Page 1 - Welcome Page 2 - Update Page 3 - News Page 4 - Brief lines |
* 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." That's the way I started "Part 1" of this article, but it's important and worth repeating. It's also a bold claim so I backed it up in the first article by comparing the business value map of PLM to that of all of the previous initiatives such as JIT, MRP, SCM, ERP, TQM, MRP II, etc. It clearly showed that the opportunity to focus on revenue is many times greater than the opportunities available through focusing on cost. However, there are even more ways to substantiate PLM as the opportunity of a century. Manufacturers make money by selling products. But they can't be just any product. They have to be the right product, for the right price, and at the right time. When those three elements are realized simultaneously, the product will be successful. Develop that into a repeatable process and the business will be successful. Now let's look at all of those previous cost reduction initiatives again. They all focused on either the Supply Chain or Operations. But is that where products really come from? When you look at the New Product Development process, you can break it up into two distinct phases. The first is the Design Chain which executes the concept, feasibility, definition, and design/engineering tasks. The second is the Supply Chain which carries out the sourcing, production and service/support. Both chains have an impact on the magic formula of right product, right price and right time; but their respective influence is nowhere close to equal. 
Let me explain the logic behind this table . . . Right Product While the Supply Chain manufactures the product, they don't really "make" it. Think about that. What "makes" a product is its perceived value from the point of view of the customer. And that perceived value is derived from the benefits the customer will get from using it. And those benefits are created by the features in the product that were developed by the Design Chain. So the Design Chain clearly has more of on impact on the perceived value of the product. Think of it this way. When you buy a car, do you care where the nuts and bolts came from or when they were ordered and paid for? Do you care if it was painted by the manufacturer or one of their suppliers? The only time the Supply Chain might come into your decision to purchase one product over the next is if you know they have a better delivery time, or service and support organization. Therefore it's safe to say that 95% of what make a product the "Right Product" is determined by the Design Chain. Right Price Most people have heard this metric. Eighty percent of the cost of a product is determined by the Design Chain. Manufacturing can impact some of the cost, but the decisions made by the Design Chain are what largely determine how expensive it is going to be. So think about that. The impact of the Design Chain on cost is four times as great as the impact of the Supply Chain. Right Time This is a big one. The clock starts ticking the very moment someone in the company has an idea for a new product. Unfortunately, most companies have a very slow process for speeding that idea through the first few phases (often called the "Fuzzy Front End"). Very often it doesn't become urgent until it's given to engineering. (Think of how many times your engineering department is given a six month deadline after marketing has been kicking around the idea for over a year.) However, the clock does not start for the Supply Chain until the product is officially released for production. By this time most companies have been involving the Supply Chain so that their ramp-up time is not on the critical path. This makes the time from production release to delivery of finished product relatively short. So if you look at the entire schedule from the day of the first concept, you can see that 90% of the development time is spent in the Design Chain. The challenge was to quantify the impact of PLM and show how it will be the biggest opportunity of a century for manufacturing. When you consider the three variables of a successful product you can see that the impact of the Supply Chain is very minor compared to the impact of the Design Chain. But even this does not tell the whole story. Most of the previous initiatives in the Supply Chain had very little to do with increasing sales - and therefore their potential was limited. With the opportunities available now to perfect the Design Chain, the outcome will be increased sales and market share. And where is the limit to the advantage you can gain from that? It won't be difficult for the casual observer to identify the companies that get it right first. Because once the barrier of a superior Design Chain is developed, it will be nearly impossible to overcome. 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. * 1.5 The Challenge of Global Products - Company View * (1.1 Global Products and You) However, if you work for a company that develops, markets, produces and/or supports products, you can probably think of a few questions that your company needs to answer if it is looking at the opportunity of Global Products. For which geographical markets could we offer such products? The whole world? One continent? Several continents? Just a few countries? If so, which ones? Would we introduce a new Global Product everywhere in the world at the same time, or introduce it first in one market, then in the others? Should we sell direct to the customer everywhere, or should we sell through third parties? Should we sell direct in some countries, and through third parties in others? Should we provide support directly to customers everywhere, or should we provide support through third parties? Should we sell over the Web? Should we have the same price everywhere, or adjust the price to each market? Should the price be quoted in our Head Office currency, or that of the customer? If we have the same price everywhere, should we quote it in dollars, or euros, or yen? And what happens when exchange rates change? Which prices do we change? Should we have one product for customers throughout the world? Or should