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Issue Date: February 2005

Understanding product lifecycle management: maximising business value through a phased PLM strategy

February 2005

Product lifecycle management (PLM) is a business strategy that is steadily gaining wide acceptance. Companies that took an early adopter approach to PLM are beginning to show significant reductions in new product introduction lead times, benefit from meaningful cost savings and enjoy more profitable products. These companies have adopted best business practices and implemented enabling software tools to make tangible changes in their business. The results from the early pioneers confirm the business value of the PLM concept in helping companies achieve and profit from product innovation.
PLM is rapidly moving from the pioneer stage to more general acceptance. PLM success stories are coming to light from large, multinational companies and from smaller businesses alike. Achievements are being unveiled from companies with large, sophisticated supply chains and from those with less complex landscapes. What is interesting about emerging PLM successes is how different many of the stories are from one another - even those from companies in the same industry. This is because many companies have adopted an incremental approach to implementing PLM and are targeting their projects at solving tangible problems with short-term paybacks for their particular business. This pragmatic approach to achieving value from PLM initiatives - the PLM programme - is providing solid, incremental returns to companies that have adopted it. Companies that have a successful PLM programme have found that in addition to solving real business challenges, their PLM investment has provided a solid platform on which to base additional product and process improvement initiatives.
This White Paper introduces the concept of The PLM programme and discusses the characteristics of a successful approach to help manufacturers define their PLM strategy and meet their PLM objectives. The paper also provides some compelling business objectives to consider for early PLM projects or proofs of concept to provide input to the strategic planning process. Finally, the paper highlights some successful PLM programmes initiated by manufacturers that have started down the path to incremental, valuable business improvements on the way to achieving the greater strategic value available from PLM.
An incremental approach to strategic value
Some companies - Boeing for example - have committed to major, bold and aggressive PLM projects while others have taken a phased approach to PLM, investing in more focused projects with tangible, high value returns. This incremental approach has been applied not just to PLM initiatives, but to most types of information technology-related projects. The 'pragmatic' approach potentially evolved from a combination of poor economic conditions and increasing frustration with low return on investment (ROI) software investments. Unless they were mandatory for security or regulatory purposes, manufacturers chose to pursue only projects with clear objectives and a reasonable scope. Now that the economic climate is improving, companies are also looking for ways to become more innovative and grow the top line. These same companies are, however, continuing to implement projects using this more rational approach to ensure that they are achieving value from their IT and process improvement investments.
PLM is very well suited to this new approach to IT implementation because it can be implemented incrementally, so that each step pays for the next. These projects, however, should not be viewed simply as standalone projects. The phased PLM projects must be viewed as part of an overall PLM initiative to ensure that these small projects lead to large, strategic results.
A recent review of SmarTeam customers provides some compelling examples of successful PLM programmes. One customer, BorgWarner, manufactures a variety of cooling solutions for the automotive and heavy trucking market. BorgWarner's PLM implementation provides an excellent example of tangible projects that include not only information sharing and managing design revisions, but also design collaboration and enhanced engineering change processes that have cut the cycle time for changes 'incredibly'. Randy Schwan, manager global release and change management for BorgWarner Emissions/Thermal Systems, explained that they developed a detailed list of prioritised goals and a defined scope for their project.
The intent of the structured approach was to ensure that the implementation stayed focused on getting the appropriate things accomplished to achieve an ROI. According to Schwan, BorgWarner's goals were:
1. Allow users to view any drawing, anywhere in the world, even if they could only access the system via a Web browser.
2. Be able to print any of these drawings.
3. Provide workflow for engineering changes via e-mail, associating the engineering change documents with the appropriate drawings.
4. Enforce strict revision control.
5. Eliminate hard copies of drawings and eliminate microfilms to save costs.
6. Enable markup of drawings electronically, allowing attachment to engineering work request and workflow.
BorgWarner developed clear goals that would offer significant improvements to their business. Interestingly, their project was justified simply based on improving the ease of part search and retrieval. "If each engineer spends four hours looking for information that could be made available at their fingertips with PLM, we would pay for the system in 12 months by improving efficiency alone," said Schwan.
The PLM programme
Companies should develop a PLM programme in order to achieve their product lifecycle goals and objectives with maximum return and minimal risk. The PLM programme should be laid out as a series of highly valuable, sequenced projects of reasonable scope, each of which provides ROI within a short period of time. When viewed as a whole, these projects should form a strategic programme that provides the company with highly valuable benefits while at the same time allows them to initiate the programme with incremental, small investments and minimal risk. Individual projects within the PLM programme should be prioritised and sequenced based on the project's ability to achieve results in a short period of time while supporting the later steps in the programme. When defining their PLM programme, companies should prioritise projects that provide the highest return achievable within a relatively short project window, perhaps as short as six months long, in order to prove value and build momentum.
