Going Global with PLM
The complexities of product development are growing as a result of the challenges posed by outsourcing, globalization, cross-functional involvement, increasing time and cost pressures and burgeoning customer demands. However, just as these issues pose challenges, they also offer opportunities. This is where Product Lifecycle Management (PLM) comes in. PLM involves the strategic use of product information from concept through end-of-life - managing products from concept through retirement. Individual elements include concept, design, evaluation, refinement, sourcing, manufacturing, sales, service/support, replacement, and disposal.
On the front end, PLM helps create a product packaging and marketing/ merchandising plan that ensure differentiation and creativity. According to a study conducted by AMR Research, companies that effectively use PLM are able to reduce cycle time for development of "new to the world" products from 42 months to 25 months.
Mining the Full Range of Benefits
Further down the chain, PLM can assist with after-market activities. "In consumer goods, with the exception of products like automobiles, there is usually not a long after-market cycle," says Michael Burkett, research director, product lifecycle management, for AMR Research. "However, where there is an after-market cycle, PLM will manage information related to service and installation of replacement parts."
As companies begin to understand the benefits of PLM, the more widespread the technology will become, especially around portfolio management. "If you introduce numerous products during a release cycle, one challenge is determining which ones deserve the most resources," notes Burkett. PLM can help in making these decisions. If it is determined via PLM data that one product no longer has the same market potential because of recently increasing sourcing costs, that project can be killed and its resources shifted to a more lucrative project.
Upstream Cost Savings
Burkett is also seeing companies using PLM data to expand their cost-saving emphasis from the product development phase to other upstream activities. "Before, the focus tended to be primarily on improving the sourcing process," he notes. Example: A global consumer goods manufacturer would focus on getting all of the specifications and bills of material into a single location, allowing the company to engage in global sourcing, remove redundant materials, and streamline the supply base. More recently, companies have been expanding this process to include merchandisers, suppliers and product designers in concept development and pre-production testing phase.
One company making the most of PLM strategies and technology is H.J. Heinz. "Our quality technical group identified a need for us to manage specifications on a global basis," says Philip Heil, global programme manager. Heinz ended up expanding into a full PLM solution, including outbound information to retailers about products. The company utilizes a web-based application provided by Prodika which manages all of the product specifications for Heinz on a global basis. "It manages ingredients, packaging, process specs, consumer specs and trade specs," says Heil. Heinz also uses PLM to manage its global supply base for direct material (scoring and approving the suppliers). Another platform handles innovation and new product development, and still another facilitates product discontinuation.
The system, which to date has been rolled out across about 90 business units, 100 facilities, and 36 countries, has been a tremendous success, according to Heil. It provides consistency and direction, both of which drive visibility. "It gives us global visibility on what we are doing, where we are doing it, and how we are doing it," he states. By being able to manage data consistently, Heinz is better able to regionally view its data and make better business decisions. "It accelerates our ability to move product from innovation into the market, because it improves the workflow processes," says Heil. Heil is a member of an advisory board that includes a number of Heinz's competitors. "They are all impressed that we have invested in this technology and been able to make it work for us."
Virtual Creativity
PowerSki International, New Hill, NC, utilizes Pro/Engineer Wildfire 2 software from PTC. "The most exciting thing is that we can now create, in a virtual way, almost all of the mandatory aspects of our products," says Leo Greene, vice president ofengineering. One of the company's products is called the JetBoard. Although the design began manually, the company was able to make the jump to fully-digital definition via Pro/Engineer.
This led to confidence among everyone who was involved," says Greene. That is, once everything was defined digitally, not only did the company have confidence that the design would work, but a myriad of suppliers from around the world also had the confidence that they could put the parts together. "They were able to put together effective bids and reduce their costs, because they knew exactly what they were getting into," he explains.
The design also gave confidence to the company's dealer network. More importantly, it built confidence among consumers that the product would actually be delivered in the manner it was depicted. (Much of the information and details of the product concept were published on the company's website.) "In other words, if you can see it on a computer, it becomes as real as if it were right in front of you," says Greene. "Once demand built for it from consumers, it created pressure in the market to make it available." Finally, the confidence among the dealers and consumers generated interest from investors to provide capital funds to support the project in preparation for the product launch.
Another benefit of the system involves engineering re-use. That is, by having a fully-defined virtual prototype/baseline, PowerSki can develop its next year's model. "This gives us a leg up, knowing we can use a lot of components that we already have on hand," says Greene.
Cruising For A Solution
Santa Cruz Bicycles, Santa Cruz, CA also utilizes PLM software from PTC. "Our goal is to get as much information as we can into the design as soon as possible, then test it as quickly as possible," says David Earle, engineering director. "In this way, we can make all of the mistakes early, when they are the least expensive." The company has a policy that quality and performance are more important than timeliness and cost. As such, it releases bikes when they are ready, not based on sales/marketing timetables. "We never bring a product to market that's not ready".
With the assistance of PTC's Pro/Engineer 3D product design solution, Santa Cruz Bicycles designed a new four-pivot suspension system called Virtual Pivot Point (VPP), replacing its existing single-pivot system. The software's digital product simulation reduced simulation time from six hours to five minutes.
With the introduction of the first bike using VPP technology, revenues for the company almost doubled in one year. In fact, the project was so successful that the company subsequently began using the software to redesign all of its existing bike designs, leading to the expectation of another large jump in revenue in 2005.
The End Game Companies planning to adopt PLM need to keep a couple of things in mind, according to Heinz's Heil. "First, you have to get everyone's commitment to formally identify all of the business processes. Then, you need to get the commitment to make sure that all of the data is standardized and loaded." In other words, without the assurance of complete and accurate information on the front end, subsequent phases of PLM are virtually worthless.