PLM: The Means of Production
Transforming Banks for a Digital Future: The Winners, The Losers, and the Strategies to Beat the Odds
Product lifecycle management means different things to different people.
In early 2003, Loewen, a Canadian specialty wood window manufacturer based in Steinbach, Manitoba, committed to an initiative to upgrade from a two- to a three-dimensional CAD system. The goal was to speed up design and production of its standard productswhich, when combined with special features and designs, totaled more than 4.3 trillion potential options, not to mention the specialty orders that accounted for up to 20 percent of Loewen's business. But company officials soon realized that speeding up the process hinged upon finding a better way to manage its vast amounts of product data. "Part of our growth strategy involves constantly introducing new products to the market," says Stephen Segal, CIO at Loewen, "and one of the issues we face is not just how we design the products, but how to manage the information associated with them."
What if there were a way to determine automatically the feasibility of a new product's design, a process that could take weeks to determine? What if multiple designers could work on the same project simultaneously and be able to share design information with potential customers throughout the process? If all this were possible, Loewen executives estimated they could knock off nearly 30 percent in production time.
Enter product lifecycle management, a concept that has been touted lately as the next cure-all for your company-wide ills. PLM means many different things to many different people, but at its most basic level, it is "a process for guiding products from concept through retirement to deliver the greatest business value to an enterprise and its trading partners," says Marc Halpern, an analyst at Gartner Inc. That can include research, development and design as well as product launches, the servicing of products once they've reached the market, and their eventual retirement. While companies from Nike Inc. to Harley-Davidson Inc. to Ford Motor Co. to Boeing Co. have all made use of PLM in one form or another, the concept is only beginning to be hawked to midsize companies. The goal: to create a company-wide work-flow and analytic tool to help track and wring the most value from the products you make and sell.
Although it's meant to manage product data, not transactional processes, Halpern says PLM as a concept is not much different from ERP. "Ten years ago, there was no ERP. There was general ledger software, there was inventory management software, and so on. The challenge was to share the data in a process-centric way. The same thing is happening with PLM today. You already have engineering applications, product data-management applications and big demand for project management functionality."
In fact, says AMR Research Inc. analyst Kevin O'Marah, you've probably been doing PLM for a while now, and just didn't know it. "PLM has been around for quite a while, but the tools within it have been used departmentally. Actually, a surprisingly large portion of companies' existing IT spending is their PLM budgets."
At the core of any PLM initiative is a database that organizes any and every piece of information that goes into making a particular product, such as formula cards, packaging information, shipping specifications and patent data. From there, companies can slice and dice the data, creating work flows to deliver information to serve specific functions. Designers and engineers can use the data to quickly determine which parts are needed for a new design. Purchasing can use it to consolidate materials orders, smoothing the supply chain. Retailers can use it to determine things like shelf height and how the product should be stored in their warehouses. In theory, PLM can touch nearly every corner of your businessincluding your customer.
Loewen's PLM plan has several layers: automate the design processes by embedding certain constraints into the system so engineers will know automatically which parts work together; create a digital work flow that will allow designers and clients to collaborate during the design process; consolidate materials orders and optimize the supply chain; and give the sales and marketing departments better visual tools to help them sell more windows. The goal: Increase productivity by 30 percent and save as much as $150,000 per year in the process.
Sounds great, right? At first glance, yes, but beware. Like any enterprise solution, PLM isn't as easy as it looks. And despite its many promises, product lifecycle management is probably going to cause you more than a few headaches.
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