Viewing PLM as a series of valuable projects breaks up the decision-making process - not to mention the investment - into a more manageable size. This approach is similar to using stages and gates in product development, ensuring that projects do not stray too far from intended goals and validating that project goals are being met along the way so no big surprises appear at the end of the programme. Another reason for smaller, incremental projects is that businesses change rapidly. A series of short-term projects allows much more flexibility to respond to customer needs and avoids finishing a project only to find that it does not support the current state of the business. Swagelok is a major developer and manufacturer of fluid system component technology. Jim Stewart, engineering systems manager at Swagelok, describes the continuous improvement efforts and the benefits of a flexible PLM programme. "No process or technology is sacred," said Stewart, "The pace of change is tremendous and our ability to respond to it is fundamental to our ability to compete. We want to not only manage this process but, with SmarTeam's help, become a leader in supporting our customer's needs."
Perhaps one of the overriding reasons to phase PLM implementations is to reduce risk. One of the key risks in any enterprise software implementation is managing the impact of change on the people and the business. Midrex Technologies is an international process engineering and technology company that has implemented a PLM system that gives them 'a competitive advantage in a global market, so we can sustain our leadership position'. Dan Sanford, vice president of operations for Midrex, describes the strategy behind their PLM programme. "We adopted a phased approach to help gradually move the change forward without creating too much resistance," Sanford explained.
Roland Weidmann of Kässbohrer, a leading manufacturer of all-terrain vehicles for ski slope preparation and beach cleaning, stated the approach more emphatically: "Building up a product lifecycle management system can only happen in small stages. Employee acceptance is extremely important because staff have to change their procedures, and they should not be over-taxed." Weidmann went on to explain that their implementation had been a 'great success', with more processes now running on the system and the ability to communicate much more efficiently and effectively with one another.
Appropriate phasing of the PLM programme can help ensure that project goals are met, that PLM investments provide tangible returns, and that the risk of project failure and user resistance is minimised. Of course, there is more then one approach to choosing and phasing incremental projects for a PLM programme. Common phasing strategies include phasing by business improvement opportunity, by geographic location, or by organisational entity.
Potential PLM projects - phasing by business improvement
Phasing the PLM programme by business improvement opportunities relies on finding tangible problems in the business. Good candidate projects to address must be current problem areas in the business that have a good chance of being solved within the project timeframe. PLM can provide a broad range of capabilities to improve business, but requires focus in order to reach full potential. "Do not tackle it all at once," said Dan Sanford of Midrex, "PLM packages are very customisable in structure. You should get the software implemented and then learn as you go."
As you would expect, different companies have different priorities for PLM. Miki Pulley, a comprehensive manufacturer of motion control and power transmission equipment, used SmarTeam to change their requirement specification exchange process. Hirohide Hirayama, of Miki Pulley's technical system group, describes that requirement specification is developed during final discussion with a customer before a contract is put in place, and that this is the first and most important activity throughout the whole design process. "In product development, the most important decision is made in requirement specification, which is located most upper-stream in the business. Therefore, clear definition and a firm concept are indispensable in this process. It has big implications for down-stream processes."
Swagelok, too, uses SmarTeam to meet quality systems requirements necessary to adhere to a wide array of regulatory and third-party approvals, including ISO, PED and METI. They aim to continue leveraging SmarTeam to optimise their product design and quality planning processes by evaluating each process and applying lean, best-practice methodologies.
BorgWarner also reported valuable 'by-products' of its PLM implementation. For example, by pulling up and sending a PDF or a CAD model to a vendor, the purchasing department can quickly recognise a pending revision for a part. "These are tangibles that we did not even compute, that have paid for the system again," says BorgWarner's Randy Schwan.
Gérard Gaire, director of research and development for NSC Schlumberger, commented on his surprise at the benefits from implementing SmarTeam in conjunction with Catia V5. "The results were beyond what we had hoped for. We now want to obtain similar results in our four subsidiaries. To achieve this, we intend to use collaborative processes and manage the life cycle of our products at all levels, from the initial design through to their maintenance."
Launching the PLM programme
The PLM programme approach has provided significant value to these companies. To achieve true strategic value, the PLM projects should be viewed as business change initiatives rather than simply software implementations. PLM software tools should be deployed to support the new way of doing business and help drive the change into the business, recognising that software alone does not solve business problems without changing the way that people work.
"Crucial to the success of SmarTeam was our design engineers' confidence in the system," said Kässbohrer's Weidmann. "Without their acceptance, it would not have been possible to establish a PDM strategy, nor could a PLM strategy have been developed from it. It was important that it should do what it promised. That included its capacity to be stable, have a transparent version management system, with defined responsibilities, a capacity to detect errors and collisions at an early stage, and to speed up the time-to-market."
The experience of these companies is evidence that the PLM programme approach is effective. These companies chose projects based on value and sequenced them to gain synergy between projects. In this way, subsequent projects provide more than just a simple additive ROI, and companies can implement the change in a way that gains the confidence of the engineers and other users.
Finally, when embarking on a PLM programme, these companies found a vendor that offered the right software, business expertise and implementation tools. According to the companies researched, SmarTeam provides companies with comprehensive industry 'best practice' business processes for implementing PLM in such a way as to further optimise work throughout the lifecycle. These best practices are the result of extensive implementation experience in the field, seeing how many different companies across industries work, and compiling streamlined approaches for implementing the solution in the best way for the most gain. Look for this level of experience in your PLM provider.
* Develop a PLM strategy based on your business strategy.

