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Top Business Objectives When Adopting PLM

Written By: Yu Chen
Published On: February 4 2010

Although product lifecycle management (PLM) can help business organizations achieve a variety of goals, some benefits of adopting PLM are more frequently sought than others. Research focusing on business objectives that PLM users have in mind prior to evaluating specific PLM solutions demonstrates that drawing and product documentation management, product collaboration, and engineering change management are among the most popular areas on a PLM buyers’ priority list.

Every year, Technology Evaluation Centers (TEC) helps thousands of users compare and select PLM solutions via TEC’s PLM Evaluation Center. In order to better assist TEC users in identifying the most suitable PLM solutions in accordance with business requirements, one of the 17 questions that the TEC PLM Evaluation Center asks in the online questionnaire is about users’ business objectives when adopting PLM systems. To answer this question, users can choose from a multiple selection list of over 50 options. Although this list is not exhaustive, TEC believes it covers the majority of business objectives that are related to PLM adoption.

Within the pool of thousands of PLM initiatives recorded each year, TEC was able to select and verify a certain number of PLM selection projects using consistent selection criteria from 2007 to 2009. In total, TEC included 485 PLM selection projects for this study—over 100 projects for each year.

The demography of this study stays relatively consistent from year to year and companies of all sizes have been included. Within the 485 selection projects, we managed to maintain a variety of industries with the six major industries that account for 60% of the total. These industries are electronics/high-tech, industrial and commercial products/machinery, aerospace and defense (A&D), engineering and construction, automotive, and consumer packaged goods (CPG).

Based on this data, the table below shows the top 10 business objectives selected in 2009 and its rankings in the previous two years.


Table 1. Top 10 Business Objectives When Adopting PLM, 2009

Most of the objectives in the top 10 list are steady from year to year. After looking through these 10 items, we separated nine out of the 10 business objectives into three categories: drawing and product documentation management, product collaboration, and engineering change management.

Drawing and Product Documentation Management

There are three business objectives in this category and “better manage drawings and product documentation” has been ranked first for the last three years. Without a doubt, PLM has roots in managing computer-aided design (CAD) drawings and all other product documentations if we trace back to PLM predecessors such as engineering document management (EDM) and product data management (PDM). Although today’s PLM is capable of offering much more than product documentation management, this remains the top priority for many organizations.

If you feel that “better manage drawings and product documentation” is a rather generic objective, the other two objectives (both ranked fifth in 2009) may give you clearer ideas about what organizations are looking for in PLM for product documentation management. These two objectives indicate that improving accuracy and decreasing costs are the major priorities for product documentation management. Generally speaking, they are negatively correlated—better accuracy usually comes with higher costs. However, today’s organizations must achieve both objectives at the same time in order to survive and to excel against competitions. A PLM solution can help resolve this negative relationship by ensuring that product data is effectively and efficiently captured, stored, protected, and distributed.

Drawings and other product documentations need to be managed because most product definition information resides within these documents. Although recent technology advancements (such as Google Wave that may empower content generation and knowledge collaboration processes) have the potential to transform traditional document-based product development to a more structured manner, we expect that “better manage drawings and product documentation” will be kept as a priority for many organizations in the near future.

Product Collaboration

Nowadays, PLM is not only in place to help product designers and engineers but also used in a wider range of business processes including marketing, manufacturing, and services. In other words, PLM is expanding its coverage to the entire life cycle of a product just as its name suggests. Hence, instead of using “product development collaboration”, we decided to use “product collaboration” to describe the second category of business objectives of adopting PLM. Within this category, we were able to include four business objectives from the top 10 list. These are “decrease cost of new product development and introduction projects”; “improve design review and approval processes; “communicate manufacturing processes or work instructions to manufacturing”; and “increase speed of new product introductions”.

As we can see, except for “improve design review and approval processes”, which focus on the product design department, the other three objectives all have significant interactions between product design and other business functions. For product oriented companies, new product development and introduction (NPDI) has become a critical business process that companies want to build their core competences on. The two major goals that many companies have regarding NPDI are to make it more cost-efficient and faster. In addition, organizations also want to build tighter connections between product design and manufacturing. TEC believes that this requirement represents the need of a two-way communication—product design and engineering design providing information for what and how to produce in one direction, and manufacturing feeding back data for how to design better and faster in the other direction.

Engineering Change Management

Technically speaking, engineering change management is part of product collaboration. However, due to the specificity and importance of engineering change, we decided to categorize this specific product collaboration in a stand-alone set.

Engineering change management is the process by which changes to product designs are implemented in the production process. This process covers simple material substitutions as well as major process changes that require plant engineering. When distributed and outsourced product design and production become more frequent in business practices, “decrease errors for engineering changes” and “reduce engineering change cycle time” receive higher priority. The ranking changes of the two business objectives over three years also suggest the same trend.

“Improve product quality” is the only business objective from the top 10 list that is not assigned to any of the above categories. Since product quality is the result of many activities that a company does, PLM is not the only system that companies use to improve product quality. In fact, software solutions such as enterprise resource planning (ERP) and manufacturing execution system (MES) also contribute significantly to product quality. The difference is that ERP and MES are more for the immediate quality of physical products from operation and execution control perspectives, whereas in PLM, quality improvement is a longer-term result achieved through more frequent and constant product collaboration among a wider range of product stakeholders.

As mentioned earlier, there were over 50 business objectives that TEC provided as answers. Below is a short list of some noticeable ranking increases outside the top 10 business objectives mentioned above.


Table 2. Noticeable Ranking Increases Outside the Top 10 Business Objectives

Design reuse: Keeping reinventing the wheel or starting from the scratch every time there is a new design task not only wastes engineers’ precious time and energy but also blocks many cost reduction opportunities in downstream processes such as production and services. As companies keep accumulating design data, the reuse of this digital asset becomes a promising area to seek for more opportunities for achieving business excellence.

Outsourcing support: While manufacturers enjoy the cost benefit of outsourced production, they also face the drawbacks such as delivery time, quality control, and collaboration between product development and production due to the elongated value chain. The ranking increase of “enable outsourced manufacturing” may represent the expectation that PLM can help build better collaboration within the extended enterprise environment.

Strategic sourcing: Without a doubt, data and process connectivity between product design and sourcing is a rewarding area for manufacturers to explore. More and more companies start looking into PLM in order to improve their sourcing performance. As a result, today’s PLM solutions are expanding to sourcing and related functionality that help companies make better decisions on commercial feasibility of products in development.

The rating status shown above represents an overall expectation when business users are thinking about adopting PLM. When it comes to a specific PLM initiative that an organization has, the business objectives may vary—sometimes significantly. Nevertheless, knowing the priorities that the majority of PLM-seeking organizations have may help you strategize you own PLM road map, if you are looking for a PLM solution, or help you provide better software offerings to the market, if you happen to be a PLM vendor.
 

 
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