Most manufacturing companies have to select a PLM (Product Lifecycle Management) system sooner or later. The decision is not easy, because there are many factors to consider. Many organizations are missing the difference between PLM application (or software platform) and PLM system. The first one is software coming from a software vendor to help you to organize your company data and process management. The second one is a way you run your business, organize data, connect people and run processes. Unless your company is just in the formation stages, you always have a PLM system in place already. It could be a bunch of Excel files stored in your Google Drive alongside your CAD files, but this is your PLM system. Therefore, I called this article “when is the right time to change your PLM system”.
What is PLM System?
PLM (Product lifecycle management) system is a set of tools and business practices that help you to manage information, connect people, and run product development process, manufacturing, supply chain management, and other business processes. Every company that manufactures something has a PLM system to manage the product value chain, product data management, and quality management. A traditional PLM approach mostly included PLM solutions that focused on engineering and CAD file management. Those PLM systems were on-premise and required a long installation and implementation time. Modern PLM software is focusing on how to manage the growing complexity of product development together with the needs of companies to connect across the product value chain.
Let’s talk about 3 typical situations and discuss criteria that help you to identify when is the right time for your company to move forward and adopt a new PLM system including PLM software (applications) and, most importantly, a new strategy to manage product development process and lifecycle.
PLM Development Breakpoints
Every team that started to build some products, will be setting up their tools and methods to manage their information and processes. As they grow and scale these tools will be changing. The most important is to keep the right balance between the needs of your business and the PLM system that you will be using. I can identify 3 main statuses (breakpoints) of PLM development
(1) Formation stage
(2) Business optimization
(3) Scale
Each of these stages are reflecting the state of your business development. Let’s discuss how to take the right decision about PLM systems at each of these stages.
Formation
The formation stage is characterized by an urgent need to build a product and start shipping it to customers. This is a time when any shortcuts can be accepted to build the product – the ultimate outcome of the business. Having optimized data management is important, but only becomes critical when the company realizes that the current. It is not a surprise that in 80% of use cases, the company is adopting some home-grown PLM strategy during the formation stages.
It is very important to identify when these home-grown methods will start to hurt your ability to deliver the results. Data management mistakes are very expensive and can cost you a lot in the near and longer future. Not having a full data representation about the product (BOM) and all connected engineering information can make you run behind the schedule, not to control product development expenses, product cost, and procurement process. A mistake many small and early-stage companies do is to ignore the urgent need to get information and process under control.
Optimization
This is the most complex decision-making point. By that time, the company is already manufacturing products and selling them successfully, working with customers, and most often bringing profit. At this stage, the business is running and you have a system in place (it could be a homegrown system or a system that build with the use of some PLM applications and platforms. If everything runs smoothly, you need to bring a good reason why to make a change. This is the biggest struggle for many companies that decide to postpone their PLM strategy development.
It works, so don’t break it. How many times you’ve heard it. However, the truth is that running inefficient processes can cost a lot of money and missed opportunities for manufacturing businesses. One of the most important is that related to the data manufacturing business can use as a foundation of their optimization. Not managing data efficiently cost lost opportunities. Besides that, as manufacturing businesses are moving from the development of products to developing services, PLM is not only a saving mechanism but also a source of new business development.
New Business and Scale
Scale is hard and for many manufacturing companies to scale requires a lot of important decisions to make. Cost analysis, outsourcing manufacturing, building new manufacturing facilities, and optimizing the supply chain. This is only a short list of decisions that are required for manufacturing businesses to scale and grow beyond what they can be doing at a certain moment of time.
How is that connected to PLM systems modernization? Many companies are missing that point and assume that PLM solutions are just a way to manage their engineering process without giving a lot of thought to how new tools and processes can improve profitability, eliminate mistakes and develop new products or services.
3 Differences in Modern PLM Software
The difference between the legacy PLM approach and the modern PLM software is huge. The fundamental difference is that modern PLM software is going beyond a traditional PLM and it is built to connect multiple companies to a product value chain using data. It leads to the creation of a data-driven manufacturing business. The second big difference is that modern PLM software is available via services (a variety of SaaS) that helps eliminate the need to invest in licenses and long implementation and services. The last and also every important difference is that modern PLM software immersively integrates into existing data sources and captures information “as-is” without needing to make a big bang reset to all processes. The last thing is very important for manufacturing companies to simplify their decision about how to move forward and change their product lifecycle management system.
Conclusion
Consider PLM system change as an opportunity to transform your company business. Go beyond just managing CAD files or BOM Excels towards the creation of processes helping to save cost, create new business opportunities or transform the processes. The modern PLM software business is changing. It switched from the approach of selling PLM platforms to control data into service to connect manufacturing company activities into a data-driven product value chain, connect people and companies, and create new businesses for manufacturing companies. It is a big difference and it changes the criteria used by manufacturing companies for decades when PLM software was mostly a cost center associated with R&D activity to a profit center when PLM activity has a direct impact to cost, profit, and creation of new businesses. Just my thoughts…
Best, Oleg
Disclaimer: I’m co-founder and CEO of OpenBOM developing a digital cloud-native PDM and PLM platform that manages product data and connects manufacturers, construction companies, and their supply chain networks. My opinion can be unintentionally biased.
