1 PLM vision 2016 and beyond Antti Saaksvuori
2 PLM vision 2016 and beyond Copyright owned by Sirrus Capital Ltd. Helsinki Finland. ISBN 978-952-67529-1-4 Antti Sääksvuori PLM vision 2016 and beyond Sirrus Publishing 2011 Helsinki Finland This work is subject to copyright. All rights are reserved, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilm or in any other way, and storage in data banks. Duplication of this publication or parts thereof is permitted only under the provisions of the Finnish Copyright Law. In its current version, and permission for use must always be obtained from Sirrus Capital Ltd. Violations are liable to prosecution under the Finnish Copyright Law. Product liability: The publisher cannot guarantee the accuracy of any information about dosage and application contained in this book. In every individual case the user must check such information by consulting the relevant literature.
3 Table of Contents Introduction... 5 Executive summary... 6 PLM today (2010)... 7 Most significant PLM GAP s today... 8 PLM in 2016... 11 PLM system usage and functionality development... 11 PLM implementation approach in 2016... 13 Industry specific development... 16 Manufacturing... 16 Service sector... 19 SME s... 21 SME s in 2011... 22 SME PLM challenges... 23 SME s in 2016... 24 Industries looking into PLM... 27 Utilities sector... 27 Construction industry... 28
4 PLM vision 2016 and beyond Clothing, footwear and apparel industry... 29 Food, process and consumer packaged goods (CPG) industry... 31 Geographical expansion... 34 RIC- Russia, India, China... 34 About the author... 36 Appendix A. Saaksvuori PLM Maturity Model... 37
5 Introduction PLM in general is in a very interesting phase. The concept itself is much widely and deeply understood on a global scale. Its potential in business development is shared and recognized by business management far better than 3-5 years ago. Many countries having long tradition on continuous business development use PLM as a standard way of working. For example in Finland the Finnish CADCAM association executed a study in August 2010 showing that 70% companies in Finland employing more than 500 people have already invested in a PLM solution. In addition, 17% consider the issue or they have a deployment in progress. Overall, this makes the total adaption rate almost 90%. However, small business companies are significantly lower in percentage, at least for now. All in all, I see PLM in a stage where it has solid footprint in many western economies and in certain fields of business, with extremely high development potential and a lot of new virgin ground to cover in the East, in the SME sector, and in completely new business verticals. This paper is a vision on what PLM could be in 2016. It is outlook estimation, not a scientific study. The contents of this paper is based on 15 years of PDM/PLM experience, dozens of PLM related projects and assignments in numerous customer companies that produce different type of products. The content of this paper is based also on academic collaboration, numerous seminars and events, discussions and contacts with PLM experts all over the globe. There is also a lot of recent research, academic and commercial, supporting the vision presented in this paper.
6 PLM vision 2016 and beyond Executive summary In most western economies manufacturing business PLM has reached a mature phase in its evolution, some may call it PLM1.0. Most of large, multinational, frontline manufacturing (incl. also electronics manufacturing, pharmaceutical etc.) corporations have structured PLM processes and a supporting PLM IT-system implemented - at least to certain parts of the organization. By 2016, PLM will evolve significantly and break through to new domains within a corporation, such as executive decision making, innovation and customer involvement and to full product lifecycle support, not only product definition lifecycle. By 2016, PLM will increase its footprint in the service industry and conquer new domains; such as the SME field, utilities, construction, fashion and footwear businesses and break into process, food and consumer packaged goods businesses. We will also see the rise of new PLM system solutions coming from Russia, India and China.
