PLM: a strategic business approach?

By Peter Bilello, CIMdata

Today’s product lifecycle management (PLM) solutions have steadily evolved from engineering-centric solutions focused on engineering data management to extended enterprise intellectual asset management solutions that support the collaborative creation, management, dissemination and use of product definition information. The key to these solutions is their ability to unlock an organisation’s knowledge by capturing and sharing it with all those who require it throughout the entire value chain.

PLM has become a powerful business and technology approach that has been shown to deliver substantial benefits. It is a critical component of an overall enterprise information technology architecture that often includes ERP, CRM and other process-enabling technologies and, through the proper implementation of a PLM solution within an enterprise framework, an enterprise can significantly impact its ability innovate its products – as well as its manufacturing and product development related business processes.

In today’s challenging global market, enterprises must innovate to increase their market size, to bring significant value to their shareholders, customers and employees and, in many cases, to survive. It is important that this innovation occur in all dimensions – product, process and organisation – to improve competitiveness and overall business performance. Companies who demonstrate continuous innovation that consistently results in right-to-market products and services can clearly differentiate themselves.

Innovation can occur spontaneously in almost any situation, but the ability to continuously innovate requires an environment that nurtures collaboration and enables the intellectual assets of the enterprise to be leveraged to their maximum potential. To attain this ‘environment for innovation’, enterprises must be able to capture, manage and leverage their intellectual assets. PLM is the business strategy that best allows organisations to establish such an environment. This strategic approach helps enterprises achieve their business goals of reducing costs, improving quality and shortening time-to-market, while innovating their products, services and business operations.

CIMdata defines PLM as a strategic business approach that applies a consistent set of business solutions in support of the collaborative creation, management, dissemination and use of product definition information across the extended enterprise from concept to end-of-life – integrating people, processes, business systems and information. The fundamental concepts of PLM are:

• Accurate capture, at the point and time of creation, of all product definition information related to the product and/or service, including the processes required for manufacturing, maintenance and disposal of the product.
• Universal, secure, managed access and use of product definition information.
• Maintenance of the integrity of the product definition and related information throughout the life of the product, no matter what type of product it is, from concept to end-of-life.
• Management and maintenance of business processes used to create, manage, disseminate, share and use product definition information.

The common thread each of these concepts share is ensuring that product-related intellectual assets of a company and its extended enterprise are effectively created, captured, managed and leveraged. Intellectual assets are comprised of all the components of the enterprise’s product and process definition, including all mechanical, electronic, software and documentation components, as well as all business and manufacturing process definitions within the scope of the lifecycle.

The power of PLM is managing these digital assets, whether within an organisation or throughout its extended enterprise, including its partners, suppliers and customers. PLM provides an enterprise with a digital highway for intellectual assets that ensures the right product definition information is available at the right time, to the right people, in the right context. PLM provides the information backbone upon which a company creates and delivers innovative products and services. The bottom line? PLM is a product-focused approach to developing and managing superior products faster and at a lower cost through their entire lifecycle.

With the needed intellectual assets at their fingertips, PLM enables collaborative product development work environments that bring together expertise from multiple organisations. These are environments where people can develop new, innovative products and services, and design and establish innovative business, manufacturing and support processes.

Intellectual assets, when leveraged proactively, are a business’ competitive weapons in its ongoing pursuit to innovate, and PLM is the catalyst for leveraging those assets to achieve a high-level of customer satisfaction and corporate value. Collaboratively leveraging intellectual assets enables companies to create more innovative products and services and to operate in a more effective manner. Innovation of process, when coupled with innovative products and services, delivers top-line performance, bottom-line profits and increased customer satisfaction.

PLM addresses business challenges

Businesses today face three ongoing challenges: improving customer intimacy, improving operational excellence and providing product leadership. Customer intimacy requires understanding and responding quickly to current and potential customers, their needs, establishing effective relationships with them and providing consistent, long-term customer value. Achieving operational excellence requires enterprises to focus on operating efficiently, effectively and flexibly, working with their partners to reduce the cost and time necessary to deliver high-quality products and services that meet their customer’s requirements in a timely manner. Being a product leader means providing leading-edge products and solutions tailored to customer needs. All of these challenges require a comprehensive ‘right-to-market’ strategy (i.e. a strategy that defines how they will get the right products to the right market, at the right time, at the right price, for the right cost).

To meet these challenges, businesses must become more innovative. However, being an innovative business doesn’t simply mean creating innovative products; it also means improving the processes a company uses to design, manufacture, market, deliver and service its products. Today, innovation is recognised as a critical issue if a business is going to maintain its competitiveness in the marketplace. However, innovation must be achieved while reducing overall product related costs across development, production and service, and maintaining product leadership.

