PLMIG

In PLM terms, there are two sizes of company.  At the low end of the scale are those (normally known as SMBs) whose directors or VPs who have a hands-on, interactive role, and know all of the operational details.  At the high end are the global or multinational corporations whose board members must direct the company through reports and financial results

This means that there must be two different approaches to informing CXOs about PLM. Until now, effort has been aimed at creating a set of persuasive material, intended to educate senior directors about all of the detailed issues and benefits of PLM, and bring about a kind of "religious conversion" so that they will champion PLM in the future.

This suits SMB-type companies, but if you are on the board of a multinational, reporting to your fellow directors on how your factories in the US have performed in comparison to those in Europe, you have no time or context for the details of PLM.  An explanation of PLM therefore has to be at a completely different level.

The PLMIG was asked by CXO Magazine to write the lead article in the feature on PLM published in the December 2006 issue of their US edition.

The brief was to explain PLM in a way that directors of large companies could appreciate, so that they would want to look into it further.  The article is reproduced below.  It is intended to be skimmed through, so that attention falls on whichever part catches the eye.  Its length comes from the need to flow through the whole subject.

PLM stands for Product Lifecycle Management. That is not what you need to know.

The term ‘PLM’ has outgrown its components in the same way that ‘laser’ no longer means ‘light amplification by stimulated emission of radiation’.  PLM is now a word, for a business improvement methodology that causes you to look at the fundamentals of your enterprise and can show you some powerful ways to strengthen its strategy and operation.  It is being implemented at some of the world’s largest companies, and the reason they are only part of the way through is that there is so much improvement potential to be exploited.

The first thing you need to know is "what PLM is", and this is also the first stumbling block.  PLM can be difficult to define.  People search for a single definition but, like relativity perhaps, PLM looks and behaves differently depending on where you view it from.  People also try to define PLM to three decimal places but this is a waste of time. No-one ever starts a PLM project because of a dictionary definition.  They do it because the activity of doing PLM continually uncovers areas where projects should have been started yesterday.

The good news is that, though difficult to define, PLM is relatively easy to understand. The traditional way of viewing an "enterprise" is as a legally-defined company with members of staff, customers, suppliers, and geographical locations.  Throw this away. Think instead of the products (or services) you produce.  Then think again, because nowadays no single company produces a product or service in its entirety.  Even an art gallery will have display material, and ropes to guide the customers, that it has bought in from trade suppliers.

So now think of the products or services you are involved in producing, and you are at the right starting point.  See the products as the primary “living beings”, which are conceived by market demand or invention, defined and produced by skilled people in a chain of collaborating companies, used by satisfied customers, complained about (and hence modified) if things go wrong, and then retired or recycled as time passes.  These product entities pass through the companies, including yours, in the same way that people might drive through the countries of Europe.

PLM is therefore “seeing your enterprise as your products see it”, and adapting accordingly.  It can be thought of as “Business Process Re-engineering from the product perspective”.  It is, to quote John Stark: “the business activity of managing a company's products all the way across their lifecycles, from the very first idea for a product all the way through until it is retired and disposed of, in the most effective way.”  And, lest we forget, it is the basis of the most effective computer-based information management platform that you can implement.

To understand PLM, you also need to understand what your “products” are - particularly if you do not produce anything physical.  It is easy to see how PLM is useful to manufacturing industries, but it applies just as well to service industries, and in fact to any organisation in which people work together to produce deliverables for customers.  This range of application is one reason why PLM seems different to different people, but the fundamental principles and techniques are the same for everyone.

In PLM terms, therefore, “product” = “product or service or deliverable”.  For example, the products of an oil company may be various grades of fuels and lubricants, but within that enterprise chain there are oil rigs (which must be designed, built, transported maintained and decommissioned) and service stations whose products are “refuelled vehicles” for their customers.  How will the lifecycle of hybrid and hydrogen-powered vehicle technology affect the products that the service stations need to offer?

Another example is the financial services industry, which is currently full of products allowing you to transfer at 0% interest for 9 months.  These products have to be conceived, designed, costed, produced, and eventually phased out.  This requires decision-making and information management from the top level (when should we introduce and retire these products for maximum success in the marketplace?) to the operational (do our staff know how to explain the products to our customers, and can our computer systems handle the timing of interest rate changes?).

The main point about PLM is that you should think first, and start working on computer systems later.  PLM enables you to look at your business from a different but very real perspective, and to use that view to work smarter in ways that you would not otherwise see.  What happens next depends on your type of business, and how thorough you are in applying PLM to it.  At the very least it makes you aware of strengths, weaknesses, opportunities and threats at the strategic level.  For most organisations, it goes on to become a platform for cost reduction, better product design, faster time to market, and greater innovation.

Paradoxically, the strategic element of PLM can be more powerful for smaller businesses.  An SME makes industrial cleaning equipment, and 30% of its product range is based on a type of cylinder cleaner that is walked around factories after the working shifts finish.  These products are durable, and there are 15-year old examples still in use in the marketplace, which their owners are satisfied with.  The SME accepts this and makes only incremental changes to the current design.  PLM asks: “what if some company goes for innovative design, and brings out a product that ends the old cleaner’s lifecycle?”.  The answer is that the game-changing new product removes 30% of the SME’s business.  The consequence is that the SME should start planning now to create that product itself.

