To PLM or Not to PLM ? start measuring !

It is already a month ago that I published a post. You might have been thinking: “Has the Virtual Dutchman gone, due to the credit crisis ?”

On the contrary, this month January has been an extremely busy month with a lot of activities mainly in Europe. Except from all the discussions with customers, I also had lot of interaction with some of my peers in the field all around the topic of PLM.

Part of these discussions were around: 

 “How would the best PLM system look-like in the context of the mid-market ?”

And

“If this PLM system exists, would it be implemented by mid-market companies?”

However first, as an interlude,  I would like to show you two interesting links from the past month.

• Martin Ohly on his web site Global PLM trying to share his experiences and view on PLM. Certainly when you would like to get an impression of all the topics around global PLM, you should go there. You will find topics there for discussion and like Martin, I am trying to do it in a similar way through my blog, although I focus more on sharing the experiences with customers and leave the architectural details in the background.
• Oleg Shilovitsky has been bombarding us since a few months with thoughts around PLM his Daily PLM Think Tank. It is interesting to see how Oleg combines concepts, trends from other disciplines with PLM. As they are all air balloons, some of them explode, others get a lot of attention as somewhere around the globe other people had similar thoughts. A nice example of global brainstorming – still everyone keeps their own IP

Now back to the question: To  PLM or not to PLM ?

This is the question I hear the most from the companies I have been visiting. They learn from the PLM vendors and analysts that they should do PLM. However every vendor has its own PLM definition, technology or solution. So who to choose ?

Here I tend to say, that the selection of the right PLM product is the last step of moving towards PLM. Yes, you can start with a PLM product and then learning on the job what is the best fit/ Not recommended. In a later post I will focus on what are the questions that a customer should consider when selecting a PLM system, the first question remains: To PLM or Not to PLM ?

Before selecting a PLM system, I would like to discuss and assist companies with their internal discussion in the company: To PLM or Not PLM ? In order to justify PLM, you need to have a justification for your company.

What will PLM bring us ?

The decision for Yes or No PLM will depend on ROI (Return On Investment) and  long term strategy. Of course there is a connection between the long term strategy and the ROI. But how do you determine the ROI ? Often I hear the question: “What will be the ROI for my company ?”  The only answers I can give without more details are commonalties, like:  Reducing the time engineers use for searching with 50 % or more . Based on the costs of your engineers you can estimated the value for this time saving, etc, etc

However, immediately one of the customers said, we already have an efficient search. Yes a lot is stored in directories, but we feel we manage it well, so the benefits are perhaps only 5 % ?

And here started the discussion. In general the files in their directories were reliable, the problem only appeared when suddenly someone else needed quickly the data used for a design and unfortunate found something in the directory of a wrong project.  The result was that the wrong spare parts were used, which led to a production stand-still at the customer which led to a claim. But this happened only once the manager said.

Here you see that an incident, which most employees of the company do not want to take into consideration (it was an incident),  lead to losing a good relation with a customer (and probably no future customer anymore) and the costs of an incidental claim. It is not only counting efficiency.

This is where the long term strategy comes. How do you as a company make sure that you will have customers in the future ? And for this question, there are many parameters, like:

• Do we still have the right products ? 
• What do customers expect from us in the future?
• What is the competition doing ?
• What are trends we must follow ?
• Where can we innovate (differentiate)?
• How efficient do we bring a product or order to delivery ?
• Can we be more efficient ?
• Can we do the process different and become more flexible ?
• Can we lower the risk by standardizing ?

Measuring is needed
These questions are not easy to answer unless you have a clear sight on what is happening in your core business and primary processes. And it is here where mid-market companies often differ from the big enterprises. Everyone is busy to do their job and tasks and there is no strategic department that looks from a distance to the company to analyze and describe it and plan the strategy. The management in the company has it as a secondary job often left apart due to the primary tasks.

The current economical down-turn  makes it even more important how to survive and in a shorter time frame.
But although the economical down-turn creates a threat it also is an opportunity. Companies might have currently less work to do, so they have the chance to look to what there are usually doing as a first baseline.

In my upcoming posts, I want to focus on these type of questions for benchmarking – knowing that per industry they might be a little different.  The reward at the end might be two-fold: you know as a company where you are and secondly now you can start really calculating the ROI of a PLM implementation. The last part can be done with an external consultant experienced in PLM as he/she can estimate benefits from other implementations. The ROI will justify and guarantee that your company is better tuned when all lights from the economy go to green.

Conclusion: Start thinking and measuring now you have the time. The result will create the base for a good justification for PLM when and where needed with a correct ROI. And it is not only about doing thing more efficient, this will not kill the competition, it is about doing things different 

Success with your analysis – and feel free to ask your questions through the comments – you can indicate if you want to treat them private or public