Does your business need PLM? The following are ten diagnostic questions, provided by AMR/Gartner, that business users should ask to determine whether or not adopting a PLM solution is right for your business.
- Do you take orders for products or configurations you can't make?
If yes, this is often because configuration rules in sales order systems do not agree with engineering definitions of product structure. The broken link may be between engineering BOMs and sales configurators or catalog product information. The problem is common in complex business electronics, machine tools, building systems, and other highly variable engineer or configure-to-order businesses.
- Is time to market a top strategic concern?
If yes, this is usually because margins and market share are a function of being first to market. In Consumer Goods, where retailers constrict channel volumes for later arrivals, High-Tech, where degrading component prices eat into margins while goods sit on the shelf, or Life Sciences, where patent protection is limited by law, time to market is vital. If you are not at least keeping pace with market leaders, the problem is likely some combination of poor data integration (separate silos of product data) and poor NPDI discipline. The answer is one part product portfolio management and ten parts better PLM foundation.
- Are bad product development projects hard to kill?
If yes, this is often because rational assessments of resource availability and expected project value are unavailable to decision-making bodies at the time they meet. Symptoms include lots of PowerPoint, Excel, and MS Project presentations with little or no ability to cross-reference assumptions or dependencies. This occurs in all industries (see the Harvard Business Review, "Why Bad Projects Are So Hard To Kill," February 2003), but is especially pronounced where a strong engineering or technology heritage persists. The answer is the use of portfolio management tools within the context of a refined NPDI process like PACE.
- Do new products take full advantage of existing parts, designs, technology, or other intellectual property?
If not, chances are that time to market, product costs, and raw materials inventory are all worse than they could be. Common symptoms include maintaining multiple materials management systems, parts databases, and engineering document repositories. Design engineers in such situations will admit that it's easier to create a new part or item from scratch than to find the existing one. The answer is to adopt a policy of maximum reuse in product design (sometimes called a platform strategy) and pick one area of especially egregious abuse to drive standardization. This may not require any additional software if the PLM foundation is sound.
- Is warranty expense a problem?
If yes, there are two possible PLM impacts. One is the linkage from engineering to manufacturing, especially where time pressures allow a design to be launched to manufacturing with engineering change taking place after production has begun. In such cases, electronic engineering change management speeds identification and resolution of quality problems. The other linkage is traceability. Using most commercial PDM applications, traceability is possible at the serial number level. These problems are common in Heavy Equipment, Aerospace, and other Complex Engineered Products industries.
- Is communication with manufacturing partners and other key suppliers a clumsy, manual process?
If yes, chances are mistakes are being made on a regular basis, showing up either as scrap or hidden in suppliers' prices. This is increasingly common not only in Electronics, where contract manufacturing is highly evolved, but also in Food and Beverage, Apparel, Automotive, and Aerospace industries. The symptoms are lots of faxes, waiting for files to download, and frantic phone calls as production volumes being to ramp up and problems are uncovered. The answer, again, is some combination of electronic engineering change management, a core PLM function, and some sort of visualization tool for better preproduction collaboration.
- Are acquired companies slow to deliver their synergistic value because product lines are hard to merge?
If yes, this is usually because separate design teams have different processes as well as systems in place. Achieving any buying leverage with key suppliers or better manufacturing costs through consolidating production runs will depend on unifying product information under a common structure, and this means modernizing the PLM foundation. There are various ways to approach this problem, including merging standard part or material classifications databases, merging PDM systems at the EBOM level, or pushing toward some standard design tools. None of these things is easy; doing all simultaneously is probably impossible.
- Are there any major regulatory burdens now or in the foreseeable future that will require electronic traceability?
If yes, this will require upfront investment in PLM systems that meet or exceed compliance requirements. For CPG and pharmaceutical manufacturers, CFR 21 Part 11 is driving such change, in Automotive it's the TREAD Act, for many European manufacturers, it's green regulations requiring recapture of materials in both products and their packaging. Almost all such regulations focus on product safety, and with unlimited liability in U.S. courts, the business case for addressing such requirements is not too tricky. PLM is the product system of record and thus the most important thing to get right.
- Is value engineering of existing products critical to reducing manufacturing cost and supply chain performance?
As complex products continue to be outsourced, it becomes more important to combine in-house and supplier engineering expertise to improve product design. As manufacturers pursue continuous improvements to reduce cost and product cycle times, value engineering with supply chain partners becomes critical. Designs that require excessive parts and specialty manufacturing processes add non-value added operations and lead time to products, driving up inventory in order to meet decreasing customer lead times. PLM provides the platform for collaborative design with suppliers and for evaluating the manufacturing and supply chain impacts of a design.
- Is there a disconnect between actual customer needs, marketing requests, and product enhancements under development?
Manufacturers are deploying initiatives such as Quality Function Deployment (QFD) to ensure product features are meeting real customer needs. The breakdown in this process often results from inconsistencies in data shared between marketing and development, as well as the time lag in sharing this information. Web surveys and requirements management applications as part of a PLM strategy can capture customer and market data, linking it directly to the product development process.
Consider the Risks
In addition to costs and benefits, risks must be calculated to assess the overall value of PLM implementations. Studies have shown that key risks include scope creep (i.e., burgeoning costs due to extending the footprint of PLM within the enterprise) and misalignment with business goals.