7 PLM today (2010) Manufacturing business PLM in most western economies has reached a mature phase in its evolution, some may call it PLM1.0 or level3 PLM based on the Saaksvuori 5 level PLM maturity scale. (See appendix A). Most of large, multinational, frontline manufacturing (incl. also electronics manufacturing, pharmaceutical etc.) corporations have structured PLM processes and a supporting PLM IT-system implemented - at least to certain parts of the organization. They manage the lifecycle of the product definitions (product process) as well as certain parts of the actual product unit lifecycle (installed base) in a structured way, naturally depending on the business model in use. The current PLM set-up in these frontline manufacturing companies include mature methods and tools for management of product related information, product development processes and integration of various product development and engineering related applications. All in all, the understanding of PLM as a concept and its level of maturity has increased considerably during the past 5-7 years. Many studies have also shown the ROI of PLM true. PLM brings considerable business benefits in discreet manufacturing type of business producing complex products, consisting of large number of components with high rate of changes. Thorough understanding of PLM and mature PLM processes supported with an IT-system are common nominators of successful new product introduction, product profitability, high quality products and altogether nominators of successful business. However, even still today the understanding of PLM is limited, and very much IT and PLM-system driven. Very few companies have a holistic understanding of PLM as a way to operate in product development and product management as well as a way to manage and lead product portfolio and related processes. Naturally there is also geographical variation in PLM understanding and utilization based on the
8 PLM vision 2016 and beyond engineering and business culture and tradition in each country. West European countries with long engineering tradition drive the PLM development, North America as well as some Asian countries like Japan and Korea, again with significant engineering tradition come close behind and in most aspects the rest of the world is at the to-beimplemented stage what comes to PLM 1.0. The most extensive PLM usage process and systems coverage with the highest level of implementation is today in the large and global corporations in the aerospace and automotive industry as well as some electronics companies. The leading service sector companies (Telco s, IT-services and insurance) in West Europe especially in the Nordic countries, have fairly developed PLM processes implemented with some level of PLM- IT-system support. In the service industry, the PLM understanding is very much driven by a need for stable and precise product definition and support for mass customization and product configurability in the sales interface. International organizations in the service area, such as Telemanagement forum, have also made an impact in the PLM development by facilitating ongoing continuous PLM process and standard development. Most significant PLM GAP s today In general, the utilization of PLM functionality has increased relatively quickly. In the early 2000 s PLM understanding was limited to product development, the management of product related data in the engineering context i.e. product definition data. Today, implemented PLM processes and systems often cover also purchasing, manufacturing, after sales and service parts of the organization and processes. Leading companies have also recognized the end of life of a product has been as a separate process.
9 The most significant weakness of existing commercial PLM IT-solutions is poor support of product lifecycle activities outside actual product development process. The early stages of the product lifecycle, the idea phase of the product development, when the product is very much on a conceptual level is poorly supported. This is commonly due to very traditional methods of managing product related requirements. In many companies these requirements of different type are managed, prioritized, validated and sorted then happens something undefined and then we have a drawing, items and a BOM. The process of transferring requirements directly to a drawing, BOM and items is not easy and straightforward job and therefore not easy to standardize to the level needed by the current IT systems. Even though PLM and ERP systems have more functionality overlap than ever, the PLM ERP role-play and functional set-up is extremely hard to implement without large-scale customization. This is due to traditional focus of ERP s to the order-delivery and of PLM to the product development process. Building a lifecycle management bridge between these two systems is very demanding even today. In practical terms this means that PLM systems manage the definition of a product i.e. the product on a conceptual level (items, BOM set-up, drawings and other documentation, configuration etc.) during a product lifecycle and when the product needs to be realized i.e. manufactured, sourced or assembled this is usually under ERP responsibility. Naturally there are gray areas in between e.g. prototyping and 0-series production. The lifecycle support for actual product units ends to the delivery of the product unit. E.g. maintenance and service activities as well as installed base management cannot be included in to the lifecycle management set-up with current ERP systems due to the current ERP base philosophy. ERP are designed to be transaction processing systems and thus not designed to able to manage the evolution of a product instance (item / BOM changes with serial numbers etc.). Another significant gap is more on the PLM concept side. Many companies struggle with integrating mechanic, electronic and software
10 PLM vision 2016 and beyond components and in some cases service elements in the PLM concept and have hard time managing all these as items in the PLM system. These entities, very different by nature, are hard to manage together and if the PLM concept cannot be build to cover all of these entities, it is obvious that the PLM system is not able to manage them either.
