Validating the Possible

Transcription

1 The ROI of PLM Validating the Possible April 2011 John MacKrell, Vice President com Tel: Global Leaders in PLM Consulting Copyright 2011 by CIMdata, Inc. 1 Copyright 2011 by CIMdata, Inc.

2 CIMdata s Mission Strategic consulting for competitive advantage in global markets CIMdata is the leading independent global strategic management consulting and market research authority focused exclusively l on PLM. We are dedicated to maximizing our clients ability to design and deliver innovative products and services through the application of PLM. Copyright 2011 by CIMdata, Inc. 2

3 ROI & Benefits are Driven by 3 Factors Recursive relationship among people, technologies, and processes Existing business processes may be enhanced using PLM Business Process Reengine ering Technologies People Processes Informa ation Techn nology Capabilities New processes enhance how PLM is used For maximum benefit, can t optimize any one factor! Copyright 2011 by CIMdata, Inc. 3

4 ROI Balance: Costs vs. Benefits A real and quantifiable analysis is required Costs are real Benefits must be real too So benefits should, if possible, be estimated in the same method of measurement Money Costs Benefits Copyright 2011 by CIMdata, Inc. 4

5 ROI Highlights Understanding the impact of PLM Determine and address business opportunities PLMbenefitsreceived by any two companies will differ understand yours The appraisal method causes the team to better understand the business Benefits & ROI help management: Make educated investment decisions Reduce the risk of wrong decisions Avoid getting the wrong solution People improve in areas where they are measured Copyright 2011 by CIMdata, Inc. 5

6 PLM The Definition PLM integrating people, processes, business systems, and information Strategic business approach NOT just technologies Consistent set of business solutions Collaborative creation, use, management & dissemination All product/plant definition information the virtual product MDA, AEC, EDA, CASE, analysis, documentation, All virtual product processes Processes that plan, design, produce, support, Full Product Lifecycle Supports the extended enterprise Spans full product/plant lifecycle, from concept to end of life Copyright 2011 by CIMdata, Inc. 6

7 PLM Spans the Product Lifecycle PLM touches all phases of a product s life and the entire value chain Requirements Portfolio Management Conceptual Product Planning Design Engineering Manufacturing Engineering Simulation & Validation Disposal & Recycling Maintenance & Repair In service Operation Sales & Distribution Test & Quality Build and Produce PLM Solutions Information Management across Media, Process, Time, Geography, & Enterprise Copyright 2011 by CIMdata, Inc. 7

8 PLM Costs The obvious side of the ROI equation Costs Benefits Copyright 2011 by CIMdata, Inc. 8

9 Cost Model for PLM Solutions Typical cost elements PLM software & maintenance Hardware (additional needed for PLM) & maintenance What gets charged to PLM? PLM appraisal, selection, and implementation planning Solution implementation Training Business and system administration Copyright 2011 by CIMdata, Inc. 9

10 Software Costs Various cost aspects exist Client licenses Subscription licensing may be possible Or none at all with Open Source Server licenses PLM software modules, e.g., document management, parts management, product structure, engineering change management, etc. Software maintenance or subscription Annual fee, usually a % of value of installed SW Database management software For meta data Other: Application integration View & markup, collaboration, etc. Copyright 2011 by CIMdata, Inc. 10

11 Selection & Implementation Costs These costs are usually much more than the software itself Internal costs for system selection, appraisal & justification, implementation planning Internal cost of subject matter experts Cost of lost user productivity (time away from job) External consultancy Training (internal and external) Data and process modeling Integration with applications Tailoring and/or customization Data capture & cleaning Business and system administration Copyright 2011 by CIMdata, Inc. 11

12 Cost Factors Main cost drivers for the implementation of PLM Number of users & sites Implementation phasing By solution, group or project Numberof PLMsolutions to bedeployed PDM, visualization, DMU, collaboration, CAD, Dig. Mfg Quantity of legacy data to be cleaned & moved Number of other systems to be integrated (CAD, ERP, business planning, etc.) Level of tailoring needed Training Copyright 2011 by CIMdata, Inc. 12

13 PLM Benefits Metrics quantify the benefits in the ROI Costs Benefits Copyright 2011 by CIMdata, Inc. 13

14 Metrics Help You Understand Some of the reasons why metrics are important When, where, and how people are using PLM The effect of PLM on the business & its processes How well the business objectives for a project have been satisfied If sponsors are receiving a return on investments Areas that t need improvement Requirements for future implementations of technologies & processes The ongoing success of your business solutions Copyright 2011 by CIMdata, Inc. 14