Achieving product leadership focuses on revenue generation from a steady stream of innovative, new products. Today, enterprises must bring innovative products to market more effectively and quicker to maximise customer interest and sales. The pressures to reduce time, improve product quality, and lower costs certainly haven’t gone away, they are being reaffirmed and folded into programs that focus on delivering the ‘right’ product. To continue to expand, product leadership companies must continue to enter new markets with more innovative products. This requires leveraging and reusing the product-related intellectual capital created by business partners working together across the extended enterprise value chain.

As a result of PLM’s expanding scope and impact on the extended enterprise, today’s leading PLM solutions are viewed as enterprise solutions, strategic to improved business performance. Strategic business investment decisions, regardless of size, are being reviewed and approved at the C-level. Other senior executives, such as senior vice presidents of major business units or functional groups (e.g. engineering and manufacturing) may also be involved. For senior managers, their investments must be focused on solving specific business problems, leveraging other opportunities and taking advantage of previous investments within their organisations.

The role of PLM

Precisely what product-related lifecycles are companies seeking to manage with today’s PLM solutions? CIMdata defines the overall product lifecycle as comprised of three major, tightly intertwined lifecycles. Each lifecycle encompasses the processes, information and people involved in delivering the related business functions.

In the PLM context, the primary of these is the product definition lifecycle – the creation, capture, management and use of intellectual assets. In its most basic form, this lifecycle is comprised of an organisation’s product development process where the gathering, creation, integration and documentation of information are performed. As with the overall product lifecycle, this lifecycle begins at the earliest point of customer requirements and product concept, and extends until the product is obsolete and field support has ceased. It includes the definition of the complete product, from mechanical and electronic components, to software and documentation.

Product definition is not just the upfront engineering design. It also includes the entire set of information that defines how the product is manufactured, operated or used, serviced, and then retired and dismantled when it becomes obsolete. This product definition is continually updated throughout the entire lifecycle. Product definition is an intellectual property of a business; an intellectual asset that must be captured, maintained, and leveraged. This information resides not just within an individual business entity, but also throughout an extended enterprise, including suppliers, business partners, and customers. In the early 1980s, industrial companies began to look at information, their intellectual capital, as an asset – and therefore, value it. PLM is just a continuation of that theme because enterprises now recognise that the product definition itself is a tremendous intellectual asset to their business.

The second lifecycle, product production, focuses on the deliverable product i.e. what a company delivers to its customers). This lifecycle includes all activities associated with production and distribution of the product. ERP systems are the primary enterprise solution that address product production, focusing on how to produce, manufacture, handle inventory and ship.

The third major process is the operations support lifecycle. This lifecycle focuses on managing the enterprise’s core resources (i.e. its people, finances and other resources) required to support the enterprise – the enterprise’s physical assets.

For an enterprise to succeed, there must be close coordination and communication among all three lifecycles. A close and collaborative effort is required to create the seamless product lifecycle needed to bring innovative products to market effectively. The enterprise faces several challenges:

• Developing an improved focus on product development and definition, learning to best capitalise on its intellectual assets
• Enabling integration among its people and organisations and enabling collaboration across the three lifecycles
• Effectively sharing product definition information throughout the extended enterprise throughout the entire life of the product
• Seamlessly integrating with its suppliers to make them a logical extension of the enterprise for maximum collaboration

Management of the product definition lifecycle and its close integration with other major lifecycles is not a new concept. In fact, it has been around for many years. Over the last several years, industry’s ability to achieve this concept has improved dramatically with the availability of a wide range of new PLM technologies and approaches that facilitate collaborative work efforts across extended enterprises.

Defining PLM

It is important to note that PLM is not a definition of a piece, or pieces, of technology. It is a definition of a business approach to solving the problem of managing the complete set of product definition information – creating that information, capturing it, managing it, disseminating it and using it throughout the lifecycle. PLM is not just a technology, but also an approach in which processes are as important, or more, than data.

PLM is as much concerned with ‘how a business works’ as with ‘what is being created’. While information includes all media (electronic and hardcopy), PLM is primarily about managing the digital representation of that information. In the 1990s, this lifecycle view expanded from primarily managing the mechanical elements of a product’s definition to include the electronics and software elements that have become a greater portion of many products. That expansion continued to push the perception of what ‘design’ encompassed. Today, PLM includes management of all product-related information from requirements, through design, manufacturing, deployment and maintenance. This information ranges from marketing requirements, product specifications and test instructions and data, to the as-maintained configuration data from the field. PLM solutions link information from many different authoring tools and other systems to the evolving product configuration.

