Strategic by design: PLM as the enterprise backbone
Imagine a group of automotive executives sitting around a table and examining a new vehicle on-screen, presented in its entirety as an accurate geometric 3-D virtual model. While exploring the model, they focus on the windshield. Using product life-cycle management (PLM) technology and simulation, they discover a design issue.
Imagine a group of automotive executives sitting around a table and examining a new vehicle on-screen, presented in its entirety as an accurate geometric 3-D virtual model. While exploring the model, they focus on the windshield. Using product life-cycle management (PLM) technology and simulation, they discover a design issue. This issue will present a problem when inserting the windshield into place, which will either bump up the cost of the vehicle or require a revision of the design.
Implementation of PLM software allows for this kind of early intervention. Originally thought of as a way to share computer-aided design files affecting engineering and manufacturing, today PLM is now more commonly viewed as the backbone of an enterprise-wide solution supporting ERP, CRM, and supply chain management systems.
However, the importance of design capabilities in PLM remains paramount, as most studies still find that 80 percent of a product's lifetime cost is determined during the design phase, with 15 percent tied to sourcing and only 5 percent affected in purchasing and service. Deployment of PLM solutions enables collaboration within an enterprise, letting departments such as finance and purchasing participate in the product development process. Potential cost overruns can be identified in the design phase, long before the vehicle is near tooling development or production.
A PLM enterprise backbone anchors all enterprise systems around a forward view of a company's product and market strategy. Competitive corporations establish their market strategies based on their portfolio of products, and the manufacturing and sourcing strategies that support them. Using ERP or MRP systems as the enterprise backbone would be equivalent to driving out of your rear-view mirror, and would reflect an emphasis on yesterday's strategies and product lines.
As markets recover, companies that position new and innovative products are more likely to lead their markets than those companies that simply retrench and rationalize their previous products, manufacturing footprints, and supply chains. The ability of companies to emerge with advantage from this economic crisis will be a function of how the following competitive competencies are managed:
Product portfolio and program management;
Direct materials sourcing and extended enterprise collaboration;
Eco-design/green products and regulatory compliance; and
Integrated new product market launch
Furthermore, current economic issues necessitate tighter data mastering and integration across mission critical systems. Consider these critical components to success, and how PLM supports them.
1. Product portfolio and program management processes need to be managed and configured based on strategic alignment, financials, revenue, and market segmentation analyses.
Following is a product portfolio and program management reduced to its essential elements:
A. Analysis includes defining business and market needs, requirements and technical targets across product, manufacturing, and sourcing functions. Executives assess risk versus opportunity for each initiative through financial analyses.
B. Planning and control takes this analysis capability through a process to define the product/market strategy and the required product and manufacturing platforms and sourcing programs that define product portfolio.
C. Product development and launch execution systems use the parts and supplier master data defined by this strategic portfolio to quote, design, and solve project and launch issues and customer orders. A central data base contains the parts and supplier masters, but also the product and manufacturing portfolio data, as well as all the product and manufacturing simulation and test data used to define and execute the business strategies. Strategic management of the product portfolio is actively maintained by business line and product line executives.
How parts and assemblies for the products get requirements defined—and then get parts sourced, selected or designed and manufactured—determines the overall cost, timing, and quality of any given product launch.
Current economic business cycles require companies maintain a tight integration across their mission critical systems so that investments and projects can be appropriately prioritized and sized. A key enterprise capability for this is to have executive level dashboards that support management of the development pipeline to re-prioritize or cancel projects in early phases, and to maintain ongoing oversight of strategic and mission critical programs. Executives need to be able to assess risk versus opportunity for each product initiative, on an ongoing basis.
2. Direct materials sourcing and extended enterprise collaboration, integrated to the product development system, enhances a manufacturer's leverage when negotiating new and existing contracts with suppliers. Sourcing, commodity and acquisition integration programs can be globally managed to the latest product attributes and designs. Spend can be more effectively aggregated to the preferred suppliers, optimizing volume pricing, reducing both parts proliferation and material and service costs.
By identifying sourced components based on part-reuse and product and manufacturing platform alignment, manufacturers can reduce inventory levels and respond with greater agility to shifts in demand.
3. Eco-design/green products and regulatory compliance requires integration of the design and development systems with the extended enterprise to manage product impact across engineering, supply chains, manufacturing, distribution, after-market service and maintenance, as well as end-of-life processes (disposal, energy conversion and/or recycling).
Suppliers and engineering can be incorporated into the material compliance evaluation process to ensure the component library contains the most current material compositions and compliance certifications for supplied parts.
In addition to regulatory compliance, PLM systems are critical to environmental performance. More than 80 percent of the ecological impact of a product across manufacturing, usage, maintenance and repair, and end-of-life disposal is determined during initial product design.
4. Integrated new product market launch processes require the effective coordination of product data across multiple systems (PLM, ERP/MRP, SCM and CRM systems).
Once a new product development program is approved, sourcing and procurement need a single view of the product data and requirements to start to line up suppliers, while marketing needs their own views of the same data to start creating collateral material. As the supply chain gets ready, getting up-to-date information on materials, bills of material (BOMs), and routings into the ERP system is critical.
Manufacturing systems need to be set up to oversee fabrication, assembly, and product quality.
Service organizations are mobilized with documentation and processes to support the product in the field. Managing the product specifications across as-built and as-maintained aspects of a product's life can be critical in some industries on an after-market service basis, and planning for this upfront will be important to these segments.
Packaging and labeling has a similar set of timely product information requirements.
Guidelines for avoiding damage in shipment, regulatory requirements on product content and labeling, and retailing issues of package appearance get considered and signed off throughout the development and launch process.
Customer-facing systems get prepared to support the launch to promote and take orders. Using data synchronization and other e-commerce techniques, product information is sent to distributors and retailers, information goes up on the Website, and order entry and sales systems are configured to include the product and salable options.
Brian Chambers, is director, business strategy and development for Dassault Systemes Americas.