Recently we were asked if it was possible to provide a BRIEF overview of typical EDM/PDM costs and benefits. When we asked what the ‘BRIEF’ meant, the answer was ‘how about 2 pages ?’ So we said ‘OK’. We’ll start with the costs of EDM/PDM :

First of all there’s the cost of the software :

• the basic EDM/PDM software modules
• perhaps some additional software options
• underlying software such as the DBMS
• complementary software such as a viewer

Then there’s the cost of the hardware :

• the server or servers
• maybe some clients
• some peripherals such as a scanner

Then there are the network costs :

• network installation
• network upgrading

Even before the EDM/PDM system is in use there’ll be costs for:

• feasibility studies
• prototyping
• planning
• consultancy
• system selection
• customization
• conversion of legacy data
• loading data in the system
• interface development
• development of new working procedures
• modification of existing procedures
• education and training
• restructuring engineering information

And once the system is in use look out for costs for:

• software upgrades
• hardware upgrades
• network upgrades
• network usage
• planning
• consultancy
• customization
• integration
• conversion of legacy data
• loading data in the system
• system management and operations
• interface development
• development of new working procedures
• modification of existing procedures
• education and training
• participation in conferences and user groups
• restructuring engineering information

Quite a lot of costs, but hopefully there’ll be some benefits which we’ll split into two categories:

• reduction of costs
• increase in revenues

First, some ways you can reduce costs with EDM/PDM:

• reduce direct labor costs in activities such as engineering, manufacturing and field service. Specialists in these areas - designers, process planners, part programmers, etc. - waste a lot of time on data retrieval and management activities. Once a system can do this work for them, they will have more time available for value-adding activities. As a result, fewer specialists will be needed for the same output.
• reduce overhead labor costs. Most companies are full of people such as administrators, supervisors, clerks, managers, checkers, information managers, filing staff, data entry clerks, inspectors, documenters, BOM conversion staff and manufacturing clerks who don’t add value. The EDM/PDM system will carry out a lot of the paper-shuffling, data re-entry, data formatting and administrative work that is currently carried out by many people both in engineering and in other functions. As a result, fewer people will be needed for these wasteful tasks.
• reduce material and energy consumption costs through the use of optimized designs, better decisions and better purchasing. The EDM/PDM system will provide product developers better information, so that they will be able to take better decisions that will lead to reduced manufacturing costs.
• reduce the cost of purchased designs and parts. The EDM/PDM system will provide more accurate and more detailed information, allowing people to negotiate better prices for purchased products and services.
• reduce the cost of quality. This can be achieved by reducing scrap and rework, penalty costs, warranty costs, recall parts, erroneous order and manufacture of parts, obsolete parts and product liability costs. The EDM/PDM system will reduce the number of errors made along the engineering - manufacturing - delivery - service chain.
• reduce the costs of storing information. With the EDM/PDM system, information will be stored on cheap, compact media rather than on paper. Once all the information currently stored on paper has been transferred to electronic media, the buildings, rooms, vaults, cupboards and drawers currently used for paper storage will be available for more useful purposes.
• reduce the costs of communicating information. With the EDM/PDM system, information will be transferred quickly and cheaply by electronic means rather than by the slow and expensive transport of paper documents.
• reduce the costs of holding finished inventory and work in progress. This can be achieved in both engineering and manufacturing by rationalization and standardization, and by reducing the number of parts. The EDM/PDM system will provide information when it is needed and not before. Examination of the detailed descriptions of all the parts and products in the system will show many similarities and a high potential benefit from rationalization.
• reduce the costs of equipment and tooling by standardizing tooling. Examination of detailed descriptions of all processes and machines in the EDM/PDM system will show many similarities and the potential for rationalization.
• reduce the costs of duplicate computer and software development, acquisition and maintenance. The EDM/PDM system acts as a central repository and infrastructure for the company’s engineering data. As a result, some of the company’s existing computer systems will no longer be needed. Many of the interfaces between these systems and other systems will no longer be needed.

• increase the number of customers. By reducing the overhead activity of engineers, the EDM/PDM system will allow them to develop and support products for new customers.
• increase the product price paid by customers. By increasing product quality, the EDM/PDM system will enable justifiable price increases.
• increase the range of products that customers can buy. By improving product structure management, the EDM/PDM system will enable more customer-specific variants.
• increase the number of products of a particular type that a customer buys. By increasing product quality, the EDM/PDM system will allow customers to dispense with second sourcing.
• increase the percentage of customers re-ordering through an increase in product and service quality.
• increase the percentage of customers re-ordering through an increase in product and service quality.
• increase the frequency with which customers buy. By helping to getting products to market faster and more frequently, the EDM/PDM system will increase the rate at which customers make purchases.
• increase the service price paid by customers. By using the EDM/PDM system to improve the quality of existing services, service prices can be increased.
• increase the range of services that customers buy. By using the EDM/PDM system to support additional services which can be sold to customers, revenues will be increased.
• get customers to pay sooner. By helping to develop products faster, and to deliver them to customers faster, the EDM/PDM system will help bring revenues in earlier.
• sell surplus capacity. With much of the overhead burden removed by the EDM/PDM system, engineers will have more time available for value-adding tasks. This time can be sold to other companies.