John Stark Associates Eurostep and John Stark Associates Technology White Paper Standards-based PLM: Re-engineering the Aftermarket with PLCS Part 1 Business Benefits Eurostep: John Dunford Peter Bergström John Stark Associates: John Stark Executive Summary Recent changes in the business environment have opened new opportunities in the aftermarket. Successfully exploiting these trends presents many challenges, including both new commercial relationships and management of huge volumes of product data. The new approaches to meeting the challenges that are discussed in this paper will enable OEMs to provide effective low-cost global support for long-life complex engineered products such as airplanes, power plant, heavy vehicles, industrial machinery and equipment, elevators, trains, and weapon systems; and also less complex systems. 2007 Eurostep and John Stark Associates
About the Authors About Eurostep Eurostep s core competence is product information management, with a focus on solutions for the integration of information. By offering world class software and consulting services based on experience from many different domains, Eurostep helps our customers realize the business potential in their information assets. Eurostep helps your business to: Reduce costs by exploiting existing information assets and easing integration Shorten lead times by ensuring that correct information is available Radically improve data quality by automating sharing and exchange capabilities and data consolidation processes Increase sales by exploiting product data as an asset for complete re-use Secure your knowledge by managing information access across multiple organizations Make product information available over the complete product life-cycle Eurostep is active in both the development and implementation of international standards for product data. This gives Eurostep a unique understanding of PLM and PLCS. The company offers the software and implementation technology needed to deliver product life cycle management from concept to disposal. Eurostep has been an international venture from its inception in 1994, and all subsidiaries have access to the leading edge PLM and PLCS knowledge base in the group. Eurostep provides world class expertise from Sweden, the United Kingdom, Finland, France and the United States. Eurostep has a number of blue chip organizations among its clients. About John Stark Dr. John Stark, president of John Stark Associates, Geneva, Switzerland is an internationally recognized expert and writer on the topic of Product Lifecycle Management (PLM). He is the author of the recently published Global Product: Strategy, Product Lifecycle Management and the Billion Customer Question. In 2004, he published Product Lifecycle Management: Paradigm for 21st Century Product Realisation, the first book to describe the cradle to grave paradigm of PLM. Prior to launching John Stark Associates in 1991, he worked with developers and providers of applications and services for product development, engineering management, CAD and PDM. In his consulting career, he has worked with many companies including ABB, BMW, Braun, Coca-Cola, Eaton, Ford Motor Company, HP, IBM, Kodak, Nestle, PSA, Renault, Saab, Schindler, Sikorsky, Valeo and Xerox. He currently works as a consultant for manufacturing companies on the practical implementation of the PLM paradigm.
Executive Summary Recent changes in the business environment have opened new opportunities in the aftermarket. Increasingly, product owner/operators, keen to cuts costs and improve utilization, are focusing on core activities, while outsourcing less strategic activities, such as product support, to specialist partners. Meanwhile, Original Equipment Manufacturers (OEMs) are seeking to maximize the return from their products by going beyond the initial product sale, and providing customers with product upgrades and other valueadded services throughout the product lifecycle. These trends are leading to new win-win business models in which owner/operators achieve cost reductions and improved asset availability by contracting for support from OEMs. Those OEMs are able to increase both turnover and profits by exploiting the technical knowledge of their products to deliver an ever-wider range of aftermarket products and services. Some OEMs are even using the term Product Support instead of Aftermarket, since product support has become a more important revenue and profit generator than the initial sale of the product. Successfully exploiting these trends presents many challenges: new commercial relationships must be negotiated; business processes have to be adjusted and integrated; and improvements must be achieved in the capabilities for creating, sharing and sustaining the huge volumes of data required for life cycle support. Fortunately, new approaches that meet these requirements are now appearing. Life Cycle, Performance-Based, and Total Cost of Ownership techniques have taken great strides in recent years. Product Lifecycle Management (PLM) has emerged as a major pillar of the corporate IS architecture. And, in 2005, a new international information standard was published in this area: ISO 10303-239 Application Protocol: Product Life Cycle Support (PLCS) specifically to address the requirements for information sharing throughout the product life cycle. The new approaches discussed in this paper will enable OEMs to provide effective lowcost global support for long-life complex engineered products such as airplanes, power plant, heavy vehicles, industrial machinery and equipment, elevators, trains, and weapon systems; and also less complex systems. By choosing the right route to implementation and making maximum re-use of existing applications and information, OEMs can grow their business, maximize profits and increase customer satisfaction progressively, with returns on investment at every stage. Improved support services can be delivered to asset owner-operators without the costs and risks implied by a Big Bang approach. This has the potential of driving new business in many industries as has already been seen with contracts based on fleet management, power by the hour, etc. 2