11 PLM in 2016 PLM system usage and functionality development The established PLM1.0 set-up is in most cases limited to the area of product development process. The main focus of PLM 1.0 is to manage the product definition i.e. the evolution of product definition and related information) including the; Items and BOM s, Drawings and design documents, version information in some cases even supplier items, modularity and configuration information (configuration rules), external product documentation, product descriptions etc. In practice this means that the PLM is known only to the engineers of the product development organization and thus their tool. By 2016 we will see PLM break through to new domains with in a corporation: First of all, in 2016 PLM will facilitate the executive decision making. Top management of every company producing tangibles, software or services wants to be able make more informed lifecycle decisions of their product portfolio than today i.e. they want to have more, better and more coherent information regarding their products. In this sense, PLM will provide better reporting and information consolidation features. Using PLM (standardized processes and product information (including KPI s) and PLM system) executive management and business control functions are able to monitor the performance of their products in the market, make comparisons between the products in the portfolio,
12 PLM vision 2016 and beyond monitor and steer the performance of the product development, analyze different e.g. BOM costing alternatives or up-sell scenarios of certain product upgrades based on installed base information etc. Secondly in 2016 PLM will facilitate innovation and customer involvement in product development. This is something PLM has promised for number of years. However, companies using PLM and companies providing PLM systems have had no idea how to use the possibilities brought by PLM to leverage the product innovation and customer involvement in Product development. Today many PLM 1.0 companies operate in the traditional way of collecting requirements to be the basis of a new product version or a completely new product. The process of collecting requirements usually has far too much emphasis on the technical issues and evaluating the value of an individual requirement. Companies are not able to build a bridge between these crumbles of requirements and customer experience. The breakthrough of social media and other electronic forums make it possible to involve existing and possible to-be-customers in more inspiring way. In 2016 PLM will connect crowds in these electronic forums and social media to the product development and innovation of product and service producers using PLM functionality and such concepts as bill of functions BOF (rather than bill of materials) representing the to be product under evaluation. Another possibility that will be utilized in this respect is the possibility to create 3D models and illustrations (animations) with the modern 3D design systems in generic view formats and have them analyzed, commented and even further innovated by the crowds in the social media.
13 Thirdly, in 2016 PLM will facilitate the lifecycle aspect a product in more depth. A set of closely integrated PLM processes, practices and tools (more advanced PLM-ERP integration) will facilitate making important product related analyses such as the forecasting and control of lifecycle costs, or the compliance of products with existing and upcoming regulations and legal constraints for example regarding certain raw materials and recycling of raw materials. Legal frameworks like TREAD Act in the USA, REACH for the chemical industry in EU, Regulators like FDA and EFSA require companies to ensure that the processes and documentation of product is done according set regulations. Another set of PLM functionality in this area will support the assessment of resources and energy consumption throughout the lifecycle, for example EU regulated energy certificates or risks analyses to executed. The above described development will be led by the manufacturing and electronics industries in the B-to-C and in some cases B-to-B business due to nature of the products and processes in question (stable definition, moderate level of configurations). However, the service industries have all the possibilities listed, on their behalf as well as, but first they need to reach the PLM1.0 level. PLM implementation approach in 2016 Today PLM process and product information standardization and harmonization is ongoing process in many companies. The practical outcome of the trend is that the common and harmonized company
14 PLM vision 2016 and beyond best practices in the PLM area will be implemented throughout large corporations causing PLM system down scaling. Up today, many large corporations have had number of PLM or product information related system in use. The drive towards one PLM scales down the existing PLM systems and in the end, most companies are looking for 1-2 systems used throughout the entire corporation. Implementation vise this means that in 2016 we will see less PLM system instances running the companies on PLM1.0 level. Most companies are not planning to reduce the number to only one PLM system. Due to very practical reasons, lack of corporate wide PLM concepts and limited PLM system capabilities, there are no systems currently available that can manage simultaneously HW, electronic and SW and service related information efficiently. One other practical reason for not having only one PLM system in place is the challenge of having corporate wide master data and product development paradigms implemented simultaneously in only one system. The introduction of PLM is a very complex process involving numerous organizational units and roles, processes and resources and IT-systems. The PLM 1.0 implementation has been in most companies laborious process lasting 24-36 months in many cases executed by trial and error method. This is in a sense very understandable, before the first PLM implementation wave the understanding of PLM was very low and was in the hands of very few individuals, even is a large corporation. The main focus of many PLM 1.0 implementations has been in the harmonization of the organization, processes, complex and scattered product data. The scale of the transformation as well as its complexity usually was underestimated and the harmonization is often realized for only one site e.g. the HQ-site. Brach sites and subsidiaries in other cities or countries often have a different perception of terms, methods, processes and data structures. This is often a result of company takeovers and acquisitions.
