From Design to Delivery, SAP® Solutions Helps Leading Medical Device Manufacturer With Significant Savings, Revenue Protection and Return on Investment
PALO ALTO, Calif. — With increasing public scrutiny and regulations regarding product safety and sustainability, manufacturers are taking the initiative to ensure they are protecting the health of both their consumers and the environment. Varian Medical Systems, a leading manufacturer of medical devices, is one such company that embarked on a mission to understand the chemical composition of its products, enabling it to redesign its components and products to reduce or eliminate hazardous substances and comply with regulations such as RoHS and REACH. The company turned to SAP AG (NYSE: SAP) to embed compliance across its business processes and achieve this more quickly, effectively and profitably.
Using the SAP® Environment, Health, and Safety Management (SAP EHS Management) application with product compliance functionality and the SAP® Product Life Cycle Management (SAP PLM) application, Varian was able to protect revenue from RoHS-related charges, reduce the efforts involved to re-design its components and re-engineer its products at a much faster pace.
Touching hundreds of thousands of lives each year, Varian is a $2.6 billion company that creates medical devices, software for treating cancer and other medical conditions with radiosurgery, and X-ray imaging for both medical and industrial purposes. In 2010 Varian introduced a new mandate for corporate social responsibility, which included far-reaching sustainability goals. In addition, the company faced increasingly strict legislation restricting the types of materials and chemicals contained in its equipment, particularly from the RoHS directive specific to medical devices and the REACH legislation that governs products entering the European Union.
Since Varian derives approximately 30 percent of its business from sales to European Union countries, it worked with SAP to reduce risk that might occur due to non-compliance with REACH regulations. Additionally, with new RoHS regulations governing medical device manufacturers coming into effect by July 2014, Varian made it a priority to re-engineer its products to help ensure that they were created with a dual focus on sustainability and compliance.
To tackle these complex challenges, Varian is using SAP EHS Management with product compliance functionality and SAP PLM. The solutions help the company mitigate risks, achieve considerable return on investment (ROI) and reduce the time to implement engineering changes from 18 to five days within the next 12 months. Using SAP solutions, Varian was able to more quickly re-engineer its products for compliance, saving money annually in RoHS-related charges alone. Many aspects of the product compliance process were made more efficient. For example, Varian now avoids late-cycle changes because compliance checks are embedded into the design process. Additionally, it is much faster and easier to adjust administrative functions to any corresponding engineering change.
“With sustainability solutions from SAP, Varian has established a platform that allows us to collect and analyze product information from within Varian and from our supply chain, determine compliance status and design for compliance at a faster pace,” said Snehashish Sarkar, senior manager, Enterprise, Varian Medical Systems. “RoHS and REACH regulations have definitely given an impetus to our sustainability efforts. Based on our philosophy, Varian not only wants to save lives but demonstrate its commitment to social and environmental causes. With SAP we have both furthered our corporate social responsibility goals and ensured that we can continue to do business as usual in the European Union beyond 2014.”
The majority of Varian’s important master data already resides in SAP systems, and the company uses SAP® Business Suite as its platform for manufacturing, procurement and sales. Selecting SAP solutions for sustainability and PLM was a natural choice. Another key differentiator for Varian was that by using SAP solutions across the board, it was able to more easily embed product compliance controls across company business processes. For example, many of Varian’s customers want to understand the environmental and compliance status of the products they intend to buy from a RoHS point of view before they sign the purchase order. With integration between the SAP product compliance solution and Varian’s SAP application for sales order management, the company is now able to do a compliance analysis and report immediately at the quotation stage.
“We believe that business can be equally committed to both sustainability and profitability, and our products are designed to make that possible,” said Peter Graf, chief sustainability officer, SAP. “Companies like Varian are increasingly dedicated to a sustainable supply chain and products, for both environmental and financial reasons. Varian shows how one can achieve both goals with significant cost savings and return on investment.”
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