Aftermarket Issues and Opportunities Product operators are increasingly demanding service contracts that focus on product availability, uptime, reliability, response time, footprint, and cost per unit usage. In return, product operators offer service providers the security of long-term contracts, with clauses including incentives for delivering improved support performance. Aftermarket customers are also increasingly likely to offer incentives for driving continuous improvement in support of delivery performance. Owner/operators are looking to reduce costs by outsourcing product support to focus on operational tasks. Worldwide operators of plants, in industries such as oil and gas, are looking for committed aftermarket partners to avoid downtime which can cost hundreds of thousands of dollars per day. Amongst the pressures for change is increasing product life. In the US, for example, the initial specifications for what was to become the B-52 were issued in 1945. After many design changes, the first prototype flew in 1952. Over the next ten years, more than 200 were built. As the geopolitical situation changed, airplanes were modified and upgraded for new Aftermarket Issues and Opportunities Owners must reduce total cost of ownership (TCO) Asset owners are seeking deeper business relationships (Performance Based Logistics, power by the hour, etc.) Product usage is high, often in adverse environments (defence) Manufacturers face relentless pressure on profits from global competition Manufacturers are well placed to reduce total cost of ownership More life extensions - fewer allnew products The value chain demands factory-to-foxhole processes The Extended Enterprise demands improved information sharing missions. Today, upgrading with new materials and engines is leading to yet more increases in range and performance; and the US Air Force expects to keep the B-52 flying beyond 2040. Product complexity and environmental issues are other factors driving change. In the automotive sector, the installed base is growing, with ever more complex electronics, and tougher re-cycling requirements, often backed by the force of law. OEM In Aerospace and Defence, and in many other industries, customer pull is now matched by supplier push through initiatives promoting the ever greater involvement of suppliers in all aspects of equipment support. The resultant Capability, Availability, and Performance Based Logistics contracts offer major opportunities for profit, through the introduction of joined-up processes and the more efficient management of assets, spares, and repairs through an end-to-end supply chain and from inception to product disposal. 3
Graphic 1: The increasingly complex reality of managing product information OEMs have good reasons for seeking to increase revenues by providing more product support. Due to globalization and product commoditization, they face increased competition for the initial product sale. Many are looking to the aftermarket as a way to differentiate, to generate significant additional profit, and to maintain customer loyalty. Providing more product support is also a way to innovate knowing how the products are used in reality is truly an asset when designing the next generation of products. Presence in the aftermarket shows that the OEM is there for the long run, offering a single source of service providing the customer with the benefits of clear responsibility and commitment to service over the longer term. OEMs are ideally placed to exploit aftermarket opportunities, as they have deep knowledge of the product and have already invested heavily in developing much of the key information required to deliver support. They are also the only partners who, through their access to the product design, can do most to reduce support costs and downtime. This is achieved by extending service intervals, managing obsolescence, and eliminating maintenance requirements through improvements to design and to the service and maintenance procedures. A win-win situation The aftermarket trends described above are well-established. In 1999 the Harvard Business Review published an article encouraging manufacturers to Go Downstream to maximize earnings over the life cycle of their products. And, in fact, the traditional aftermarket offering from OEMs of one-off spares and repairs, has, for some time, been evolving towards an incentivized, service-based approach to supporting product availability over the complete life cycle. In business, contracts drive behaviour. Aftermarket success depends on a realistic commercial relationship that is able to endure over time. Those developing aftermarket contracts need to consider, for example, where interests coincide and where they differ, and how appropriate behaviour will be measured and rewarded. 4
The Route to Aftermarket Success Product information related to the aftermarket With a commercial agreement in place, attention can turn to service delivery. Efficient service delivery is "information hungry". What products are deployed and where? How is each asset currently configured? What state is it in, regarding faults, wear, and usage? What work is needed and by when? What resources - people, facilities, spares, tools, and test equipment - are required to perform this work? Are modifications or upgrades due? Are changes needed to the role configuration? The list of questions is long! Some of the information needed to deliver support - such as asset location - is transitory in nature and is typically created and managed by the owner/operators themselves. Other important data - such as stock holdings, demand status, and predicted arrival dates for required resources - reside in the related supply chain systems. Effective support delivery also requires access to the more complex and more durable information set which defines the design and support intent. Examples include: asset configurations, predicted fault states and failure modes, approved support activities, operating instructions, service manuals, parts lists, engineering change information, etc. The key to consistent profits in the aftermarket businesses lies in establishing a capability that can access and manage the total information set appropriately. These data have complex inter-relationships, reside on many different IT systems, are owned by many different parties and are subject to continuous change. They may have a life cycle of minutes, or need to be managed for decades. From EDM/PDM to PLM The mid-1980s saw the first IS applications specifically developed to manage design engineering and manufacturing engineering data. Engineering Data Management (EDM) systems matured into Product Data Management (PDM) systems in the 1990s. The 21 st Century saw the emergence of Product