union [EU] goes into effect July 2006. RoHS, in particular, will have a dramatic affect on the computer industry. It will prohibit the sale in the European Union of electronics products that contain more than 0.01 percent of eight hazardous materials, one of which is lead.
The Waste Electrical and Electronic Equipment (WEEE) Directive also from the EU, had an August 2005 initial deadline for compliance. WEEE is a waste disposal and recycling regulation, that will make manufacturers responsible for what happens to goods at the end of their product lifecycles.
Similar regulations are expected from China and California.
The Arena PLM Fall '05 upgrade will allow companies to track the status of each requirement for each product down to the component and supplier level. It will also allow for the inclusion of additional information such as the rationale for why it is in compliance and evidence that it does comply. The system generates a compliance report.
Tracking gets even more complex, according to Larkin, because manufacturing typically allows for subtle variations in product content from supplier to supplier.
"When you design, you are saying, 'Here is what is acceptable,' and using different suppliers means content may vary by one ten thousandth and that needs to be tracked," said Larkin.
Arena allowed startup SafeView, a company that makes full body imaging devices for security, to concentrate on its core competency rather than having to embrace a major deployment of difficult PLM software, according to Karen Meyer, vice president of operations at SafeView.
After licensing the imaging technology from the U.S. Department of Energy' s Pacific Northwest National Lab, Safeview decided to outsource as much of the actual design and manufacturing as it could, said Meyer. This meant the company was going to have a lot of partners in the design and manufacturing phase.
"SaaS gives you that flexibility. We have partners all over the place, but as long as they had Internet access that is all that is required [to collaborate]," said Meyer.
Larkin claims a SaaS solution allows manufacturers and suppliers to more easily work off the same set of information than a more costly packaged application.
"Even if I am using a PLM system, I generally e-mail it to the machine shop, and so he might build off the revision. Now, using SaaS, there is a single version of truth to the entire supply chain," said Larkin.
The new version collects any proposed changes to design, routes it around for approval and, said Larkin, "have it take effect atomically."
Atomically is industry jargon for grouping a collection of content changes and having it take effect all at once so that no one participant in the extended supply chain is working off different set of data.
Erik Karofsky, a senior research analyst with AMR Research, said companies like Arena will help to seed the entire supply base with a SaaS solution.
"SaaS allows all companies and their suppliers to get on to the system for free and on the Web," said Karofsky.
In essence, Arena is creating a standard that can be used by everyone at the very time when the lack of reporting standards for compliance are quickly becoming the bane of manufacturing.
For example, although IBM, Dell and Hewlett Packard may all sell the exact same product line, downstream each of those company's suppliers are forced to use proprietary forms to answer the same questions.
"Suppliers are getting overloaded with thousands of forms and these are low margin companies," said Karofsky.
Arena appears to be well aware of its early entry into the SaaS for PLM space and its potential to become the industry standard. The company announced the Arena Supplier Marketplace, an online directory of companies certified on the Arena PLM platform.
While SaaS solutions have been criticized for not allowing competitive differentiation, according to Karofsky, when it comes to compliance differentiation is the last thing that is needed.
"There is no competitive information here. Why not expose that to the world? Companies that are sharing content among different buyers are the SaaS model."
The Arena Fall 05 release is available now.