The PLM understanding has developed a lot in 2016. This results to shorter PLM project durations. This is mainly due to the change from big projects to smaller, more focused projects. Project implementation is accompanied by permanent process re-engineering. Companies have realized that there is a lot of undeveloped potential in the harmonization of the organization 15
16 PLM vision 2016 and beyond Industry specific development Manufacturing In 2016 PLM in the manufacturing business especially in the capital goods manufacturing / engineer to order area will focus to: 1. Solution business model support product <> service convergence A critical success factor in 2016 in the manufacturing industry will the ability to provide more profitable services in addition to the tangible good i.e. to create meaningful packages resolving ever larger business challenges in the customers daily business. However, this combination of tangible and intangible items such as services and software in terms of the extended product increases the complexity in managing the product lifecycle. The creation, delivery and maintenance of customer solution combine tangible products, software and pure services in a challenging way in PLM sense. These entities, very different by nature, need to be designed and managed together. This puts pressure on PLM concept, process and system development as well as to development of solid product architectures covering all different product types. In order to make it possible to design and manage this kind of entities efficiently together companies will need more advanced information models, which will cover both tangibles and intangibles. In practical terms this means that services and software need to be productized to the detail hardware has been productized, defined and documented. Only
17 through this kind of development, it will be possible to manage software and services in a PLM system with conjunction to hardware. 2. Innovations Companies see systematic and continuously ongoing innovation as one key success factor of their future. PLM processes must support ongoing innovation as well as VOC (voice of customer) and VOM (voice of market) implementation to the product portfolio. The practical outcome of in the PLM sense must be more agile and better controlled product development facilitating the systematic transformation of customer inputs, requirements, innovations to product features. In 2016 this transformation process also will include transparent decision making and customer input allocation to product features and functions i.e. traceability of how the requirements or inputs ended up to be product functions and which of the inputs did not end up to the product road map at all and why. This kind on transparent and traceable chain of inputs and events is necessary in order to analyze the decisions and their impact to the product performance later on. Social media and customer involvement To support the continuous innovation and to integrate customers better into the product development we will see in the coming years a breakthrough in the modelling and design tools of product development. There is a huge potential out there. Customers and crowds know many things better than design engineers. The big problem issue at hand up to this day has been how to involve customers and crowds to the design process in an efficient and meaningful way. One of the practical real life problems has been how to visualize and concretize the feature / function under design in order gather feedback on the design. The new 3D design tools with animation and highlight features make this possible. Design
18 PLM vision 2016 and beyond engineers are able the create draft designs and ask the crowd or selected reference group or lead customer their feedback through electronic channels or even social media. These drafted designs with comments and feedback can be turned into final designs extremely quickly and much ripe for the markets when examined from the customer perspective. 3. Sustainability / Re-cycling / Closed loop PLM and material contents management Refurbishing is already very important business for many capital goods manufacturers having large installed base. In the installed base management and design for refurbishing PLM can be a tremendous support. Exact product information and documentation, the knowledge of the product to be refurbished is a key enabler the successful implementation of refurbishing business. National and international regulators put constantly more and more pressure on the management of hazardous materials. The trend is quite obvious; we will experience a constant growth of the level of information management of certain materials in product BOM s as well as the product specifications. Companies across different business verticals need to manage this information with efficient and precise manner with easy reporting and analysis possibilities.
19 Service sector In the service sector we will see the gradual expansion of PLM 1.0. The leading service companies with high volume standard services are struggling with their product definitions, product changes, demands for product configurability. For example, a teleoperator having 100 million mobile subscriptions and 50 million broadband subscriptions simply cannot afford simple change management problems in the product definition. A minor mistake in the product change management and version compatibility can result an immediate landslide of 10000 additional support calls per day. All in all, service production and delivery is becoming more and more industrialized. The global megatrend towards a service society and the ever-growing demand for services in the market, especially in the European and American economies, puts pressure to develop new services, produce and deliver the services more efficiently and with lower cost. In addition to the growing need of service volume, the need to customize service for the individual customer remains. The spectrum of various service products is extremely vast. It is obvious that if the volume of service delivery is small and the variation of the service content is large regarding a certain service, it is not feasible to put huge effort in creating very comprehensive service definitions and making a standard and automated service delivery process. Service sector PLM in 2016 includes re-thinking the service- product and the service product development process. This requires Service is a product mindset adaption and understanding in the product management and product development organizations. The people responsible service development and management need to understand that services can be developed and defined as precisely and carefully as f. ex. in manufacturing business.