Lifecycle Management (PLM) as a major pillar of corporate IS architecture. PLM is the business activity of managing a product, or a product range, throughout its entire life, from the recognition of the need or the product concept, to retirement and safe disposal. This requires full access to both design and aftermarket data. PLM based on the ISO PLCS standard In 2005, a new information standard - ISO 10303-239 Application Protocol: Product Life Cycle Support (PLCS) - was published to address the information requirements of full life cycle management. PLCS was developed as part of the STEP suite of standards by a commercial consortium of global owner-operators, OEMs and software vendors. The PLCS information model, likely to remain valid for several decades, enables open information exchange and necessary data consolidation of the large information set required to deliver efficient support across the product lifecycle. Since publication, there has been significant further development of the software and exchange specifications required to implement PLCS. 5
PLCS provides a mechanism for exploiting the investment, made in well-structured product data during the design phase, throughout the product life. This is achieved by creating and sustaining an Assured set of Product and Support Information (APSI) for support delivery and optimization. The key concept of PLCS is the creation of a single source of truth concerning assured product and support information - for use across the enterprise. This information will necessarily be created in many different IT systems - CAD, MRP, ERP, LSAR, and Authoring Tools, etc. so, in order to realize the concept in full, it is necessary to consolidate the information set by explicitly linking related items. Graphic 2: The need to link information sets to achieve true PLM PLCS as a change enabler Today, much of the data addressed by PLCS are created by independent processes which ignore, or fail to exploit, data already created. Some point-to-point exchanges have usually been established, but these do not address the life cycle configuration management issues whose resolution is required for the delivery of efficient support. Particular difficulties exist between the supplier and end-user communities, with neither having access to information created by the other. As a result, information which already exists is frequently re-generated or manually re-entered with a proliferation of errors over time. The feedback of data from the supply chain or in-service activities is patchy, or too vague to be useful. The impact of such information errors and omissions is rarely measured by accountants, but it does impose heavy costs and time delays on every business process. The PLCS concept implies a major change from current PLM practice and, like any change process, it will require management support. PLCS provides a means of breaking away from the current way of managing product data and simplying the re-use of product information. PLCS provides a means of achieving integration within and between organizations whilst, at the same time, reducing user dependency on specific software vendors through the use of a neutral and international product-data standard. 6
Business Benefits of the PLCS Approach In summary, PLCS can help your business deliver: Improved availability with reduced cost of ownership Sustainable business growth into the aftermarket Reduced IT costs through open system interfaces Options for collaboration across the virtual and extended enterprise Benefits achieved in many industries Benefits of the PLCS approach have already been achieved in business domains as varied as: Parts management for power-boat engines Requirements management for a telecommunications supplier Release of design data to components manufacturers Consolidation of assembly data from different viewpoints (design, manufacture, and support analysis) Provision of a modification management service including multi-lingual publication Automation of in-service feedback Using PLCS to automate data exchange reduces costs substantially in several ways. By far the most important is the improvement in data quality that automation brings. For example, the use of STEP standards by the design engineering community of the US automotive, aerospace, and shipbuilding industries has delivered accumulated benefits of $1.1Bn for an investment of $100M over 16 years. Current annual benefits are estimated at $156M per year, based on a 17% take up of the technology. The potential for gains in the aftermarket are of similar, if not greater, scale. Automation and standardization Automation of interfaces also encourages re-use of data. This can lead to significant savings in manpower previously expended on re-generating the same information for different users - often several times over. Manual data re-entry is also eliminated, and with it, a major source of errors. Automation also improves concurrency, as daily, or even hourly, updates can be provided with minimal effort. Standardization of data exchange adds a further layer of benefits, because the export format created for one system can be re-used by others. Standardization of interfaces allows systems to be upgraded or replaced without affecting other systems with which they communicate. This is of particular importance in the aftermarket, where data from many different systems, owned by different organizations, is needed to optimize support. Consolidate for business intelligence Further benefits are available when the PLCS information model is used to consolidate data from different sources into a single environment. This enables business partners to share necessary information, to notify partners of changes, and to receive notification of 7
