Why Do We Need PLM to Control Product Cost?

I’d like to continue discussing topics that create maximum confusion between PLM marketing and reality. Today, I want to talk about one, that probably in the top list of all manufacturers – product cost. Yes, you want it down, no doubt. If you will talk to PLM marketers, they will all tell – PLM is the way to go. However, how magically it will happen? Why PLM can help you manage cost? How practically it will happen? I decided to discover the potential answers on these questions today…

Let me think about a traditional manufacturing environment that is not going to implement “PLM strategies”, but indeed is looking how to decrease cost of their products. The most reasonable approach is to ask different business units to develop their cost saving programs- R&D, Manufacturing, Supply Chain, Support. I believe, these organizations will be able to deliver decent results. Now, depends on manufacturing type, they have various chances to be successful. For the long run, the company manufacturing the same (or similar) products will be able to optimize cost of products. Their best chance to do so, will be for mass-manufacturing products. Within the time, all functional areas will be optimized and learn from the experience how to manage product costs for what they are doing. There are two potential problems in this approach. First is the time scale and the second production volume. What does it mean?

Time Scale in Manufacturing
With a significant time period, your manufacturing organization has a good chance to develop reasonable good product cost practices. Designers will find optimal solutions, right suppliers will be designated and subcontracted, manufacturing facilities will be optimized, etc.

Production Volume
The previous assumption of time scale will be working if you will continue to manufacture big series of products. With growing number of manufactured items, your product cost will go down.

What is the problem with such assumptions? The only one, in my view. This is less and less happening in modern manufacturing. Market demanding customization in production and due to that time and product volume is going down. So, manufacturers need to manage very flexible practices in their environment to maintain balance between production volume, time and cost.

Now, I want to get to my original question. How PLM can help? PLM is managing product data and processes. How product cost will be resulted from that? My answer – PLM need to facilitate cross-functional IT functions in the organization. Your functional domains are separate. Most of the systems in today’s IT are department oriented and rarely have global organizational exposure.  PLM need to make a success in cross-functional data and processes management. This will be a key for PLM success in the organization. And this is still not happenings…

What do you think about that?
Best, Oleg


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