20 PLM vision 2016 and beyond In practice this means that in the service development and management of leading service sector companies in 2016 we will see: Emergence of new service definition methods and tools, including structural service definition utilizing manufacturing type of product definition methodology like BOF bill of functions type of presentation of product functionality and functionality hierarchy. The reuse of existing service functions / modules across various products. Emergence of new processes and tools for creating, documenting and maintaining service definition, including PLM systems and formal product development and change management processes covering the entire service portfolio in a common and harmonized way management practices and models. A set of new product management methods become enabled when more formal and common (i.e. not only verbal) product definition is in use. The allocation of product revenue and cost to certain modules and products. Portfolio management, product comparison and e.g. what if analyses based on structural and formal product definition The outcome of the described development in the area of a new service product development process is a carefully defined and documented, modular, configurable and easily repeatable service product that can be managed using a standard PLM system. One of the most important tools in the service PLM systems will be the BOF Bill of functions management, which will used to manage the service
21 product content and functionality, configurability as well as the changes in the service product. SME s It is quite obvious that we will see expansion of PLM 1.0 (as described above) in the SME sector. In order to see large scale expansion of PLM systems in the SME sector we need lighter business models from PLM system providers and more straightforward implementation processes as well as ready to be implemented PLM concepts to facilitate the overall PLM thinking in the company. SME s do not have the development muscle themselves; they need readymade solutions for their problems. Most of the PLM system providers and their VAR s have not been able to put forward clear and simple product management frameworks and templates to be supported by the PLM systems. For example in the CRM area many system providers are able give ready-made segmentation models and customer information management models scaled to fit for the business in question to be used as baseline templates for the system implementation. Until we do not have this kind of support for the SME s in the PLM side the PLM expansion will be slow. However by 2016 we will not see Salesforce.com type of cloud computing explosion in the PLM sector due to the fact that the this level of standardization cannot be reached in the product development area, products are hugely different in different companies and the needs and requirements for PLM process support varies a lot between business verticals.
22 PLM vision 2016 and beyond SME s in 2011 Today the SMEs face the same increasingly complex product management environment most of the larger businesses. In many cases the SME s are not OEM s, they don t own the end product, they are rather suppliers to multiple OEM s i.e. they are in the downstream in the value chain. In practice, this means that they need to collaborate with number of large partners having somewhat different business approaches and ways to operate and naturally different systems and product information set-up. The basic PLM benefits are available to SMEs, but the SME s are much slower in adapting new business processes. SMEs tend to be more conservative, often waiting for new solutions to be well proven before adopting them. While being conservative still the SME s want to secure their basic success factors agility and cost efficiency in order to stay in the game with increasing sourcing from the low cost countries. In this development work, PLM is an excellent tool for the agile and development oriented SME s. Basically a vary standard out of the box type PLM 1.0 implementation can improve their performance directly in: Product information management. Complex product information in a networked business environment requires automated methods for information management. Improved product development execution. Faster product development project through put times, use of crossfunctional teams, and networked resources require excellent control and communication and information management in order to prevent mistakes and rework. Management of
23 deliverables, approvals, and status extend core product information management with business process automation and project management capabilities to coordinate activities in addition to just information. Quick response to market and OEM demands with very limited resources are critical to SMEs. Collaborative design. The increased focus on optimizing product lifecycle impacts earlier in the design process for example, design for manufacture, design for sourcing activities, design for refurbishing and design for lifecycle services are creating a demand for broader participation in design processes. In addition, many companies are including suppliers and other third parties in the design process to leverage external expertise. SME PLM challenges SMEs face challenges when considering or implementing PLM, however, that are common for smaller-sized organizations. They simply do not have the same resources available than large corporations. For a SME looking in to PLM the most significant challenges are: Lack of available internal resources with deep enough PLM understanding. Smaller companies may be able to approve funding for software and implementation, but face problems in assembling the resources for the task. Usually SMEs also lack the depth in technical resources required to implement a new solution. These resources, however, are more readily available from the outside because they do not need the same level of
