PLM Aids Product Makers, Buyers

Building a better mousetrap isnt the goal for manufacturing companies; its building a better mousetrap faster, for less cost, and including the knowledge and experience built into design, engineering, manufacturing, customer service, accounting and supplier databases.

Product lifecycle management—or PLM, in the inevitable acronym form—is helping manufacturers achieve this complex goal and get the right products to market faster. The benefits to buyers of these products are obvious, including more stable products and better service for the life of the product.

PLM is a framework in which all the data about a product—from idea to retirement—is contained and available to stakeholders. PLM products use the Internet to facilitate access to this information and collaboration internally and externally with partners and customers.

ARC Advisory Group Inc., which provides technology assessment services to manufacturing companies, defines six components of PLM: innovation and portfolio management, project and program management, collaborative design, product data management, manufacturing process planning, and service and support management.

Putting a price on PLM is like putting a price on ERP (enterprise resource planning), said ARC analyst John Moore, in Dedham, Mass. In other words, pricing varies widely depending on a number of factors, and customers arent too quick to tell you what they paid. Moore said that PLM implementations can cost as much as $500 million—including product, service and licensing costs—but that they can start as low as $10,000.

PLM may have begun as a rebranding of CAD/E and PDM (product data management), said Moore, but its gained traction in the last couple of years as budgets have tightened, margins have shrunk and markets have become more competitive.

"In terms of the market need," said Moore, "roughly 80 percent of a products final cost is locked in at the design stage, so the more [companies] can reuse components and manage handoff between design and manufacturing, the better. And on the service side, theres a lot of revenue to be had in servicing a product and ensuring customer retention."

Also driving the market, said Moore, is that large players such as SAP AG, IBM and Electronic Data Systems Corp. are delivering PLM offerings and that top-tier companies are adopting them.

Mary Ward, director of marketing and communications at EDS, in Cincinnati, said PLM gives companies a new way to minimize costs and bring more innovative products to market faster.

"[Manufacturing companies have] pretty much squeezed a lot of the systems available to them," said Ward. "Theyre now looking at PLM as the next step of meeting the challenges of the market—to help them be more competitive, get products to market faster and get the right products to market faster."

ARCs Moore said the discrete industry represents about 85 to 90 percent of the PLM market.

Tape drive manufacturer Quantum Corp. started implementing Agile Software Corp.s PLM solution in December 2001 and went live with Agile last March.

Quantums decision to deploy a PLM system was driven in large part by a need to update legacy systems.

"We realized that our way of doing business in the engineering area was pretty antiquated—not only in our process but also in our tools," said Ray Wozney, director of engineering at Quantum, in Boulder, Colo. "The time to process an engineering change was about 100 days. What that means is that if Im an engineer and Im thinking about updating a part, it will take me 100 days to get that change on the manufacturing floor, and that involves a lot of cost."

Wozney said Quantum looked at a variety of PLM systems and narrowed the field to three. Agile was chosen for its functionality, ease of use and customer service (which Quantum had seen demonstrated in past interaction with Agile) but also because it was very open with its customer list, encouraging Quantum to contact current customers for feedback.

Quantum is using the following components of the Agile PLM suite: Agile Product Definition, Agile Change Collaboration, Agile Supplier Management, Agile Design Publication and Agile Manufacturing Integration. Also available are modules for product cost management and product service and improvement.

Much of the time to implement the Agile system was spent "getting data in our current systems straightened out," said Wozney. "We had a team of 11 people working full time to clean up all the databases. We found that we had been producing products with inaccurate bills of material. When we decided to go forward with Agile, we decided it was an opportunity to make sure we had accurate data and could process it through all cycles of a product."

After using Agile for just under a year, Quantum has seen the time it takes to process an engineering change drop from 100 days to about seven and a half days. There is also less rework and scrap within products, said Wozney, and data from other departments can be used in the product engineering process.

The time to recover costs? "Just in talking with the other engineering directors, we believe that we paid off the initial expenses within the first six months," said Wozney.

