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What Does the “P” in PLM Really Mean?

Written By: Yu Chen
Published On: December 10 2008

What does the “P” in PLM really mean? The question seems ambiguous since PLM may refer to many different things (such as an airport, a university, a railway company, etc.). Okay, so let me clarify what I mean. The PLM I’m talking about here is product lifecycle management. Now, the answer seems quite simple. However, my purpose is not to trick you with this silly question, but to explore the true meaning of “product” under the PLM setting.

So, what is a product in the light of product lifecycle management?

To answer this question, I found something really helpful from the definition of product (business) on Wikipedia:

In marketing, a product is anything that can be offered to a market that might satisfy a want or need. In retailing, products are called merchandise. In manufacturing, products are purchased as raw materials and sold as finished goods.

This defines the term “product” from three different perspectives and reflects the evolution (in a reverse order) of adopting PLM methodology in business practices, which I’ll describe below.

“In manufacturing, products are purchased as raw materials and sold as finished goods.”

Undoubtedly, PLM was cradled in the manufacturing sector. From the manufacturing point of view, a product is something that has either an assembly structure, a recipe, or both. The major purposes of PLM are to help determine what raw materials are needed and how to convert these raw materials into finished goods. The added value that a manufacturer creates is associated with the physical or chemical changes from raw material to finished goods; the task of PLM is to facilitate these changes.

“In retailing, products are called merchandise.”

More recently, people started to realize the benefits of utilizing PLM outside of the manufacturing domain. The retail industry is one such example. The reason retailers have adopted PLM is because product information is a critical component when it comes to making decisions on what to buy, who to buy from, and how to sell. Some PLM vendors now provide well-tuned solutions for retailers to manage their merchandise from a life cycle standpoint.

“In marketing, a product is anything that can be offered to a market that might satisfy a want or need.”

Will PLM keep expanding to other areas? It seems likely. From a marketing perspective, service is also included in a broader definition of product. A service also has a life cycle, and managing the life cycle of a service has similarities with managing the life cycle of a product—although they too have their differences. The intangible nature of services makes the development, production and delivery of services (not all kinds of services but at least a few of them) easier to take place in the digital world than those of tangible products (e.g., even surgeries can be done through the Internet now). This might provide a hint that managing services from their birth to death using PLM principles is not only advisable, but also has the potential to reach a new height that PLM has not achieved in the manufacturing sector.

Hence, the meaning of “product” within “product lifecycle management” is changing over time with the process of more industries adopting the PLM methodology. In fact, as long as you offer something that “might satisfy a want or need”, you should think about the life cycle of your offering.

So, I hope you have a better idea about what the “P” in PLM really means.

Now, I am going to throw you another question. As I write this blog, I’m facing an Acer monitor. It has a model number and a serial number. The model number represents all Acer monitors that have exactly the same product structure and specifications; the serial number specifically refers to the one monitor in front of me. Which number (the product as a model or the product as a concrete piece) should be managed within a PLM system?

This question is about the granularity of information that PLM systems deal with—and as such, affects what “product” means to a PLM system. The granularity may range from coarse to fine, including product line, product model, model variation, and individual product (serial number). Thus, the objects being managed in different PLM systems may vary.

An appropriate granularity depends on industry, regulation, company strategy, and customer requirements. In the engineer-to-order (ETO) industry, the one-of-a-kind product is designed specifically for one customer therefore the granularity will be very fine; while in the consumer packaged goods (CPG) industry, it is not necessary for a PLM system to manage the toothbrush that you are using.

Regulation also plays an important role in determining granularity level. Some products (such as aircrafts or medical equipment) that are subject to strict safety regulations need fine granularity in order to maintain the traceability for individual parts. In short, the coarser the granularity, the more “efficiently” you can manage the product life cycle, but there are risks of losing effectiveness due to the lack of details.

In our monitor case, I would say that managing this product at the model level in the PLM system is both efficient and effective. The serial number is also meaningful in terms of quality control and customer service. Well, this could be handled by the ERP system. After all, PLM doesn’t do everything!
 
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