Manufacturing companies are facing multiple operational and strategic challenges in the current business environment. Post-COVID supply chain and labor shortage, growing economic instability, geopolitical tensions, growing complexity of products, and regulation demands. Cost pressure and competition are also here. So, manufacturing companies are actively looking at how to find their competitive edge to build better products faster and identify business opportunities before their competitors, to eliminate operational efficiencies before it will impact in a severe way their business.
In this article, we will explore five organizational indicators that signal you’re behind with your PLM strategy.
Better, Faster, Cheaper – Is PLM The Answer?
The debates about the role of PLM in helping manufacturing companies to build better products faster and optimize the cost of product development, manufacturing, and operations were around for the last two decades. In my view, every manufacturing business that delivers products (or services) to customers has its own “PLM”. It might be not even called “PLM”, but it helps companies to define what they do, figure out the process of building products or providing services, and then be responsible for support, maintenance, and overhaul. In a nutshell, all together, it represents a product development and manufacturing process.
Information is the most critical element of product development and manufacturing process. It includes product data management, supply chain management, manufacturing engineering, and customer feedback. In the beginning, it involves based on customer feedback or customer relationship management including the ideation process. Later it includes computer-aided design (CAD) to create a design, communicate results to the production planner and supply chain, order and build components, and assemble and ship results. The amount of interaction and data exchange in the process I described above is gigantic. Every manufacturing business goes through these steps and needs to manage the information and process properly.
Strategy and software to support product development and manufacturing were developed for the last few decades in silos. Each organization (engineering, manufacturing, sales, and support) took care of itself by developing systems to manage information and throw this information “over the wall”, or how it is called “push/pull” the information needed in the next stage. As a result, an additional class of software was developed – integration software to help companies “to sync” data between systems.
The outcome of the complexity described above can be gigantic and it can severely impact business. It can happen regardless of company size, type of product lifecycle and industry, and geographical location. It can happen to a company with 10 people building products in batches using contract manufacturers and it can happen to large corporations. As the level of complexity and risks of failure was growing, companies started to realize that they need to look at the problem holistically.
5 Organiaztional KPIs to Watch
You cannot manage anything if you cannot measure it in a way to define the quality of the process and to define steps to improve it. Is placing CAD files in Google Drive sufficient for your company to manage product development and order components based on Google Spreadsheets? Do you need to have organized multiple Bills of Materials for each process (EBOM, MBOM, PBOM, SBOM, etc.)? Is there a need to integrate my SOLIDWORKS PDM with the ERP system to push data automatically? Can we just buy PLM software to fix all problems related to document management, product data management, quality management, supply chain, and maintenance?
You can go with all the activities I mentioned above, but it will be wrong. I’ve seen companies that doing so ending up in the mess. You don’t wake up in the morning and say – yesterday we ordered the wrong materials (or we can not get supply for specific components), so I need to sync data from engineering to procurement to solve my problems. It might sound like you’re solving some immediate issues but guess what – the next issue will present itself soon.
To make things holistic, you need to build your PLM strategy first. And it all starts with organizational indicators that can help you to understand the “temperature” of information problems you have. Failing to do so, can result in an organizational mess, create product development inefficiency and impact your company’s growth, fail customers, and, eventually even put you in jail (imagining you develop an airplane or car that crashes, electronics that shocks, or food that poisoning).
I’ve been working with many manufacturing companies – small and large, I can give my list of top 5 questions and indicators that can help you to understand you’re late with your product lifecycle strategy. The right PLM strategy can help you to streamline product development, reduce time-to-market, and enhance collaboration across departments.
Lack of Centralized Data Management:
Data is the foundation of everything in your organization. Not having data managed properly is a crime that will kill your organization sooner than later. The KPI to make an assessment of this problem is easy to have. Check if you can easily get to any piece of information about what you build. Imagine you need to tell to the customer what was included in the product you shipped to them 3 months ago. Can you get this information easily? Find what components were used there. Who was the supplier? Who approved the change? etc. etc. etc. If to answer the questions above you need to go multiple places, search for Excels or bring data from multiple systems, the chances are you have a problem. Getting on the same page with any information is an essential thing in any manufacturing environment.
Lengthy Product Development Cycles:
A bit more complex indicator, but also very important. Companies need speed to win in a modern manufacturing world. How to make things fast, how stop waiting for previous steps to be completed, how to order materials and components upfront? You need to start by measuring how much time it takes to your organization to make each step – design, changes, production planning, ordering. Check for idle time, check for long shipment times and lead time. How long takes your organization to fix a problem reported by your customer? How fast takes your organization to develop a feature requested for your strategic partner? These are KPIs that can help you to understand the process inefficiencies.
Ineffective Change Management:
Change is an inevitable part of the product development process. However, if your organization struggles with ineffective change management, it indicates that your PLM strategy is not working well. Change approval time, getting information about the change, and complexity in tracking revisions – are typical failing points related to change management. Building a PLM strategy to streamline change management is an essential step in optimizing your company’s performance.
Limited Cross-Department and Cross-Organizational Collaboration:
Even the smallest manufacturing organization has its silos and these silos have a tendency to disconnect. Engineers, production planners, procurement, and management. If you move to a larger business, the problems are getting even bigger. You’re talking about departments, and separate companies – suppliers and contractors. Modern manufacturing is a network that includes multiple organizations. To have them collaborate and exchange data is absolutely important. Check how data is shared between them, and how communication goes (eg. change approval). If it requires many hoops to jump throw, it means something is wrong and your PLM strategy is lacking collaboration methods.
Overreliance on Manual Processes:
Manual steps impact efficiency and creates quality issues. If you need to export BOM from a CAD system manually and then send an Excel to procurement by email, expect mistakes and delays. If you need manually to update data in multiple systems (PDM, ERP), it means you will make mistakes and it will impact your organization. Each manual data copy/paste operation can impact data quality. You can measure the number of times, human manual involvement is needed to build something in your company. Each manual data conversion brings ~10% of data inaccuracy. Running data quality checks is essential to ensure the information you have is accurate. Automation is a key element in your PLM strategy. If you don’t have it, you should expect problems. And this is a time to think about your PLM strategy.
Why do you need PLM playbook?
To get your PLM strategy right, you need to have an organizational playbook. It must include KPIs and strategies to manage information and processes to achieve organizational results. It includes an analysis of your existing processes, making an assessment of technologies that can help you to build a better product lifecycle, and defining implementation steps. The last one is not less important than the decision about the right technology and process management. An attempt to implement fast (one big bang) can be as dangerous as the absence of product lifecycle management plans.
What is my conclusion?
A well-executed PLM strategy is essential for organizations looking to thrive in today’s competitive marketplace. Recognizing the indicators that signal a delayed PLM strategy empowers businesses to take corrective action. By centralizing data management, shortening product development cycles, optimizing change management, promoting cross-department collaboration, and embracing automation, companies can unleash their true potential and ensure a successful product lifecycle management implementation.
How to build the right strategy? This is a key question your organization needs to answer before “jumping into PLM” implementation and decision about purchasing or upgrading PLM software. Buying a well-known-brand PLM software as well as jumping into a “modern cloud PLM world” can be equally dangerous. To come up with the strategy first is the right way to bring your organization (small or large) to the right place.
Just my thoughts…
Disclaimer: I’m co-founder and CEO of OpenBOM developing a digital-thread platform with cloud-native PDM & PLM capabilities to manage product data lifecycle and connect manufacturers, construction companies, and their supply chain networks. My opinion can be unintentionally biased.