In addition to the aforementioned elements, PLM also encompasses significant areas of process. It’s not just program and project management processes. It’s also the processes required to manufacture the product, operate it in the field and dispose or decommission it at the end of its useful life. PLM solutions help define, execute, measure and manage key product-related business processes. Manufacturing and operational process plans are also now viewed as an inherent part of PLM. Processes, and the workflow engines that control them, enable digital feedback to both users and other business systems throughout multiple lifecycle stages.

Please note that in CIMdata’s PLM definition, product data authoring and analysis tools are included as part of the PLM environment. This is a different approach than in other previous market descriptions, such as PDM. Creation of product definition information and related intellectual capital includes authoring and analysis tools for mechanical design (e.g. CAD/CAM and CAE tools), electronics design (e.g. ECAD tools) and software design (e.g. CASE tools). In addition, technical publication applications used to create the documentation used to define and support the product throughout its lifecycle are within the scope of PLM.

The PLM solution providers use core functions to build functional applications, such as workflow and configuration management. Business solutions are applications that incorporate best practices, methods and processes pertinent to an enterprise’s market and specific industrial sector that can be fine-tuned to meet unique enterprise requirements. Given this broad definition, it is important to reiterate which elements are included within PLM solutions. Using the definition put forth herein, PLM includes, but is not limited to:

• Creation and management of product definition information – both its content and context, throughout the entire product lifecycle (e.g. from concept to obsolescence).
• Program, project and process management (i.e. the business processes that operate within the scope of the product definition lifecycle, such as product development, engineering analysis, validation and simulation, and others).
• Digital manufacturing (i.e. definition of the manufacturing process).

The definition and use of product information is still evolving. For example, the in-service or service after sales operations, maintenance, and service activities are now included within the scope of PLM. In some industries, the service component is the primary driver for PLM benefits.

Supply chain management, which is normally focused on ordering and procurement logistics, begins at the front end of the product lifecycle because, in many industries, the same partners that produce parts or components for a product are being delegated responsibility to participate in the design of those parts and components. Design change management or management of the intellectual supply chain, commonly called the design chain, is becoming as, or more important than the logistics and logistics supply chain. Companies of all shapes and sizes, and their design chain partners must be able to quickly and effectively share and leverage each other’s resources, knowledge, products and, where appropriate, intellectual capital. PLM encompasses and enables management of the intellectual assets created and shared among design chain partners. Integration of design processes fosters innovation for all organisations throughout the chain.

A major evolution in PLM over the last two years, is a recognition that defining the manufacturing processes required to produce a product are just as critical as defining the mechanical, electronic, software, and documentation components. PTC, MatrixOne, UGS, IBM/Dassault Systèmes, Aras Corporation and other leading solution providers are incorporating manufacturing processes and digital manufacturing into their PLM offerings today.

PLM users defined

Just about everyone in an organisation can use and benefit from PLM. This includes chief executive officers, technical directors, chief engineers, engineering managers, engineers of every disciplines, heads of information technology or services, design managers, CAD/CAM/CAE managers, production engineers, project managers, operations and maintenance managers, estimators and purchasing officers, marketing and sales managers, shop floor personnel, and many others. Along with these end users, administrators install and tailor the PLM solution to meet the enterprise’s needs. As a result, these solutions must provide ability to readily tailor data and interfaces for these disparate roles.

An organisation’s data creators include individuals responsible for the daily creation of product definition information, such as 3D CAD models, bill of materials, drawings, test plans, etc. These individuals are usually considered power users, having full read and edit capabilities within the PLM solution. Data reviewers include individuals responsible for project planning and task assignment, tracking and reporting task progress, budget management, and review and approval of changes and tasks. These users typically have read and limited edit capabilities within restricted control of the PLM solution. Data consumers make up the majority of the users within any organisation that implements a PLM solution. These users typically have only read access to the solution and its managed product definition information.

Depending on the needs of the user and the maturity of the PLM solution, the solution may present itself in a number of different ways. Some users may perceive the PLM solution as a controlling layer through which they gain access to data, applications, and processes. Others may indirectly access the PLM solution’s features and functions from menu and action lists within the applications they normally use, such as within their CAD system. Other users may have no knowledge that they are working within a PLM solution as they simply access and operate with data through a standard Web browser, which is being fed product definition information controlled by an underlying PLM solution often seamlessly integrated with other enterprise systems and their associated data.

Peter A. Bilello is Director of Consulting Services at CIMdata, Inc., a leading consultancy dedicated to maximising an enterprise’s ability to design and deliver innovative products and services through the application of PLM. To learn more about CIMdata’s services, visit: www.CIMdata.com