observationFinally I have time to continue on my sequence: “How to come to measurable PLM benefits ?” I think it is a topic where everyone talks about, but little is known in concrete figures. One of the main challenges is also “What to measure ? “. As I added to Martin’s comment on my previous post, we can measure comparable activities, like how much time and people are involved in average for an engineering change. And when a company makes the statement: “We reduced the time for an engineering change in average from 23 days to 8 days” – what does it mean ?

Does is mean people have spent less time to understand and implement correctly the change ? Probably – so there might me xxx amount of money related to this saving in time. Of course, there might be also a saving in distribution costs, assuming in the traditional approach a paper-based distribution process was used – people spending time in distribution, printing, copying etc.

Everyone experienced with Excel and formulas can make these kind of calculations (and I did it too) and often I was surprised about the huge benefits showing up in the spreadsheet. So please continue filling spreadsheets as in general the benefits will be high

In parallel a second approach should be considered. Benchmarking against similar companies and Aberdeen has published some papers in this area, (see for example: The Best Kept Secret of Top SMB Product Developers -Finding the Shortest Path to PLM Value) . Maybe less specific per activity but they offer a good secondary view of the PLM benefits, in this case viewed from the business point of view.

Back to ROI measuring – and now in the planning phase

planning The planning phase, by my definition is the phase where we have a concept and we start to analyze which activities and which resources are required to develop the concept. In a Built To Order process, the planning phase might overlap the concept phase, as the inputs from the prospect require besides to provide a solution also the need to have it done within a certain budget and timeframe.

So the most important questions related to the planning phase are:

  • How many projects we are doing are similar in approach?
    Measure: time spent in finding similar solutions / percentage reuse /classify projects
    Analyze: Can we improve by standardization
  • How often do we have to do a major change /disruption in our planning ?
    Measure: the amount of projects that have small compared to major changes (define a rule to differentiate)
    Analyze: What is the reason for the major changes
  • During execution of a project – do we know if we are on track ?
    Measure: Select an arbitrary project and make a status
    Analyze: Was this status correct looking back later ? ( a month – some months)
  • How much time and effort do we spent to understand the status of a project ?
    Measure: Select an arbitrary project and make a status
    Analyze: How much time and people were involved to get the status
  • How much time does it take to plan an engineering change ?
    : Once an ECO (Engineering Change Order) has been approved, what does it take to plan the change
    (perhaps you already planned too as part of the ECR process- excellent) – resources and time
    Analyze: Can we improve by doing things different

Again all the above points can be addressed by PLM, either through a sales and product configurator (a configurator btw already requires a certain level of standardization or modularization of products. I will write  more on configurators and how to get there perhaps in the future. Meanwhile read this excellent white paper from the Valent Group: 7 Myths of Configurators).
Project and program management combined with template best practices, how to do execute an customer order or a new product introduction are also providing huge benefits. Every time you have the chance to do something similar, you have reduced the risk dramatically. So investing in standardization and templates is an investment in risk reduction and increased reliability

At then the measurable results will come from two sides: customer satisfaction and market share (hard to measure) and internal increased efficiency (easy to measure)which contributes to your margin or to your market share as you can follow a different price point.

status Conclusion
The keywords for the planning phase are: standardization, reuse (in the broadest context) and activities that can be monitored with low effort . This allows companies to control their margin and their risks and their health status.

And planning is import – see video below (and I hope all are still alive)