Cost is an important topic. Period. Everybody agrees with this statement. I can even say many companies investing a lot in their ability to calculate and predict the cost of product. Compared to that, cost of change is much less exposed. However, cost of change can be even more destructive for the overall cost of the product you manufacturing and the business. Recently, I’ve been spending some time analyzing how companies are managing changes and how PLM systems are supporting them. I decided to put some thoughts about change management and cost calculation.
Cost Standard and processes
There are several policies or standards you want to have in your company when it comes to cost management and change processes. Change cost policy – usually specify the changes that required cost calculation (or not) and company payback period. Cost calculation document. You want to have it in the way that allows you to follow up it from the historical perspective as well as an instruction how to do so. The important question of every PLM implementation is how you are able to automate cost of change calculation and embed it in the overall change process.
Is there something you can call “average cost of change”?
The perception of people in any company is that cost is expensive thing to have. At the same time, it is hard to come with a range of how much an average change cost. $1K-5K is a range you might be hearing. But it is too broad. Another point of confusion is to conclusion out is included in this cost – engineering services, labor, equipment, etc.
Cost Calculation Classification
I can classify all changes into four groups: cost reduction, product maturity, product development, others. Depends on what type of change you are estimating, actually change cost calculation can be different. If you estimating change that marked to save cost or time, you absolutely need to calculate the cost. However, if you making a change that related to product maturity, you probably can skip some cost of change calculation. Taking right assumption can significantly improve the speed of change processes, which is an essential part of every manufacturing organization.
What is my conclusion? Change management is one of the most complicated discipline in product development lifecycle. To measure it right and tack the history and metrics of changes together with cost calculation is tricky and very important. I haven’t seen ready out of the box implementations that can do so. Main reason – system customization is complicated to have all information in PLM system. Sometime, if cost calculation is complicated, you can calculate profit erosion. What is your practice and experience? Speak your mind, please. Do you have any examples you can share?
Product development and manufacturing is very different from company to company. Therefore, I’m not surprised anymore when I see multiple ways companies are defining what is Product Lifecycle Management. Some time ago, I started to gather these definitions in order to share with the readers of my blog. I was reading Aras’ blog and watching Nexteer presentation by David Lien and Bob Lipscomb about strategies, selection and implementation process of Aras PLM.
PLM Definition – Nexteer.
PLM is a global system that manages the complete set of product and process definition data, information, business processes, and the roles of peoples assigned with with a product through all stages from its creation to retirement. The PLM system is the central information hub for everyone associated with a given product, streamlining product and process development and facilitating communication among those working with a product.
You can watch the following presentation to see more about PLM implementation at Nexteer, which I found very interesting
PLM and ERP Implementation Patterns
The presentation made me think about the pattern of “singularity” in PLM implementation. I call it ERP-pattern. Look on the following slide. The idea of customer to centralize all data related to product and processing isn’t very new. This is so called “single point of truth” implementation is still very popular.
At the same time, future explanation about keeping PDM implementation and synchronizing between PLM, PDM and ERP shows some weakness. To move all data to a single place is very complicated process. To make it in steps is probably a viable strategy. Keeping PDM and ERP “as is” just a confirmation of that.
What is my conclusion? Manufacturing clearly wants to optimize product development processes across the enterprise. The single point of truth is leveraging the simplicity of SQL-database experience for the last 20 years. At the same time, centralization and replication of data are complicated and expensive processes. Managing phased implementation creates a set of new problems related to the ability to maintain the data transformation and synchronization within the time. I’m interested to know your opinion. Do you see any alternatives the singularity in PLM? Just my thoughts…
The second day of Autodesk Forum in Moscow. Today, I gave my presentation about PLM Trends and Solution Alternatives. You can find my presentation below. I originally presented in Russian. However, for my blog readers I’m also sharing an English version. I found quite many people interesting about PLM and possible solutions.
This Afternoon, I had a chance to run a roundtable about PLM. Here is the list of my questions and discussion notes.
PLM Implementation Options
The conclusion we made actually stated that implementation option is very dependent on organization and organization perspective on PLM. Company with a strong PLM vision on the C-level, can take an approach to follow one of the big mind-share PLM vendors. However, if a company is looking how to solve a specific problem, the approach of DIY or PDM+ can be very appropriated too. Few people mentioned that they know about situations when IT managers were fired after making wrong decisions even if that decision was to bring one of “big name” vendors. The agreement across almost all participants of the roundtable was about two things: PDM as a foundation of any PLM solution as well as importance of “staged approach”.
PLM Top-Down vs. Bottom-Up
The discussion about PLM implementation options naturally came to the comparison of Top-Down and Bottom-Up approaches. Both options were considered as valid. At the same time, we discussed how a company can differentiate and make a right decision. Some of the aspects related to a company size, other systems (ERP, CRM) as well as specific business characteristics. The important conclusion we made – PLM can be a top-down strategy from the management standpoint, but from implementation side, it requires bottom-up implementations and integration of multiple tools to be really efficient.
Not Only PLM (noPLM)
The discussion was mostly about how to exclude complication and simplify PLM implementation. We didn’t make a conclusion about that. However, it was clear that not all PLM programs are achieving their results. In some situations, people are displacing PLM tools by some homegrown solutions mostly because of the simplicity. At the end, people just want to make a job done. It is important to remember.
How to make PLM Different?
It was the last question. We discussed historical retrospective from EDM to PLM. Two key opinions were raised during the discussion. 1- PLM is really different for everybody. Don’t even try to unify it and propose a solution that fits everybody needs. Local (Russian) PLM vendors were dominated in this discussion. 2- something needs to change in PLM technologies. Similar to dynamic data modeling (back to 1990s) and PDM integration inside of CAD tools (end of 1990s / beginning of 2000s), a new technological innovation can change PLM implementation approach in 2010s. A very bold analogy is related to tablet computers. The original tablets with stencil and flip/flop screens were available long before. However, only Apple innovation with iPad made real tablet computer revolution these days.
What is my conclusion? 1800 attendees – this is a very impressive number shows strong Autodesk community in Russia/CIS. It was good meeting people and discussing PLM. I’ve got interesting feedback about my presentation. Also, I learned a lot of things related to PLM implementations made by local Russian PLM vendors (I will share them in one of my future posts). I hope the conversation will continue online. Don’t be shy and speak your mind.
When I’m thinking about any PLM project, I can clearly see the step when data available in the organization need to be loaded into the system. This step is often underestimated from different standpoints: ability to gather and load information, availability of data definitions, availability of APIs and system performance. I had chance to write [...]
The question of the PLM adoption is always raising interest. One of the most important question people are asking in the context of PLM is about PLM software adoption level. I found an interesting article by TEC - Too Hard To Adopt PLM? Find Ways To Make it Easier!. I specially liked the following piece: [...]
One of my favorite quotes of Peter Drucker is following – “The purpose of business is to create and keep a customer“. So, to learn how a customer sees the world is one of the most important things that we need to do. I had a chance to see a very interesting P&G presentation showing [...]
Cost is an important topic. Period. Everybody agrees with this statement. I can even say many companies investing a lot in their ability to calculate and predict the cost of product. Compared to that, cost of change is much less exposed. However, cost of change can be even more destructive for the overall cost of the product you manufacturing and the business. Recently, I’ve been spending some time analyzing how companies are managing changes and how PLM systems are supporting them. I decided to put some thoughts about change management and cost calculation.
