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This time a post that has been on the table already for a long time – the importance of having established processes, in particular with implementing PLM.  By nature, most people hate processes as it might give the idea that their personal creativity is limited, where large organizations love processes as for them this is the way to guarantee a confident performance.  So let’s have a more in-depth look.

Where processes shine

In a transactional world, processes can be implemented like algorithms, assuming the data to be processed has the right quality. That is why MRP (Material Requirement Planning) and ERP (Enterprise Resource Planning) don’t have the mindset of personal creativity. It is about optimized execution driven by financial and quality goals.

When I started my career in the early days of data management, before it was called PDM/PLM, I learned that there is a need for communication-related to product data. Terms are revisions, and versions started to pop-up combined with change processes. Some companies began to talk about configuration management.

Companies were not thinking PLM along the whole lifecycle. It was more PDM for engineering and ERP for manufacturing. Where PDM was ultimate a document-control environment, ERP was the execution engine relying on documented content, but not necessarily connected. Unfortunate this is still the case at many companies, and it has to do with the mindset. Traditionally a company’s performance has been measured based on financial reporting coming from the ERP system. Engineering was an unmanageable cost in the eyes of the manufacturing company’s management and ERP-software vendors.

In de middle of the nineties (previous century now ! ), I had a meeting with an ERP-country manager to discuss a potential partnership. The challenge was that he had no clue about the value and complementary need for PLM. Even after discussing with him the differences between iterative product development (with revisioning) and linear execution (on the released product), his statement was:

“Engineers are just resources that do not want to be managed, but we will get them”

Meanwhile, I can say this company has changed its strategy, giving PLM a space in their portfolio combined with excellent slides about what could be possible.

To conclude, for linear execution the meaning of processes is more or less close to algorithms and when there is no algorithm, the individual steps in place are predictable with their own KPIs.

Process certification

As I mentioned in the introduction, processes were established to guarantee a predictable outcome, in particular when it comes to quality. For that reason, in the previous century when globalization started companies were somehow forced to get ISO 900x certified. The idea behind these certifications was that a company had processes in place to guarantee an expected outcome and for when they failed, they would have procedures in place to fix these gaps. The reason companies were doing this because no social internet could name and shame bad companies. Having ISO 900x certification would be the guarantee to deliver quality.  In the same perspective, we could see, configuration management, a system of best practices to guarantee that product information was always correct.

Certification was and is heaven for specialized external auditors and consultants.  To get certification you needed to invest in people and time to describe your processes, and once these processes were defined, there were regular external audits to ensure the quality system has been followed.  The beauty of this system – the described procedures were more or less “best intentions” not enforced. When the auditor would come the company had to play some theater that processes were followed., the auditor would find some improvements for next year and the management was happy certification was passed.

This has changed early this century. In particular, mid-market companies were no longer motivated to keep up this charade. The quality process manual remained as a source of inspiration, but external audits were no longer needed. Companies were globally connected and reviewed, so reputation could be sourced easily.

The result: there are documented quality procedures, and there is a reality. The more disconnected employees became in a company due to mergers or growth, the more individual best-practices became the way to deliver the right product and quality, combined with accepted errors and fixes downstream or later. The hidden cost of poor quality is still a secret within many companies.  Talking with employees they all have examples where their company lost a lot of money due to quality mistakes. Yet in less regulated industries, there is no standard approach, like CAPA (Corrective And Preventive Actions), APQP or 8D to solve it.

Configuration Management and Change Management processes

When it comes to managing the exact definition of a product, either an already manufactured product or products that are currently made, there is a need for Configuration Management.  Before there were PLM systems configuration management was done through procedures defining configurations based on references to documents with revisions and versions. In the aerospace industry, separate systems for configuration management were developed, to ensure the exact configuration of an aircraft could be retrieved at any time. Less regulated industries used a more document-based procedural approach as strict as possible. You can read about the history of configuration management and PLM in an earlier blog post: PLM and Configuration Management – a happy marriage?

