Get Savvy about PLM

One of the big project level benefits of a PLM implementation is that most PLM solutions can be rolled out to the users in stages. New PLM processes and workflows and modules can be incrementally added after the foundation is laid - this is GREAT and it is TERRIBLE.

It is great that PLM can have core functionality within weeks or months of starting a deployment - systems like Arena Solutions or Teamcenter Express that target the small businesses can be rolled out literally in 1-2 weeks if your business can accept out of the box workflows for change management. For the mid-sized businesses systems such as Agile and Windchill can typically be deployed within 3 to 4 months with core functionality in place. What addes time to these types of deployments is typically dealing with preparing the training program and process documentation associated with implementing these solutions. With the larger enterprises implementing Windchill, Teamcenter or Enovia the enterprise complexities come into play earlier and take longer to deploy at 6-9 months, but even the large enterprises tend to only see a small piece of the PLM vision and only obtain limited benefit due to stopping at change management.

What is terrible is how many PLM systems get implemented without an enterprise roadmap that takes the implementation beyond the foundational deployment. Change management is put in place without enabling the part classification (to enable reductions of duplicated parts). BOMs are built without enabling Multisite or BOM variants (tracking the site specific build data or the engineering vs. manufacturing BOM). Manufacturer and Supplier data is managed with the product information, yet the external partners are still sent CD’s or paper and kept outside the loop on major changes that impact their contribution to the finished product.

Why is this? It is the curse of the initial success of a PLM deployment. When an ERP system is rolled out for the first time (after 2-3 years preparation) it gets turned on with 90% of the functionality in place and then is very cautiously modified mostly for tuning purposed. PLM on the other hand can be rolled out successfully with only 40-50% of the business functionality implemented and considered successful at which point the senior management often thinks the project is done - losing the vision for the other 50-60% of business benefits that have yet to be obtained.

It is this tendency that makes the initial long term roadmap so critical. Without defining what the long term business objectives are that the PLM deployment is to address the execution typically halts after the “engineering” system is in place yet the enterprise enabling capabilities have not even been tapped into. The selection of the system is often targeted at a short term objective, then the longer term benefits may be hindered or require a second PLM system to obtain the next tier of benefit. (See Gartner’s

Predicts 2008: Manufacturing IT Becomes More Than Business IT

, December 2007)

No company would deploy ERP without a 5 year plan. Yet PLM, which impacts 30-40% more end users than ERP, typically is deployed without a similar long term plan. Then the users and the management end up stymied about why the benefits expected from PLM have yet to be achieved. (See Aberdeen’s July 2007 report -

Profiting from PLM: Strategy and Delivery of the PLM Program

)

What is your PLM roadmap?
Have you tied the PLM implementation to true business benefit or are you just implementing a data vault?
Do you have a phased plan that identifies the business value obtained from each and every phase?

What many companies will find is that for true understanding of what is possible and what to do to build that roadmap - it takes experts in PLM and in your industry issues to help you build that vision. To expect the IT or Engineering department to vision cast is often not possible - as internal resources often do not have the subject matter or process expertise to cast the PLM initiative into a plan that ties the implementation to direct business strategy.

I recently did an examination of the tradeoffs of using hosted versus on-site PLM systems.  The decisions are challenging and there is no particular right or wrong answer but figured it was time to share my findings. 

Traditionally PLM systems have been implemented at a manufacturing site with very much a similar business implementation paradigms as used with ERP systems. However, as with CRM and ERP systems, there is an “on-demand” (that is a hosted) option. So which to use? Small emerging businesses have very different decision based issues than the established businesses. So here are some of the issues that the range of companies would need to examine in the decision of what type of deployment to consider (pick on image to see full sized view):

The challenge is to make a decision when a company is sitting near the boundaries of one profile or another. This discussion has not even covered the cost tradeoffs in the selection process - only the business factors that should be weighed in on.

Copyright 2007, LR Hirr, All Rights Reserved

One company I spoke with had a problem that was far from unique.  The company had complex machines in factories around the world.  One line of their machines had numerous computer components in it - including an OEMed CPU board (of a specific revision) that was recalled by the manufacturer for safety reasons.  Not surprisingly all systems had to be checked to see if the specific board revision was on the system for replacement.  Because the company had relatively low product volumes it had never considered tracking the system assemblies to the revision level of the components on their machines nor to the serial numbers of the OEM’d parts.  So the only solution was to send field engineers to each machine that had been shipped in a 6 month window (that was as tight as the window could be narrowed to to find the boards).

