PLM and Manufacturing Startups: Potential Mismatch?

PLM and Manufacturing Startups: Potential Mismatch?

hardware-mfg-startup

Selling PLM for SME was always a very controversial topic among PLM vendors. No consensus here. I wrote about it few months ago in my Why PLM stuck to provide solution for SME post and got  interesting follow up conversations with few industry pundits.

Every PLM vendor has some special product offering ready for SME market segment. But did it work well to anybody? My hunch, most of “successful PLM SME” implementations are focusing on basic CAD/PDM features. Very few SME organizations successfully implemented a complete PLM system including BOM, change management, configurations, manufacturing integration, requirement management and more. If you got a chance to see one, it is typically result of huge effort of people in the organization itself committed to make it work.

One of the most typical reasons for PLM vendors to sale to SME was high cost of implementation and sales multiplied by absence of IT people ready to handle PLM implementation. In my view, PLM vendors have a great hope to make it easier with modern cloud based PLM offering, but jury is still out to watch results.

Meantime, manufacturing landscape is getting even more interesting. Hardware is the new software. Nest, GoPro, Beats, Jawbone, Oculus… You’re welcome in the world of manufacturing startups. I touched it in my earlier post – Why Kickstarter projects need PLM? Yesterday, my attention was caught by TechCrunch article – Hardware Case Study: Why Lockitron Has Taken So Long To Ship. Read the article – I found it very interesting. The following passage explains basically that from “limited assembly”, manufacturing startups are moving towards full manufacturing cycle:

In our initial RFQs (“request for quote”) we leaned heavily towards manufacturing entirely in the United States. Our impetus for this was largely around logistics; if we could make everything domestically, we wouldn’t have to travel far and wide to ensure the quality we expected. It quickly became apparent that manufacturing domestically would cost far beyond what we had budgeted for. Given the number of parts, required touch time (the amount of time it takes someone to assemble a product), various materials and processes used, building entirely in the U.S. wasn’t viable. Potential domestic suppliers still looked East for most of the components we needed, albeit with longer lead times.

However, even more interesting quote is the following one explaining the level of challenges during the development processes.

We spent the next few months redesigning our gearbox to reduce noise while increasing power to deal with sticky or hard-to-close locks. While the choice was the right one to make, it cost us valuable time; a few parts had to be retooled and there were cascading effects on our electronics and supplier choices. We selected an ultra-efficient, powerful motor to place at the lock’s heart, but this also impacted our timeline. Most challenging, however, was the meshing of electronic and mechanical worlds. An initial circuit board design proved overly complex and underpowered.

As you noted the complexity of product including mechanical and electronic parts is very high. In addition to that, even it wasn’t stated explicitly by the article, I can see a growing complexity of integration between electromechanical and software components.

What is my conclusion? The complexity of manufacturing startups is growing. To scale product development and manufacturing is a very challenging job. And all must be done in a craziest timeline – the reality of every startup. Manufacturing startups is an interesting niche that clearly different from typical SME organizations we’ve seen before.  The challenge of PLM with a typical manufacturing SME is to compete with a status quo of existing processes and tools. Manufacturing startups are different – absence of processes, startup culture and an absolutely need to get job done in a very short timeframe. It would be interesting to see a growing demand for PLM tools as well as growing complexity of product development and supply chain in these organizations. What PLM tools will provide an answer? Good question for PLM strategists these days. Just my thoughts…

Best, Oleg

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  • Ross Bernheim

    Some considerations. Wherever you manufacture, you need proper documentation to assure that you manufacture your device properly. Startups need many of the same processes as larger manufacturers to do this.

    In order to sustain a manufacturing business and grow a manufacturing business the documentation and processes need to be done. We need to have products tested and certified before we can sell them into the majority of the world. That means you need to document what you build and control any changes to keep your certification among other things.

    PLM can help you handle all the documentation needed. Qualified parts and vendors, BOM’s as well as data sheets, drawings, schematics, assembly procedures, test procedures, data sheets, travelers, the list goes on and on.

    Modern manufacturing requires that things be built the same. that requires process and documentation. PLM is expensive and consumes resources. It is however, much less expensive than not implementing a PLM system. Waiting until you have a large amount of data scattered among several computers and different programs creates inefficiencies as well as making the cost of moving to PLM later a much more difficult and expensive task.

    PLM requires a cultural change to a structured environment. If committed to implementing PLM this cultural change may be the biggest benefit of PLM for a small start-up.

  • beyondplm

    Ross,

    thanks for this great insight! Of course, if you need to manufacture something, you need to have documentation describing what and how you will build the product. The story of “cultural change” to implement PLM is also well known story. Even for well tuned organization with established processes, the cost of implementing PLM raises lots of controversy.

    Startup organization is not well-organized place that run by established processes and rules. It is an emergent organization. For startup, the clear priority is how to create an innovative product. In many situations it comes as a compromise with processes, rules, organization hierarchy, etc. To implement “fully blown PLM” can be too complicated and too costly. Just my thoughts..

    Best, Oleg

  • Ross Bernheim

    It is the correct time to start implementing PLM while the amount of data is still manageable. Start with parts. Set up an organized structured part numbering system and use PLM to set up the parts including qualified parts and the attendant qualified vendors and vendor part numbers. Collect data sheets and RoHS and other required information as the parts are bought.

    BOM’s can then be easily built. Then add documents for how to build it and how to test it, etc. These documents can be short and informal to begin with,

    This is doable and goes a long way as the company begins to actually certify and then manufacture and sell and service their products.

    At the company I just left, We started implementing PLM when we had three full time employees, including the owner, myself, one other production person and a part time admin person. It forced structure on us to a certain extent and was invaluable in helping us to grow.

  • beyondplm

    Ross, this is sounds logical and right approach. However, many companies are ignoring that. Which is probably related to cultural changes you mentioned before. Did you use specific PDM/PLM tools to implement that?

  • Ross Bernheim

    At the time we started implementing PLM, most solutions started at close to $100K. The exception was Omnify. Now called Empower by Omnify. It was still expensive, but much more affordable at around $30K to purchase and $15K to lease for the number of seats we thought we would need.

    The biggest mistake we made was getting too many seats to start. Since they were floating seat licenses, we could have used two to start and added more as needed.

  • beyondplm

    Ross, thanks for sharing that! What was the problem of getting too many seats? Cost? These days lots of solutions are moving towards subscriptions. it is much easier to start with lower upfront cost.

  • I thought most all PLM was on the old License + maintenance cost model. Aras has a subscription, but that’s a service subscription since the base product is technically free (provided you’ve bought certain necessary back end licensing). Any others you know that are subscription based?

  • beyondplm

    I have limited ability to follow up business and pricing models for different vendors. Arena and PLM360 are clearly subscription models.

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