we have a different product for each continent, or even a different product for each country? Maybe we know what a potential customer in Columbus, Ohio wants, but how about customers in Seoul and Bogota? Will the same product satisfy customers in Vostok, where the temperature can drop to -129 °F, and in El Azizia, where it can rise to 136 °F? Should we have one product for everybody, or different products for women and for men? What architecture should we have for our Global Products? Should the product be modular? If so, how do we decide on the modules? How do we define the interfaces between modules? Will interfaces be country-specific? Will we have product platforms? How do platforms relate to modules? Should we have a core product that we can sell world-wide with local customizations? If we are able to make a product that we can sell world-wide, how can we retain market leadership over other companies in the world that, presumably, can do the same thing? Which of our competencies really set us apart from competitors? Which of our product features and functions set us apart? Where will we develop our Global Products? In a single location where we can bring our best people together and give them the best tools in the world? Or, to be closer to the market, should we develop in several regional locations, even though this implies limited resources at each location? Should we develop the product in one location and then offer the same version worldwide? Or should we develop in one location, and then localize that development in different locations round the world? Or should all the locations work together to develop a common product that can then be produced with local variations? How will we know what to develop for customers in faraway places? How will we know on which development projects we should work? How will we manage development projects that involve companies in different locations with different management structures? Will we manufacture in-house? Or should we just assemble in-house? Should we move all our manufacturing to a new subsidiary that we build up in a low-cost country? Should we outsource manufacturing? Should we always work with our "preferred suppliers", or should we always select on the basis of lowest-cost? And what happens if, as a result of exchange rate changes, another supplier becomes lower-cost than a previously preferred low-cost supplier? And what about design? And development? And marketing? And IS? And finance? Should we outsource them? What should we outsource, what should we keep in-house? What should we offshore, what should we keep at home? How will we inform customers around the world about our products? In which language? Over the Web? On television, in magazines, in journals, in newspapers, on billboards? Should we have the same message in all countries? How will we address regulatory issues? Should we specifically aim to meet regulations country by country? Or should we aim to have a product that will meet the toughest regulations in all countries so that we are sure we can meet all country-specific regulations? Which business processes should we use? Which IS applications? Should we use the same processes and applications everywhere in the world? If not, what must be global, what can be local? Should we use a set of IS applications from just one vendor, and hope that will eliminate integration problems between applications in different application areas? Or should we use best-in-class applications in each area, even if they are from different vendors and do not integrate well? And where should we store the data that defines our products? How can we keep it safe from envious prying eyes? How will we train our people? Should everybody get the same training, or should training be country-specific? Should we speak the same language everywhere? * 1.6 Practical Considerations and Potential Risks * Global Product: Strategy, Product Lifecycle Management and the Billion Customer Question 
* PLM Strategy 2008 and Product Life live 2007 * It's been clear for many years that companies need to develop increasingly complex products very quickly, manufacture parts world-wide on multiple sites, and support customers world-wide over many years. It's also been clear that, to meet these needs, companies need to deploy an integrated PLM infrastructure of processes, work methods, applications, data and human resources - and the corresponding organizational structure and metrics. It's also clear that it takes time for all those involved to understand what is needed and to start taking action. Events such as "Product Life live 2007" provide a good opportunity to understand PLM better. Having understood the need for PLM, business executives look for action and results from their PLM teams. They expect to see a coherent, business-oriented PLM initiative in the corporate plans for 2008. They want to see that money-making innovative products will be brought to market rapidly and to schedule. Has your company thought through the details of PLM and its development during the next few years? What will the PLM Team be proposing in the PLM Strategy? How will the PLM Initiative be presented to the CEO and the CFO? What will they be told about the status of PLM in 2007 and the vision for 2012? Are you looking for assistance with definition of a PLM strategy or a PLM plan? Or for presenting PLM to the CEO or CFO? For more information about assistance with PLM, arrange a meeting on Tuesday November 6 or Wednesday November 7 at the Product Life live 2007 Conference and Exhibition in Mainz, Germany, or contact us at John Stark Associates. * 1.3 The Need for PLM * (1.2 Short Answers) There are so many reasons why PLM is needed, that it is difficult to know which are the most important. And as the reasons will be different for companies operating in different industries and in different countries, it's probably impossible to prioritize them. So here's a list of very briefly described reasons, in no particular order:
Often an enquiry is held into these problems. Typical sources of the problems are :
* 1.4 Implementing PLM * Product Lifecycle Management: Paradigm for 21st Century Product Realisation |