impending changes to data published by others. The consolidated view empowers business intelligence users since the complete and consolidated set of information around a product, supporting different views, allows for decisions supporting the enterprise level view. Within the collaboration environment, value can be added by recording important relationships between different data sets. This enriches the information held and enables valuable queries across information from many sources. For example, by combining information from PDM, ERP, and Logistic Support Analysis systems, it is possible to identify which individual assets, and which maintenance documentation, are related to a specific part version, and, hence, to a potential change. Contracting for performance Performance based support contracts require the capture of feedback in order to measure contract performance, and drive continuous improvement. A well structured set of APSI, appropriately delivered to end users, can greatly improve the quality and value of feedback by automating the capture of related context data. The agile enterprise Effective information management provides agility in the face of change. Rapid communication of changes across all affected participants - such as a proposed modification or an update to a technical document - leads directly to improved service delivery. Avoiding just a fraction of today s cost caused by outdated product information represents a potential of huge savings. Every nugatory task avoided, every wrong spare not ordered, provides an immediate cost reduction. PLCS to upgrade the IT landscape including legacy systems The latest development in PLCS implementation technology is provided by web service capabilities. These allow existing applications to be wrapped in a service layer, creating a neutral interface which other applications can exploit by submitting appropriate requests. Workflow, or Business Benefits of PLCS in the Aftermarket: Existing product data can be re-used by all downstream processes Improved data quality allows for better decisions in all aftermarket activities The right work is done, when needed The correct spares are ordered Maintenance costs are reduced Improved feedback is available for performance management and continuous improvement The modification process can be accelerated and effectively managed The support system can be rapidly adapted to match changes in product performance or intended usage event driven processes can then be implemented across multiple applications. For example, on the completion of feedback, a report can trigger necessary follow-up actions, based on pre-defined rules. 8
Implementation Paths Many companies are implementing the PLCS approach. Experience shows that PLCS can be successfully implemented using either standard corporate IS methodologies or as part of broader business improvements. Standard implementation methodologies usually include several phases such as: Assessing the current environment Understanding the new opportunities Identifying the opportunities that offer best return on investment (ROI) Implementing the chosen option Measuring benefits and confirming the ROI Expanding these further gives ten key steps: Review of the Current Situation Executive Education and Awareness Best Practice Positioning Concept Generation and Analysis Roadmap and Plan Generation Business Benefits and Business Case Development Evaluation of Technical Demonstrator Pilot Implementation, including Business Case Validation Full Business Roll-out Continuous Improvement from Lessons Learned Within this context, the PLCS business vision and related activity model can be used to inform business improvement initiatives, illustrate current best practice, and raise awareness of information issues and opportunities by illustrating the necessary information flows across any organization, contract, or system boundary of interest. The PLCS information model can then be used to clarify requirements for new information systems and information deliverables. It can also be used to automate selected interfaces. The Assured Product and Support Information approach can be tested, implemented and exploited using commercially available PLCS-based software applications. PLCSbased web services can be implemented to consolidate and compare data from multiple systems, including automation of data consolidation through use of appropriate rules. 9
Next Steps The next steps that a company should take towards PLCS will depend on its current environment and maturity. Organizations with a strong track record in use of PDM or ERP may already be able to implement PLCS to automate selected interfaces and establish collaborative working. Organizations with more limited IT experience may initially want to develop their understanding by using the PLCS activity model to help review the current situation, and develop their information requirements. Education and training, from those who have trodden the path before, will always pay dividends. Technical demonstrations and presentations on the experience of other implementers are also readily available. Executive training In some cases, the 1-day Executive Overview provided by Eurostep will be appropriate. This is especially recommended for project and business managers, including product support engineers. It gives the background to PLCS, explaining the concept, and providing an overview of the information covered by the standard. The Overview addresses business drivers behind AP239, ways in which PLCS can be used to make processes more efficient, and development of a business roadmap for exploiting PLCS. Technical training The 3-day PLCS Technical Walk-Through provided by Eurostep has proven to be very helpful for teams preparing for implementation. This is especially recommended for IT managers, system architects and developers, and software engineers who may be appointed as translator or web service implementers. On the first day, the PLCS concept is explained, and an overview of PLCS presented. The focus of the last two days is on an in-depth technical description of the information model and guidance for its implementation. This prepares participants for implementing and exploiting PLCS. Tailored courses, positioning PLCS in the context of an organization s existing improvement initiatives can also be useful and Eurostep has successfully delivered a number of these. Training and awareness activities may lead to a Feasibility Study, to investigate how and where PLCS can be applied most effectively in a specific business context. Particular attention must be paid to the potential benefits in order to secure that all-important executive approval for a PLCS initiative to proceed. Many organizations are already benefiting from using PLCS. Readers seeking a deeper understanding of the issues should read Part 2 of this White Paper, Standards-based PLM: Re-engineering the Aftermarket with PLCS, Part 2 Technologies and Deployments which describes their experience and achievements in more detail. 10
Contact: Eurostep www.eurostep.com www.share-a-space.com info@eurostep.com John Stark Cadcamation Route de Chancy 103 1213 Onex Switzerland pdm@2pdm.com