24 PLM vision 2016 and beyond familiarity with the business and the industry as functional resources. Lack of suitable external resources to support the PLM implementation. The large-scale PLM implementations have been traditionally the domain of the large, global, multinational consulting firms. In too many cases, a SME looking for a skilled implementation partner cannot find a suitable partner having enough skills and vision what is needed in a case of a lean SME implementation. The global giants are not able to downscale their operation and the local and smaller consultants simply do not have the skills and experience. Cost and complexity of implementation. Implementations of enterprise software solution suites are in many cases far too heavy for SME needs. To achieve successful adoption, companies must assess their business processes, identify the changes to be targeted and the solutions to be deployed, and train users to take advantage of them. An implementation may also involve integration with existing systems although many smaller companies choose to integrate PLM solutions relatively loosely in early implementation phases. SME s in 2016 Because so many of the leading large-scale manufacturing companies have the PLM 1.0 implemented, the PLM system suppliers see the SME sector much more potential customer than in the early 2000 s. This
25 puts pressure in developing new approaches and new solutions and business models for smaller companies. By 2016 the development oriented SME s (in Europe) mostly in the manufacturing sector have PLM 1.0 implemented. This has happened through new PLM solutions focusing on solving the SME related implementation problems mentioned in the chapter SME PLM challenges. These new PLM system solutions have SME specific business approach, licensing, SaaS cutting the initial cost of implementation. The new system solutions have ready to be implemented templates and best practice models for the most beneficial areas of SME type of PLM implementation; management of complex product data in highly collaborative supply chain. The consultants supporting the SME s in the implementation of PLM system solutions also have also a set of new methods in use. The global Accentures, HP s, TCS s are not traditionally the most suitable implementation partners to the SME s looking for a quick, ready and lean implementation. By 2016 there will be more local, skilled implementation partners available with a pragmatic set of tools to fulfill the fairly standard and simple SME needs. In 2016 there are cloud solutions available also in the PLM area, the cloud computing capabilities in the PLM area will develop in the SME sector first. The most significant obstacles in the expansion of cloud computing in the PLM area are: Variation in the product definition the products are and will defined in some many different ways that having a relatively standard approach is quite demanding Integrations In the PLM area, most of the implementations need quite extensive integration to multiple CAD s and ERP. Standalone PLM does not meet the needs of many companies.
26 PLM vision 2016 and beyond Product configurability needs in many cases products are configured at least to some extent. It is very demanding to have standardized approach to the configurations. Information security product IPR s are in the core of each company. Having them in the cloud is and will be for some companies a mental barrier.
27 Industries looking into PLM By 2016 we have seen the fact that PLM as a business concept and an IT-system is not only usable in the manufacturing and electronics industries. In late 1990 s We have already seen PLM moving to Utilities sector In the Utilities, sector companies typically possess assets in the field worth billions. In most cases their view to PLM is twofold: 1. Fault free operation of very complex systems and regulation compliance using carefully defined processes and practices. In practice this means precise and smooth management of the installed base information. 2. On time, in budget construction of new facilities with numerous contributors in the process. EPC (Engineering, Procurement & Construction) firms responsible for plant design and construction, regulators introducing new and strict regulatory standards and dozens of suppliers supplying very important components. At the moment PLM1.0 is not widely in use in the utilities sector. Most of the companies have many dedicated systems per site, in many cases build in house for their specific purposes. However, standard PLM solutions could bring tremendous boost in efficiency in both of the challenges.
28 PLM vision 2016 and beyond Due to the fact that Utilities sector companies have steady and highly regulated business they are slow to adapt new concepts. Despite this the companies are under pressure to increase efficiency. By 2016 we will see not PLM breakthrough but PLM emergence in much larger scale in the utilities sector as well. By 2016 the most innovative utilities companies we use have PLM in use in the installed base management managing the factory site information including process equipment information, equipment traceability, supplier information, spare part and consumables compatibility information, maintenance history etc. On very significant supporting factor enabling the PLM development in the utilities sector, is that the engineering companies designing the plants, the system and equipment providers providing the plant equipment are using more and more advanced PLM approaches. In the field of plant design, modeling, delivery and O&M (operation and maintenance) we are also experiencing entirely new methods and standards such as f. ex. IEC 81346 created for plant lifecycle management. Construction industry On one hand, the PLM challenges of the construction industry are a lot like in the utilities business: On time, in budget construction of new facilities, apartment houses, offices, commercial centers, factories, and warehouses with numerous contributors and component suppliers in the process.