* Develop a programme that prioritises and sequences potential PLM projects.

* Include valuable, tangible projects that have relatively short payback in your programme.

* Sequence the programmes to allow later phases to leverage earlier ones.

* Look for a vendor that understands your business, and can support your business needs, now and throughout the PLM programme.

* Look for a vendor that can provide flexible, modular software and best business practices that can help you achieve the business priorities in your PLM programme.
Swagelok's vice president of engineering and technology, Jim Hanson, summarised the value of PLM nicely. "PLM is a powerful enabling technology for greater design collaboration within the company," notes Hanson. "PLM puts us squarely in the middle of a technology revolution that companies absolutely must utilise to remain competitive in the global market."
The bottom line is that these companies have had early success in implementing PLM strategies. They decided to start small, but planned for a big ROI. The companies researched for this paper indicate that SmarTeam provided excellent support for their phased PLM programmes. By mapping out their PLM strategies and breaking them down into multiple projects they have been able to quickly internalise new, more effective practices that provide a return to the business. These returns can then be invested in further projects that will provide more incremental value and further the company to realising its overall PLM goals and associated PLM benefits.
About the author
Jim Brown has over 15 years of experience in management consulting and application software focused on the manufacturing industries. Jim is a recognised expert in software solutions for manufacturers and has broad experience in applying enterprise applications such as product lifecycle management, supply chain management, ERP and customer relationship management to improve business performance. Jim began his professional experience at General Electric before joining Andersen Consulting (Accenture), and subsequently served as an executive for software companies specialising in PLM and process manufacturing solutions.
Jim is the president of Tech-Clarity, a research and consulting firm dedicated to making the value of technology clear to business, where he is a frequent author and speaker on applying software technology to achieve tangible business benefits. Jim also serves as the PLM Analyst for Technology Evaluation Centers and The PLM Evaluation Center.
This article has been published with permission from SmarTeam.

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