EuP: The coming regulation storm, Part 2

Welcome to Part 2 of last week’s installment of Reality Check.

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The crux of last’s week’s column is that the E.U.’s EuP (energy using product) initiative will require manufacturers to track the amount of energy used in the creation of a product from cradle to grave. This includes the energy used to extract raw materials, to push materials through the supply chain, to deliver the product, and finally to dispose of the product at the end of its lifecycle.

As promised, I’ll now delve into the EuP initiative’s impact on IT, supply chain, and software.

Part of the purpose of the EuP regulations “in its own insidious way” is to promote recycled materials, says Michael Kirschner, president of DesignChain Associates, a company that offers consulting services on the supply chain implications of product design.

For example, Kirschner points out that a manufacturer designing a product using sheet metal must consider the energy-use metrics for producing a virgin piece of sheet metal vs. using recycled sheet metal. The manufacturer must also consider that the recycled material may not have the same purity level.

There are supply chain and software issues as well. IT will have to find a data “container” that keeps information in a coherent form for analysis, and to generate reports in a form that’s usable by engineers, marketing departments, and regulators. A company’s distribution channel may prove suboptimal to meet EuP requirements. For example, rail may use less energy than transporting the product with big rigs.

Allowing energy attribute information about materials to flow up and down the supply chain is where IT must shine, Kirschner says.

EuP will require substantially more information capture and new XML definitions, with the cross-enterprise information transfer posing a big problem, adds Eric Larkin, CTO of Arena Solutions.

“The incorporation of multiple companies into the product record is an inevitable outgrowth, and you [must] manage a unified product record,” Larkin says.

While current regulations require information collection down to all layers of the supply chain, the adoption of EuP requires adding the uses of energy in the refinement of a product.

New services are springing up to satisfy current regulations. Avnet Premier offers an online subscription service to look up electronic component specs. The specifications integrate with Arena’s PLM (Product Lifecycle Management) software as a service so that manufacturers can design compliant products.

PLM products are changing, says Dries D’Hooghe, director for product strategy at Agile Software. For example, Agile upgraded its online and packaged solutions to validate designs against compliance specifications and to assign a compliance status report.

Until now, most manufacturers have put in an enormous infrastructure to build and sell products without a thought to environmental attributes. So there is no doubt the cost of doing business will go up in the short term.

But in the future, products meeting EuP minimum standards will receive a CE (Conformité Européenne) approval logo on their packaging. The E.U. will create an ecological profile of the energy used during the lifetime of a product so that green-minded consumers can compare similar products.

And once companies realize that they can’t actively ignore environmental attributes, they will develop standards and it will become part of how they operate. In time, it will reduce waste and the need for new raw materials and ultimately reduce cost.