Get Savvy about PLM

April 22, 2009

Successful Implementations – Invest in Phase 1 – Establish the Business Case for PLM

Filed under: Cost and Benefits,Lessons Learned,Mythbusting,Success or Failure: Lessons Learned — Laila Hirr @ 2:46 pm

A reader recently asked me to share perspectives on successful PLM deployments – what are the common themes across successful implementations.

The thought that comes to mind first and foremost is the upfront planning.  By planning I don’t mean the development of a project schedule or of the system requirements - it’s the investment in taking the time to really make sure the business justification is well understood.

There is a process I have used repeatedly that involves managing expectations very carefully before engaging the software vendor.  Too often it seems that the PLM decision is reactive – as sold by the software vendor, not based upon a clear set of business drivers.

To be successful with the process steps executive level endorsement is critical as it has a lot in common with a business process assessment in that it probes the entire organization, however, the assessment is focused upon the product record, not operations or production.  The challenge for many however having someone who knows  PLM well enough to be able to see the opportunities is often not a skill set contained within your company.  The cost of having consulting done for this stage is often well worth the initial investment when taking into account the overall investment you may end up making in the implementation.

The single most significant thing to be done is to look at the PLM project with the same kind of rigor as a product development project.  Too often IT projects (coming from a non revenue perspective) fail to use simple PMO types of processes.  It all starts with the business case phase.

phasedprojectplans

But on the successful implementations – the business case stage would include the following activities:

  1. Take your organization chart and mark every department that handles product related information, identify key external partners that are also interacting with your product records (note – do not count your financial transactions here – just focus on the product information).
  2. Evaluate each department around it’s  handling of product information or the product record look for manual transactions, duplicated entries, printouts, markups, shadow databases, network storage of product information.  Include examining what IT infrastructure components are involved.
  3. Dollarize the impact of the “non-value” added activities associated with these product record related transactions – the caution is that executives will readily let you turn this into a blame game rather than a financial business case – so be careful how this is framed (Read the Dollarization Discipline for more on this).
  4. As in product development project management practices – develop a high level specification (similar to a Market Requirements Document) that ties business objectives to the functionality requirements – this is NOT where to say it must run on xyz database, or have n tier architecture.  This is a market level specification for executive consumption.
  5. Obtain executive buy-in for the next stage – do not go too deep into specification definition until this phase is approved.

January 7, 2009

Today’s economy and the enterprise: Now or Never

Filed under: Cost and Benefits,Enabling Technology — Laila Hirr @ 11:57 am

I watched Charlie Rose last night as he met with Leo Apothekar, co-CEO of SAP AG, and Andrew Mcaffee of Harvard Business School as they discussed the state of affairs with the economy and IT. Mr. Apothekar at the end of the discussion stated that in today’s economy there are two behaviors in IT: Now or Never. That companies recognize that either they must invest now in the process factories (his description of the enterprise applications) for efficiencies or they risk not surviving.

Some of the key points they discussed that I found very pertinent are that:

1) the Lack of Integrations of systems has been an Achilles heel to the IT industry. This was most clearly brought out in the examination of the intelligence community after 9/11 and in today’s banking situation. Too many systems and too isolated systems have led to breakdowns in critical functions. The good news is that more and more of the enterprise applications have been making the access to the data structures simpler and thus easier to build integrations.

2) the need for flexibility to foster use. As Andrew Mcaffee stated it was once thought that to get a good outcome you had to tightly control the process, yet wiki and open source show us that the organic controls are working.

3) the connectivity inside, outside and across boundaries is through process. Leo Apothekar gave a very visual description of this environment. To add to his words I’d suggest you take a look at code swarm Code Swarm videos give a very good sense of the complexities and interactions of product development (for code) – after watching it – just imagine the interactions that include electrical and mechanical design, not just software – and you begin to get a sense of how crucial access, vaulting, and change management are across both the internal and external enterprise.

4) the emergence of “cloud” computing for the enterprise. The use of the internet or the “space out there” as the environment for the enterprise operations.