15 Nature of Metrics Metrics should meet a number of criteria They should measure direct cost, time, count savings Theyshould bemeasured both before and after theproject is implemented (to set baseline) Theyshould bereported automatically (vs. manually) Facilitate the process Assure timely reporting They should be evaluated to ensure they don't create an unwanted behavior Can they be manipulated to show inappropriate results or hide problems Do they violate how people are motivated Copyright 2011 by CIMdata, Inc. 15

16 Guiding Your PLM Program Indicators of program progress provide direction PLM project metrics track the PLM program s progress PLM business metrics help you understand how well the PLM program is supporting the enterprise s business objectives, e.g., Cost Quality Time to market market Both indicate how to adjust the PLM program s scope & timing to maximize your return on investment Copyright 2011 by CIMdata, Inc. 16

17 Example Benefits Example ranges of benefits based on actual experiences Time to manufacturing 10% to 50% reduction Engineering gchange process 10% to 70% reduction Design review process 50% to 80% reduction Increased productivity 10% to 20% increase Product development costs 25% to 40% reduction New part numbers 5% to 15% reduction Time to find information 75% to 90% reduction Design errors 10% to 25% reduction Time to design 15% to 70% reduction Travel cost for design 20% to 35% reduction Copyright 2011 by CIMdata, Inc. 17

18 Benefits for Business Performance Win against the competition Enables innovation, predictability, company flexibility, and better management Respond more swiftly to new challenges, new markets, etc. Good management depends on rapid access to full and up to date information Companies first to harness PLM will raise barriers of entry for their competitors Enable communications with partner companies Support global manufacture, assembly, or service Support global product execution Companies who continue to ignore PLM will learn all about it from their biggest competitors Copyright 2011 by CIMdata, Inc. 18

19 Benefits for Business Performance Quality Initiatives PLM enables Quality Assurance Uphold a reputation for excellence and reliability through product lifecycle Quality impacts legal, contractual, liability, cost savings, competitive, human resource, and environmental issues Supporttotal total quality management initiatives & otherinitiatives ISO 9000 Objectives: To supply quality products that don t come back, to customers who do. David Hoyle ISO 9000 Handbook Support TQM: Total Quality Management Copyright 2011 by CIMdata, Inc. 19

20 Benefits for Business Performance Regulatory issues PLM supports industry regulations and requirements Industry requirements, e.g., QS 9000, FDA, RoHS, WEEE, REACH regulations Environmental, health, and safety considerations Provides access any time, anywhere to valid information and proves the capability to satisfy regulators PLM maintains a traceable system of record Copyright 2011 by CIMdata, Inc. 20

21 Benefits for the Organization Facilitate effectiveness of the organization Improve corporate communications Integrate product development across divisions of a company Break down geographical barriers Provide concurrent access to all enterprise resources Access to all product data (e.g., the technical library) fromevery desk Support organizational change Corporate reorganizations Acquisitions Implementing concurrent engineering & other initiatives Business process re engineering Automation and enforcement of new business processes Copyright 2011 by CIMdata, Inc. 21

22 PLM Building Knowledge Creating & managing your intellectual assets to enable innovation Traditionally, the knowledge of the organization is the sum of that which is held by its people Intellectual Assets (Incorporate Principles) Knowledge (Patterns) Information (Relationships) Data (Items) (te Adapted from Knowledge Management by Gene Bellinger Copyright 2011 by CIMdata, Inc. 22

23 Data Reuse Creates Value Your intellectual assets need to be leveraged Allow product developers to easily re use parts, designs, & processes Up to 80% of the work done in an engineering department is identical or very similar to work done previously From Research by Arthur D Little The more your data is used and reused the more value it produces for your enterprise Re use proven designs with confidence Avoid prototyping and testing Avoid re using failures and repeating the same old mistakes Copyright 2011 by CIMdata, Inc. 23

24 Benefits for Users PLM is attractive to users PLM is a consistent data source: one place to look Provides shared access to data Links data Inter data relationships provide a morecomplete view ofinformation Powerful search facilities by attributes, browsing, full text retrieval Visibility to all product information through a common source Copyright 2011 by CIMdata, Inc. 24

25 Benefits for Users Empowering the organization with the right information Empowers workers Provides easy access to knowledge & expertise Reduces burden of administrative tasks Automates tracking Records who, what, where, when, etc. Automatically links related information (e.g., viewable data to geometric model, models to specifications) Transfers BOMs to ERP, avoid re keying Automatic versioning and revision tracking Encourages use of a common terminology Improves personal productivity Copyright 2011 by CIMdata, Inc. 25