Taking PLM thought down to the operational level leads you to ask: “How do we communicate across the product lifecycle?” and “How do our information systems support this?”.  This is where PLM becomes contentious (because of the communication) and complex (because of the information platform).

Seamless communication across the enterprise includes information sent to and received from customers and suppliers.  Have you sent them the latest, correct specifications, or have you updated your in-house version in the meantime?  Are your designers, rushing to meet tight deadlines, making changes that are recorded only by email notes?  If you don’t keep track of these and update your data, you can start to purchase hundreds of thousands of a component for production, and they can all be incorrect.  Are you sending out too much detail, so that a customer can use your information to get other suppliers up to speed to make competitive bids?

The most contentious part of communication is actually internal, within your own company, because it can expose weaknesses that are hidden under the surface.  Do your manufacturing (product delivery) people think they are properly informed by product development?  Are production problems due to causes that should have been fixed at the design stage?  Are your purchasing staff involved in the product as skilled people, or are they simply given a paper specification and told to buy against it?  PLM has a habit of exposing issues that really should have been covered by the Quality department. An electronics company had a high rate of failures on one particular product due to its sensing systems.  They retrieved all of the field failure data and had students type it into a database.  This “saved the time” of quality managers, but meant that no-one actually understood the data.  When the monthly reports were published, the engineer who designed the sensing system was not on the circulation list.  Nett feedback to product design - nil.

So what does it mean to apply PLM?  This, again, depends on the type and size of your business, but the essence is always the same.  Look at your enterprise as your products see it, work in a way that supports those products (or services), and apply computer tools to form an application base that gives everyone the correct information in the form that they need it.

Large companies tend to set up a dedicated PLM team, and implement purpose-built computer packages.  The CXOs of a multinational do not need to be PLM experts, but they do need to understand the issues, to be able to authorise the IT spend, and to be able to steer PLM progress.  In manufacturing industries the IT spend will be on dedicated “PLM systems”: elsewhere it may be on content management or database systems.  All of this requires a solid reporting structure and commitment to long-term improvement.

In SMEs the directors can have a more hands-on role, and one of them can take responsibility for PLM.  It does not matter which VP it is, so long as one of them does. The most common single mistake in companies of all sizes is to assign PLM to a mid-level manager and then ask about it once in a while.  This is just as effective as having your Quality function report to someone halfway up your organisation.  Given that there is director-level support to deal with the management issues, the “PLM computer systems” will be a pragmatic adjustment to what you already have, to get maximum improvement and control for minimum extra cost.

With all new initiatives there are benefits and risks, and the benefits of PLM are.... difficult to define.  This is not because they don’t exist.  Companies around the world are implementing PLM and they are not doing so as an act of faith.  They do it because they can see results.  The difficulties are that that there is no common, comparative base of results data; and most companies do not have metrics in the first place.

Case studies exist which quote examples of benefits that have been achieved through PLM.  They tend to be written by vendors, because the companies themselves do not have the time; and they focus on specific details (such as a 25% reduction in product development time) without giving any context as a basis for comparison.  A 25% reduction in the development time of a new supertanker is very much larger, and subject to very different constraints, than a 25% reduction for a new mobile telephone.

Before you can measure improvement, you must already have metrics in place to form a baseline.  Most companies are too busy operating to do this properly.  Furthermore, performance improvements tend to be “calculated” before a project starts, as part of its justification.  Once the project has finished, there is little incentive to measure if its planned improvements were gained.  There is always the next project to be justified, and the outturns might not look as good as the justification anyway.  You may find it instructive to think for a moment about the metrics that your company has in place.

This issue is so important to the world of PLM that the PLMIG is leading an initiative to develop a global PLM Benefits Reference Model.  This will be a international project in which user companies collaborate to build an agreed set of metrics, data and tools, and is currently in its launch phase.  In the meantime, PLM benefits are calculated by applied business good sense.

There are risks to PLM, and you should be aware of them.  Most relate to the effects of the new levels of communication.  PLM acts as a kind of penetrating oil, exposing weaknesses and uncovering issues that may have been dormant for years.  For example, most companies invest time to define and document their strategic aims. These are devised and published by a working group, and are dutifully read once by everyone else in what is an open loop.  Your PLM team will actually follow these as if they are gospel, and unearth any inconsistencies and omissions that the strategy team have not thought through.

PLM requires the involvement of everyone who supports the product, and this includes staff at remote sites who have not been consulted about anything for a long time. You may find either that “Head Office never talks to us,” or “We have our own way of doing things here.”

These are good risks if you have the right kind of company - a company in which people work together on continuous improvement, and are prepared to solve problems so they can work better.

The final thing you really need to know about PLM is: what your PLM people are doing - now, next year, for the next three years. If they are doing nothing, your business is falling behind; and if they are working effectively, they are shaking up your company.  As someone might have said: “Keep your friends close, but your PLM team even closer.”