 So the company stocked the field personnel with replacement boards and sent them around the world to replace the unsafe boards.  Lets look at some of the costs associated with that effort

1) shipping boards to field offices

2) field personnel scheduling with each customer

3) travel and lodging for most customer visits

4) shutting customer production down for “inspection”

5) discovering X% of boards were not affected

6) replacing Y% of boards

7) running short of replacement boards and waiting on shipments

and the list goes on.  Multiply the time, cost, disruption by every machine or customer affected.

Has this ever happened to your company?   Revision tracking of components to serial numbered final assemblies (knowing the AS-BUILT configuration) is a core functionality for many PLM systems.  If you believe that a PLM system  is too costly - consider the above scenario and how much is saved by knowing each exact system affected and being able to work directly with the customers with affected systems and not disrupting the customers that are not affected.

 We all remember the battery recalls on laptops recently - think of what would have happened if the affected lots were not identified.  In a matter of minutes one could check their laptop, do a lookup on the web and know whether thier laptop was affected.

Copyright 2007, LR Hirr, All Rights Reserved

While developing a business case for one company to invest in PLM tools, we took a look at the data transfers to the supply chain.  The company had complex product structures and would use suppliers to prebuild many of the assemblies to design specifications.  Because of the product complexity, the company typically processed 60 change orders per week which then had to be communicated to the suppliers. 

 The process of communicating to the supply chain required that procurement personnel create an electronic package of the drawings, work instructions, and specifications all of which may have been updated by a change order, and send the package (either on a CD or via FTP) to the supplier.  The supplier in turn would update their files with the newer files and begin production based upon the change instructions.

 The problems came in when the supplier would fail to remove legacy files and file naming conventions were not observed so that the supplier was not always sure which documents were correct.  In addition, sometimes a more recent change would have been delivered before a earlier change order and the information gets out of sequence.

 In our discussions with the procurement team, each of the 10 buyers indicated that they spent approximately 20% of their time generating package files to send to the suppliers yet the data was already fully contained within the company PDM system (PDM having limited external capabilities compared to PLM).  To top it off, the top three suppliers each indicated that they had to keep 2 full time resources dedicated to the company due to the rate of change and the need to manage the files being sent to them daily.  Each supplier estimated that if they had direct access to the production information they could reduce the manpower costs they passed to the company by over 50%.

So for this one company - they realized they would be able to gain the equivalent of 2 resources internally and also experience cost savings from the supplier with a more mature PLM system.

The challenge however becomes then the “acceptance” of a new system that has the potential for taking jobs away if the company is in a cost savings initiative.  The flip side of the coin is when a business is facing growth - making peoples jobs more effective reduces the need to increase hiring in response to the growth.

Copyright 2006, LR Hirr, All Rights Reserved

A case study:

Company Profile:      Semiconductor Equipment Manufacturer

                                    $120M Revenue

                                    Field Service Engineers providing warrantee service globally

Labor savings from PLM: minimum $24,000/yr

Situation:

Field service personnel often have to replace parts on customer systems.  The parts are large and highly specialized.  The FSE has to identify the correct part number to place orders for airfreight delivery to assure a rapid resolution to the customer situation.  To facilitate their work, their department head instituted a process to provide part drawings for his personnel on CD’s.

Process:

The company developed its product designs on advanced 3D CAD systems and the designers and drafters had complete electronic drawings within the CAD system, however were not generating formats that were readable outside the CAD application.  As a result drawings were being plotted using a D size printer, filmed to microfiche and placed in microfiche files at various locations within the manufacturing environment.  So all parts were put through the following steps:

Note that at no point is the initial plotted drawing retained.

Once the cards were in the files then the field service process would step in.  Their process looked like this:

Note again the paper drawing and even the microfiche do not serve any purpose other than a transition data set.  This process would be repeated quarterly for hundreds of parts to assure that the part record held by the FSE’s was reasonably up to date. 

So to look at the cost of this process lets’ make some basic assumptions which may be simplifications however they will get the point across.  Assume a clerk is performing the work so might be earning $14/hr or $20/hour burdened.  This is a reasonable estimate for most high tech companies. 

The document control portion of the process for generating each microfiche card and filing it is roughly 45 minutes.  The field service clerk is then spending approximately 15 minutes per item.  So for each drawing one hour is spent taking an electronic file to paper to film to paper and back to electronic format.  Multiply that by 300 drawings per quarter or 1200 hours per year. Which means that $24,000 is spent on this one process per year, not including the risks that a part has changed in the interim and that the FSE obtains out of date information.

With a PLM System in place a few months later, the same situation looked more like this:

And the total process takes minutes rather than hours with direct access to the latest information needed by the FSE.

So with one minor process, not highly visible to the corporation, a minimum of $24,000 of labor cost was recovered for more valued activities per year.

Copyright 2006, LR Hirr, All Rights Reserved