26 Benefits for the Product or Service Improve customer s perception of products & services More quickly respond to customer queries Navigate through data Search and find Discover related information Facilitate rapid product improvements early in product development cycle When the big decisions are needed When committed costs are high and incurred costs are low 100% 50% Costs Defined Costs 0% Engineering Manufacturing After-Sales Time Copyright 2011 by CIMdata, Inc. 26

27 Benefits for the Product or Service Facility production and maintenance Facilitate longer production runs Cut time to production, time to commissioned Benefit from profit margin on additional production Gain value from larger market share for the product Cut plant down time with PLM and project management If the product is a plant or facility, cut non productive time Opportunity to improve planned maintenance Facilitate hand off of product data A petrochemical plant owner operatorestimatesoperator estimates the cost ofmoving information between hook up & commissioning into operations at $10 million Copyright 2011 by CIMdata, Inc. 27

28 Benefits for Business Process Streamline design reviews and approvals Provide a formal mechanism to evaluate product developments at major milestones Allow many users to see product data and make comments on that data Review the design rather than merely its documentation Allow users to see product definition information Supports review teams having a collective competency greater than that of the designers Eg E.g., include representatives of marketing, purchasing, manufacturing, servicing, test, inspection, reliability, quality assurance Copyright 2011 by CIMdata, Inc. 28

29 Benefits for Business Process Improve change processing (1 of 2) Make changes earlier in the process Improved access to design information Work with more up to date information Support concurrent processes Reduce cost of managing and tracking changes Establish & maintain procedures for the identification, documentation, review & approval of all changes across whole product life cycle Engineering Change Request Engineering Change Order Engineering Change Record Copyright 2011 by CIMdata, Inc. 29

30 Benefits for Business Process Improve change processing (2 of 2) Major process for control of a product Implement using workflow Tracks the impact of a change Cost and time Part and document relationships Where used investigations Ripple effect: one change can require another 3D PART NC PLM captures the approval or rejection of a change for audit and history PLM enables electronic comment/markup PLM enables rapid communication of changes Copyright 2011 by CIMdata, Inc. 30

31 Benefits for Business Process Increase efficiency by streamlining processes Improve the purchasing cycle Effective purchasing depends on managing data and processes as well as good cross functional communications Speed work orders Work orders, with all relevant reference documentation and data in a folder, distributed electronically Unify multiple BOMs E.g., engineering, manufacturing, purchasing Allow use of multiple part numbering (customer, supplier, internal) Copyright 2011 by CIMdata, Inc. 31

32 Benefits for Business Process Increase efficiency by streamlining processes Improve cross functional integration and collaboration The purchasing cycle profit from larger discounts, fewer suppliers, reduced inventory, fewer errors resulting in scrap Change management cycle Speed response in emergencies Predefine processes to access a complete data set Encourage & enable continuous improvement of processes Enable business transformation Support process change & integration with lower risk Copyright 2011 by CIMdata, Inc. 32

33 Examples of Metrics Applicability & importance vary by company & PLM project Business Metrics Time to access data Plant down time for maintenance Cost of changes No. of standard parts/no. of special parts No. of successful bids/month Tooling costs or assembly costs Scrap, inventory rates, or re work rates Warranty costs, returns, or MTBF PLM Project Metrics Software delivered against plan Tasks completed on time Cost of IT resources Number of processes (workflows) implemented Quantity of legacy data migrated Number of licenses delivered Number of users implemented Number of users trained Number of PLM solution errors reported Copyright 2011 by CIMdata, Inc. 33

34 Benefits of Open Source Minimize cost of PLM licenses Lower capital expense for PLM shortens payback period & lowers up front risks Be clear that just because you don t have to buy PLM licenses, youdon t haveto buytheinfrastructure (database, operating environment, visualization tools, other product design software, etc.) Reduce software maintenance & tailoring costs Reduce Total Cost of Ownership Decrease initial start up costs & ongoing costs Result is improved ROI, achieved more quickly with better Internal Rate of Return (IRR) Copyright 2011 by CIMdata, Inc. 34

35 Parting Advice How true it is! If you torture data sufficiently, it will confess to almost anything. Fred Menger, chemistry professor (1937- ) Copyright 2011 by CIMdata, Inc. 35

36 CIMdata Strategic consulting for competitive advantage in global markets World Headquarters 3909 Research Park Drive Ann Arbor, MI 48108, USA Tel: Fax: Main Office - Europe Oogststraat CV Weert, NL Tel:+31 (0) Main Office - Asia-Pacific Takegahana-Nishimachi Matsudo, Chiba JAPAN Tel: Fax: Serving clients from offices in North America, Europe, and Asia-Pacific Copyright 2011 by CIMdata, Inc. 36