Global concerns now centre on “how green is my car”. So it is hardly surprising that a software company that develops computer-aided engineering, design and manufacturing products used by the manufacturing sector from the design stage up equally concerned. Green and eco-friendly measures are classified, in three broad categories, starting with forced green, easy green and green leadership.
The explanation for the differentiation: The forced green category is the one where the government has laid down regulations. Easy green is when the customer demands an eco-friendly product it as it makes him feel good. Green leadership comes when a company defies circumstances to be green, like Toyota pioneering its electric car, the Prius.
Energy security and moving away from fossil fuels were among the drivers of cleaner technology. China’s first green car, Build Your Dream (BYD), is an electric vehicle and the reason they have gone green is energy security. Energy security is a major concern and most countries do not want to be dependent to the extent they currently are on imported fuel. So what is the software company’s contribution to energy security?
PTC now has a software solution that helps track the carbon footprint from the start to the end. For instance, if an OEM wants to know the carbon footprint of a tire, he should be able to track it from Malaysia where the latex was tapped, to Korea where the tire was made, to Los Angeles where it reached by ship and to Detroit where it was sent by train. The OEM should be able to differentiate the carbon footprint of one tire maker from another. This software will measure the carbon impact on design as every company is trying to reduce its carbon footprint from the design stage.
With governments around the world planning to introduce carbon tax in one form or another, it is no longer a matter of choice for OEMs to track such matters. Automobile companies work on margins of 2-3 %. A carbon tax could wipe out the company.
Last month PTC acquired the California based environmental analysis technology company Planet Metrics to extend its In-Sight product, a range of solutions for tracking and improving environmental performance of products, parts, materials and suppliers. Manufacturers need their products to be environmentally sound while in use and recyclable at the end of life. Country regulations mandate this, leaving producers no option but to meet norms. Software products can make this easier, capturing data from the design stage of all the inputs needed to check the presence of hazardous substances. While the automotive industry is driven by emission standards, the hi-tech electronics industry has other norms, ranging from recyclables, if hazardous substances like lead are present. Different industries have different challenges and this is a supply chain issue. What does the acquisition of this technology mean for the over $930 million software products company?
This is an opportunity to create a new market. Our product lifecycle management solution has matured over time so that it helps a company manage its product development and CAD data and processes. The next market opportunity for PTC is to help develop a product way upfront, from the concept state, so that its carbon footprint is optimal.
The upfront concept is that a product takes three years to be developed. Earlier, focus was on the later 12 months. At the upfront state, nothing is frozen and changes are easier to make.
So, the obvious question, of whether Planet Metrics is a solution that can be retrofitted? All it needs right now is a bill of materials. In a year from now, it will be seamlessly integrate into all our products.
Since the green challenge concerns the supply chain of a sector, what will the impact be for China and India, now integrated into the global supply chain? The cost of raw material and the cost of carbon footprint, in selecting materials, will become crucial. It is expected that there is a lot at stake for China, as that is an export-driven economy. For India, the impact could be similar.