29 As the utilities business, the construction industry is slow to adapt new processes and concepts in their way to operate. Today in 2011 PLM is not widely used in the construction business. Despite this fact it is quite obvious that standard PLM system solutions could make a huge impact in the collaboration network of dozens of suppliers, designers, engineers, sub-contractors and regulators in simplifying change management, offering view tools to latest designs and design changes, keeping track on approved suppliers and standardizing components. PLM systems with PLM1.0 type of functionality could be easily launched to manage in-work product structures, digital mockups, engineering BOMs available to construction planners or customers before a design release, providing valuable early insights to on-going project development. By 2016 the most innovative construction companies will have PLM in use in the project based change and documentation as well as BOM management. The companies will have PLM implemented for the management of approved suppliers and standard components, as well as, in the collaboration network information sharing. Clothing, footwear and apparel industry Clothing, footwear and apparel industry is lot like all other component - assembly based industries with certain clear and industry specific characteristics. There is a huge need for precise and up-to-date product definition, the products are constantly changing, the new designs need to be introduced to markets within months and there are many collaboration partners in the process. One of the most important PLM drivers in the clothing industry today is virtualization and 3D design. Virtual 3D designs and prototypes make it
30 PLM vision 2016 and beyond possible to shorten the design cycle of many products in this industry due to the fact that so much of the traditionally Europe and America based manufacturing has shifted to Asia bringing in new challenges related to design and prototyping. Using 3D models and virtual prototypes it is considerably quicker to finalize the designs than sending goods back and forth between continents. The utilization of social media and customer involvement is the other major driver of PLM development in the clothing industry. In this trend the virtualization plays an important role as well. Cloth and footwear manufacturers need to involve their customers i.e. in many cases the consumers to the design process. The new virtual 3D tools make this possible. Designers draft designs and ask the crowd or selected reference group their feedback through social media. These drafted designs with comments and feedback can be turned into final designs extremely quickly and much ripe for the markets when examined from the customer perspective. Other dimension to the same issue is the possibility to create individual designs to shoes for example to create unique set of sneakers though manufacturer website using virtual 3D tools. By 2016 we will see expansion of PLM1.0 to the large multinational clothing, footwear and apparel companies with fairly standard item, BOM and change management features added with industry characteristic functionality such as use of 3D models in prototyping, virtual showrooms designed for distribution channels and B-to-B e- commerce as some cases directly to consumers.
31 Food, process and consumer packaged goods (CPG) industry The characteristics of PLM in CPG and process industries are quite different from in the discrete manufacturing. Discrete manufacturing is characterized by individual or separate unit production with low volume and very high complexity or high volumes of low complexity, with high emphasis on part and assembly quality, NPI and time-tomarket speed and cost cutting. In process manufacturing, the relevant factors are ingredients, not parts; formulas, not bill of materials; and bulk, not individual units or configurations. In many areas of process industry f. ex. In the food and drug processing the packaging, traceability and regulation compliance has very high emphasis In 2011 there are still very few CPG companies that have implemented PLM to the same level than manufacturing industry. Part of the reason is that the CPG industry is still a technologically reactive industry and developed ideas through scientific experimentation. Many process companies have culture of exploring, testing and analyzing using scientific methods rather than streamlined processes and product development funnels, large number of front line companies still use laboratory notebooks to manage and document the R&D results. Fierce price competition, battle of the top of mind of consumers, continuous efforts of increasing R&D productivity, increased safety and traceability requirements drive the product innovation of development of PLM in the process and CPG area. Many process and CPG companies have taken note of the vast improvements PLM has brought into manufacturing industries. CPG companies are beginning to understand how they can also benefit from such solutions to help them drive product innovation.