In their discussion they covered other topics such as the challenges of employee retention and the viability of open source for the enterprise. I’m pleased that Charlie Rose programming posts the replays on their website, since he is on so very late at night.

November 26, 2008

18.5% improvement in profit margins with PLM? Sign me up!

Filed under: Cost and Benefits,PLM — Laila Hirr @ 4:50 pm

PTC sent my husband the following Aberdeen report today

    The Best Kept Secret of Top SMB Product Developers?

published in July 2008, that confirmed what I see every day in the SMB market and in the SMB perception of PLM. What was interesting was that they concluded that SMB Executives are still struggling with perceptions.

SMB executives under estimate the level of effort associated with implementation yet they largely overestimate the overall cost of PLM. Aberdeen has a very good chart in the report showing the difference between reality and perception.

The best in class SMB’s see a 26.5% improvement in profit margins after deploying PLM showing that definitive ROI is available. To be that successful, the execution of planned implementation, out of the box systems, and conscious adaptation of business practices all being spearheaded with executive buy-in is critical. But even the “average” SMB implementation of PLM is yielding an 18.5% improvement in their profit margins.

What is heartening to me is that Aberdeen confirmed that the PACE framework that I’ve adhered to for years, is the primary means for a successful PLM implementation, namely
- Executive goal setting/workshop
- Requirements gathered from across the enterprise (not just engineering)
- Prioritize PLM plan to address top pain points
- Executives remain involved throughout process
- Address business process mapping prior to implementation
- Measure/track estimated deployment costs to actuals
- Establish success criteria prior to implementation

Thank you Aberdeen for providing one of the best business based perspectives on PLM I’ve seen in a long time.

July 30, 2008

IT invests in Collaboration Tools – so where is PLM?

Filed under: Cost and Benefits,Mythbusting — Laila Hirr @ 5:36 pm

I was reading this weeks issue of Information Week – following an article on one of my favorite topics – IT spending (in an uncertain economy)…and was heartened to see several key comments. See

In the article from July 28th, 2008 – Stare down the bear it is stated that companies are viewing the present uncertainties with a view to “leap ahead of weakened competitors” and are “plowing ahead on collaboration technologies” while conserving in the tactical areas.

This should hearten those of us who work extensively in PLM – yet it doesn’t. The frustration is that too many executives view PLM as an “engineering system” not as an enterprise necessity. While many PLM systems get implemented within engineering departments it’s typical to find that in short order, the rapid access to product information, the supply chain enabling, the multi-site collaboration capabilities – more employees within a company will be accessing the PLM environment than any other enterprise application.

Many of the PLM systems enable design reviews, assembly instructions, site specific component designations, hazard tracking, safety notices, policies, and processes all to be maintained across the business. Any business that has multiple facilities and produces products, should not forget that PLM is a highly critical collaboration solution (some even include conferencing systems embedded within them).

If your business is looking for efficiencies and reduction of costs associated with communications and collaboration – hopefully you are looking at your information flow in that context as well and examining what can be done to eliminate the overheads associated with transfer, loss, duplication of product information. After all – your business is based upon your products, right?

July 11, 2008

The importance of a long term roadmap for PLM

Filed under: Cost and Benefits,PLM,System Selection — Laila Hirr @ 10:28 am

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 adds 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.

February 6, 2007

PLM: In house or Hosted?

Filed under: Cost and Benefits,Mythbusting — Laila Hirr @ 1:08 pm

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):

On-Demand or In-House PLM

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

January 6, 2007

Traceability – can you find products affected by a component failure in the field?

Filed under: Cost and Benefits,Information Change Management — Laila Hirr @ 8:10 pm

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

October 24, 2006

The hidden costs of exchanging production information

Filed under: Cost and Benefits,Mythbusting — Laila Hirr @ 12:12 pm

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

October 12, 2006

Field Service needed Parts

Filed under: Cost and Benefits — Laila Hirr @ 5:13 pm

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:

Drawing to Microfiche Process

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:

Microfiche to CD

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

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