PLM also provided a means to modernize systems for communications and life sciences company Agilent Technologies Inc., which was spun off from Hewlett-Packard Co. in 1999. Agilent designs and manufactures a wide range of products, including complex test-and-measure equipment.

"The scope was to replace all legacy [product development] systems—most were completely home-grown or highly customized," said Pete Woodhouse, product generation solutions manager at Agilent, in Santa Clara, Calif. "When I started at HP 15 years ago, we had a manufacturing specification department—really a whole bunch of filing cabinets—so PDM systems came in initially to replace that. It was really a computerized version of the department. As manufacturing became more complex, we needed to provide more standards and methods of collaboration."

The next step, said Woodhouse, was PLM, which evolved the technology from simply archiving information to managing product data from initial research and development work all the way to obsolescence. "There is a significant value from a business process perspective in using a significantly more modern tool set and changing from the concept of PDM as an archive to managing information to the product life cycle," Woodhouse said.

Agilent went live in June with MatrixOne Inc.s MatrixOne Engineering Central and MatrixOne Supplier Central, as well as numerous packaged integrations to its ERP and CAD systems. The system is used in four countries: India, Malaysia, Singapore and the United States, in Santa Rosa, Calif. The company estimates it has eliminated more than $10 million in annual systems and maintenance costs required by its legacy applications.

Agilent has 6,300 active MatrixOne users and expects that number to grow to 10,000.

Woodhouse said that PLM has bridged engineering and operational functions and that the primary benefits are faster time to market and time to volume. In addition, the PLM system allows closer links between the design and quality organizations, leading to higher-quality products.

"Theres always work going on in different tools," Woodhouse said. "At various stages of completion, each of those engineers is ready to share information. They can check it into the MatrixOne system directly from the desktop, and at that point, other people and organizations can check the contents of the bill of materials. At various other stages, it can get released to the ERP system, which can check inventory levels and supplier lead times and so forth."

B/E Aerospace Inc. has been working with EDS for five years on a PLM deployment. One of the reasons its taken so long—and a reason for having it in the first place—is that B/E Aerospace has grown through acquisition and consolidation of many businesses, said John Whiting, corporate director of engineering systems at B/E Aerospace, in Winston-Salem, N.C.

Whiting said the cost of a PLM project depends in large part on the quality of data in legacy systems. B/E Aerospace invested $1 million in conversion and consolidation to get its data into the EDS PLM system.

The return on that investment can be seen in part in the consolidation B/E Aerospace has been able to do. "We had three sites designing seats, with six different design systems, and you were extremely limited on who could work on what line," Whiting said. By simplifying six tools down to one and 12 different data locations down to one virtual database, B/E has provided the flexibility for anybody to work on any product line, in any time zone, using the same set of tools.

But dont expect these kinds of metrics to be widely understood, said Whiting.

"Dont start if you havent got executive approval because its bloody hard work," Whiting said. "It takes a while to educate people about the benefits because theyre incremental. The benefits tend to be, an engineer would spend 40 minutes per day finding data, and they now spend 15 minutes per day. So you have to have a lot of engineers before you take one out."

It can be tough to get sign-off on a PLM system because there are so many stakeholders—not to mention deeply entrenched ways of working—involved in product design and manufacturing.

"One of the critical challenges is that, in most companies, there is really no one single leading executive responsible for PLM," said ARCs Moore. "So what youre getting is the vice president of engineering using this CAD tool and that PDM tool, but the manufacturing guys are using a tool that doesnt relate well. So there are still some issues there in terms of how to develop an internal structure to overcome these stovepipes of responsibility. Oftentimes, its a very strong CIO or a CEO."

Moore said he expects to see modest but healthy growth in the PLM market.

"There are solutions being deployed—its just that no one right now is going to bite off a big chunk," Moore said. "Its going to be really kind of focused—one piece here, one piece there, which is what were seeing with just about every application out there right now."

Executive Editor Debra Donston is at debra_donston@ziffdavis.com.

PLM Benefits

Improve customer capture and retention

Leverage strategic sourcing contracts

Source: ARC Advisory Group

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