32 PLM vision 2016 and beyond In 2016 we will see much larger PLM penetration if the process and CPG industries. PLM implementations will facilitate product success excellence in three areas: 1. 1 reducing product development cycle time and increasing productivity 2. Increasing product development innovation and again facilitating the use of social media in crowd sourcing and consumer based innovation 3. Reusing information related company assets. By 2016 we will see PLM solutions supporting the following processes in the process and CPG industries: Product development and design: streamlined and carefully designed development processes producing precise product definitions are in use in leading process and CPG companies. PLM solutions manage the Product Data Records (PDR) and ITsupported information management facilitates sampling, approvals, regulation and traceability of decisions and documentation for regulative purposes Packaging design and labeling: Leading companies have integrated packaging design and labeling functions to product design, virtual design tools are standard to every company. Traceability: Traceability is an essential requirement for CPG companies. They must manage product information with the objective of consistently meeting or exceeding regulatory standards to avoid or quickly manage any crisis that could damage their brand. The PLM system supported lifecycle management ensures compliance by enabling full traceability throughout the development phases and manufacturing, through to suppliers. This gives companies a process to react quickly during product recalls. Regulatory issues, sustainability and environmental issues and safety: PLM will make it possible to manage and access product related information coming from various sources, such
33 as developers, analysts, toxicologists, microbiologists, and procurement for regulative purposes and in order to support ever growing demand in the consumer base for sustainability and environmental issues. Procurement: PLM systems enable the delivery of real-time raw material costs to the formulators at the point when they select the supplier from which they will source the ingredient for this product formula. By selecting the lowest ingredient cost when the product is first formulated, formulators lock in the cost for the life of the product.
34 PLM vision 2016 and beyond Geographical expansion RIC- Russia, India, China PLM-system software solutions have traditionally been alma mater of Europe and USA based software companies, many of them having roots in the CAD software business. This set-up is changing also on a fast pace as we have seen the change in the bulk manufacturing. A lot of things are happening the emerging countries what comes to PLM software engineering. With the manufacturing and low cost country sourcing many Europe and USA / Canada based manufacturing OEM s in the PLM1.0 utilization level have expanded their PLM implementations to cover their own subsidiaries in Asia as well as their suppliers and contract manufacturers. In practice this means that the same PLM software solutions, the Enovias, Oracles, Siemens, PTC software suites used by the OEM are used in the Asian sites and by Asia suppliers as well. Many of the large and most innovative manufacturing companies owning product IPR s the RIC area are facilitating the development of RIC based new PLM software suites through venture capital funds and direct investments. In Europe and USA we have seen a lot of consolidation recently in the PLM system software field. There are fewer PLM system providers the western countries than before. By 2016 we will see new PLM systems developed in the RIC countries with high software development capability taking large market shares in the larger manufacturing companies RIC area as well penetrating the
SME sector with light business models, low cost licenses, local support, local language and GUI experience and significant cultural advantage. 35
36 PLM vision 2016 and beyond About the author Antti Saaksvuori is a management consultant focusing on product lifecycle management, product and service development, product management, product and portfolio strategies as well as service development and service productization. Antti Saaksvuori is the author of a widely acclaimed book on Product Lifecycle Management (Springer; 3rd edition ISBN 978-3540781738), he has performed consulting work for a variety of companies in industries as diverse as telecommunications, manufacturing, software, logistics, insurance and healthcare. He has an engineering degree from Helsinki University of Technology. For more information on the subject check: www.plm-info.com / antti.saaksvuori@iki.fi
37 Appendix A. Saaksvuori PLM Maturity Model Saaksvuori Unstructured Repeatable but intuitive Defined Managed and measurable Optimal PLM maturity model The PLM topic has been recognized and its importance agreed. Work must be done to define and develop the PLM concept and standards. However, at present, there are no defined approaches concerning lifecycle management; all lifecycle and product management issues are resolved by individuals on a case-by-case basis. Lifecycle and product management processes have developed to the stage where similar procedures are followed by different people undertaking the same task within one organization (i.e. the processes function on ad hoc bases, corporate wide procedures or definitions do not exist). There is no formal development, definition, training, or communication of standard processes; all responsibility is left to individuals. There is a high degree of reliance on individual knowledge and therefore errors occur. Processes and basic concepts are standardized, defined, documented, and communicated through manuals and training (on corporate level, in all business units geographical, functional units). However, the human factor is important, there is no end-to-end PLM process supporting IT systems, all work is completely or partially manual from the process point of view. IT systems support individual parts of processes. The PLM processes or basic PLM concepts are not best-of-the-breed, nor are they uniform throughout the corporation, however they are formalized. There is common understanding of the to-be model how PLM shall be executed in the future. It is possible to monitor and measure the compliance between processes and to take action where processes are not functioning well. Processes and concepts are under constant improvement and provide best practices. IT systems support PLM processes well. Process automation is used in a partial or limited way. Processes and concepts are developed through clear vision throughout the corporation. The state of uniformity of processes is clear. Processes and concepts have been refined to the level of best practice, based on continuous improvement and benchmarking with other organizations. IT is used in an integrated manner and process automation exists on an end-to-end basis.