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* Welcome * Welcome to 2PLM, an e-zine distributed about every two weeks. This issue includes :
David W. Paulson The biggest opportunity in a hundred years has arrived for manufacturing. Henry Ford's innovations in mass production happened at the beginning of the last century. It not only propelled his company to the top, it completely revolutionized the industry and forced his competitors to change or go out of business. History is about to repeat itself. That opportunity is here again. For most of the rest of the twentieth century, manufacturing innovations were fairly evolutionary. Then in the mid 1970's an accountant figured out how to free up all that cash that was tied up in inventory, and JIT was born. In the thirty years since, we've had quite a few more initiatives such as MRP, SCM, ERP, TQM, MRP II, etc. But think of the value map of those initiatives. They mainly focused on reducing cost. While that's a good thing, there is a limit - you can only reduce cost a finite amount. And squeezing the margins of your suppliers only weakens your supply chain. A very simplified business value map is shown below. The #1 goal of almost all companies is to increase company value. If you look at the opportunities to increase value, there are really only two - increase revenue or decrease expenses. Each of those opportunities has multiple drivers, but nearly all of the previous manufacturing initiatives focused on decreasing expenses. 
However, the opportunity for increasing revenue is much greater. While there is a theoretical limit to the quantity you can sell, it is substantially higher than the limit you'll hit when cutting costs. And while "a penny saved is a penny earned" might sound true, it's actually not in this case. Profit earned through increased sales is actually worth more than the same amount of profit earned through cost reductions. How? Not only is every additional sale an increase in market share, it's also a reduction of someone else's revenue and market share. And market share advantage gives advantages in margin, marketing, sales, distribution, etc. And those advantages all equate to further cost savings. The opportunity described here is called PLM, or Product Lifecycle Management. There are a lot of varying definitions of PLM, but the best ones make two points. The focus of PLM is on the product, and the purpose of PLM is to increase company value. But that might make you ask, "So what's new about PLM? We've always been trying to increase our company value by selling great products." That's a good question but the answer is simple. What's new is the focus. While you've always been trying to create great products, those previous initiatives shifted the focus to something else - operations, suppliers, materials, etc. Fortunately, PLM puts the focus back on the product. We all know that great products make great companies (and vice versa), and PricewaterhouseCoopers determined that companies who generate 80% of their revenue from new products will double their market cap in five years. The value map for PLM is shown below. While the intent of PLM is to impact the revenue portion of the map, it will also impact the expense areas as well. So you can see why the opportunity inherent in PLM is much greater than that of the previous initiatives. 
You might be wondering, "If PLM is such a great opportunity, why did we pursue all those other initiatives first?" That's also a good question and there's a good answer as well. All of the previous initiatives happened when there were tools available to enable them. When the accountant figured out JIT, the only tools required were paper and pencil. As the ability of our tools increased, so did the sophistication of the initiatives. PLM requires tools that have only recently been developed - and they're constantly improving. This look at the value map is just one way to show that the opportunity within PLM is greater than any we've ever seen before. In the next article I will show more, and even more compelling, justifications for the high expectations. By the way, Henry Ford's innovations in mass production allowed him to produce 15,000,000 Model T's from 1908 to 1927. The first ones took 14 hours to build and sold for $1000. Within eight years he had reduced the production time to 93 minutes and the price was down to $360. The Author David W. Paulson, NPDP, the President of Accuer, Inc., can be contacted at dpaulson@accuer.com. Accuer helps manufacturers decrease their time-to-market and increase their market share. Their services solve efficiency problems that plague engineering and impact other departments in the enterprise. * 1.4 The Challenge of Global Products - Customer View * (1.1 Global Products and You) As a potential customer of a global consumer product you probably see it first on the Web, or on television, or in a magazine. It's probably being used by happy, healthy, beautiful people and you want to share the experience. You want that product, and you are going to pay good money for it. It goes without saying that you want a product you can use. You want a product that you can use where you live, in your country. And you want product documentation and instructions in a language you understand. You don't want, for example, a car built for people in a country where the average height is 15 cm less than in yours. You don't want a product - or product packaging or product labelling - that is offensive to your religion or national culture. You don't want a product that you can't even use in your own country because it falls foul of government regulations. Similarly, if you are a user of an industrial product, you want it to be easy to use and safe. You want understandable operating instructions. You don't want to work all day at a machine that was built for a country where people are on average 15 cm taller. You don't want to strain your arm and leg muscles all day long to work the machine. As a customer or user of a Global Product, you may not even realize that it is a Global Product. You probably don't think about how it was developed, manufactured and made available to you. That's not your concern. You just want it to work the way you like. * 1.5 The Challenge of Global Products - Company View * Global Product: Strategy, Product Lifecycle Management and the Billion Customer Question 
* PLM for the SME - Not a Problem, but an Opportunity * PLM is sometimes thought of as a huge and difficult undertaking only of interest to large companies. In reality, PLM is often a huge problem for large companies. However this is not because of PLM, but because large companies often have complex or frequently changing organisations, and very different applications and processes on different sites. Also, the responsibility for PLM in a large company is often unclear, or divided between different organisational entities. PLM should not be a problem for the SME, but an opportunity. In the globalized world, there is an opportunity for an SME to sell its products throughout the world, and not just to local customers. PLM is an enabler for this opportunity. It allows the SME to find many new customers, understand their needs, and then sell its products and services worldwide. The typical SME doesn't have the barriers to PLM that a large company faces. The environment is much clearer and there is less complexity. It is easier to develop a PLM Strategy, and to identify and implement the best components for a PLM solution. Find out more. PLM Strategi & Vision 07, Stockhom, 18 October 2007, Agenda * 1.2 Short Answers * (1.1 Talking to a VP) PLM is the activity of managing a company's products all the way across their lifecycles in the most effective way. In so doing, it enables the company to take control of its products. For various reasons, some of which are mentioned in the next section, companies are losing control of their products. Losing control of their products can have disastrous effects. Keeping control isn't easy. During the development of a product, it doesn't physically exist, so during that phase of its life it's difficult to control. Once a product does exist, it should be used at a customer location, where again, it's difficult for a company to keep control of it. PLM helps bring better products to market faster, and enables better support of customers' use of products. It's important to bring a product to market quickly - otherwise the customer will choose a competitor's product before yours gets to market. PLM helps reduce the cost of a product. It's important to reduce product costs - otherwise the customer will choose a competitive product that costs less than yours. It's important to support customers' use of your product - otherwise they may stop using your product and use a competitor's instead. PLM enables the value of a product to be maximized over its lifecycle. With accurate, consolidated information about mature products available, low-cost ways can be found to extend their revenue-generating lifetimes. PLM gives transparency about what is happening over the product lifecycle. It offers managers visibility about what is really happening with products. Before, they were often faced by an opaque mass of conflicting information. PLM provides them the opportunity to manage better. Based on the real information, they can come to better decisions. PLM offers many ways to solve problems and seize market opportunities. Each company will apply it in a different way but all will find that the benefits are substantial. Many companies have improved competitiveness through successful implementation of PLM technologies, reducing, for example, product development costs by 15%, product development time by 25%, engineering change time by 30%, and the number of engineering changes by 40%. Results like these have a significant impact on an organization's competitiveness. * 1.3 The Need for PLM * Product Lifecycle Management: Paradigm for 21st Century Product Realisation |