With the introduction of PDM and PLM-systems, more and more companies wanted to implement their configuration management and in particular their change management inside the system, as the changes are always related to product information that can reside in a PLM-system. The change of part can be proposed (ECR), analyzed and approved, leading to and implementation of the change (ECO) which is based on changed specifications, designs (3D Models / Drawings) and more. You can read the basics here: The Issue and ECR/ECO for Dummies (Reprise)

The Challenge (= Problem) of Digital Processes

More and more companies are implementing change processes fully in PLM, and this is the point that creates the most friction for a PLM implementation. The beauty of digital change processes is that they can be full-proof. No change gets unnoticed as everyone is forced to follow the predefined procedures, either a type of fast track in case of lightweight (= low risk) changes or the full change process when the product is already in a mature state.

Like the ISO-900x processes, the PLM-implementer is often playing the role of the consultancy firm that needs to recommend the company how to implement configuration management and change processes. The challenge here is that the company most of the time does not have a standard view for their change processes and for sure the standard change management inside PLM s not identical to their processes.

Here the battle starts….

Management believes that digital change processes, preferable out-of-the-box, a crucial to implement, where users feel their job becomes more an administrative job than a creative job. Users that create information don’t want to be bothered with the decisions for numbering and revisioning.

They expect the system to do that easily for them – which does not happen as old procedures, responsibilities, and methodologies do not align with the system. Users are not measured or challenged for data quality, they are measured on the work they deliver that is needed now. Let’s first get the work done before we make sure all is consisted defined in the PLM-system.

Digital Transformation allows companies to redefine the responsibilities for users related to the data they produce. It is no longer a 3D Model or a drawing, but a complete data set with properties/attributes that can be shared and used for analysis and automation.

Conclusion

Implementing digital processes for PLM is the most painful, but required step for a successful implementation. As long as data and processes are not consistent, we can keep on dreaming about automation in PLM. Therefore, digital transformation inside PLM should focus on new methods and responsibilities to create a foundation for the future. Without an agreement on the digital processes there will be a growing inefficiency for the future.

 

Image:  21stcenturypublicservant.wordpress.com/

I have talked a lot the past years about Digital Transformation and in particular its relation to PLM. This time I want to focus a little more on Digital Transformation and my observations related to big enterprises and small and medium enterprises. I will take you starting from the top, the C-level to the work floor and then try to reconnect through the middle management. As you can imagine from the title of this post, there is a challenge. And I am aware I am generalizing for the sake of simplicity.

Starting from the C-level of a large enterprise

Large and traditional enterprises are having the most significant challenge when aiming at a digital transformation for several reasons:

  • They have shareholders that prefer short-term benefits above long-term promising but unclear higher benefits. Shareholders most of the time have no personal interest in these companies, they just want to earn money above the average growth.
  • The CEO is the person to define the strategy which has to come with a compelling vision to inspire the shareholders, the customers and the employees in the company – most of the time in that order of priority.
  • The role of the CEO is to prioritize investments and stop or sell core components to make the transformation affordable. Every transformation is about deciding what to stop, what to start and what to maintain.
  • After four to seven years (the seven years’ itch) it is time for a new CEO to create a new momentum as you cannot keep the excitement up too long.
  • Meanwhile, the Stop-activities are creating fear within the organization – people start fearing their jobs and the start-activities are most of the time of such a small-scale that their successes are not yet seen. So at the work floor, there will be reservations about what’s next

Companies like ABB, Ericsson, GE, Philips – in alphabetical order – are all in several stages of their digital transformation and in particular I have followed GE as they were extremely visible and ambitious. Meanwhile, it is fair to say that the initial Digital Transformation plan from GE has stalled and a lot of lessons learned from that.

If you have time – read this article: The Only Way Manufacturers Can Survive – by Vijay Govindarajan & Jeff Immelt (you need to register). It gives useful insights about what the strategy and planning were for digital transformation. And note PLM is not even mentioned there J

Starting from the C-level of a small and medium enterprise

In a small or medium enterprise, the distance between the C-level and the work floor is most of the time much shorter and chances are that the CEO is a long-term company member in case of a long-standing family-owned business. In this type of companies, a long-term vision can exist and you could expect that digital transformation is more sustainable there.

Unfortunate most of the time it is not, as the C-level is often more active in current business strategies and capabilities close to their understanding instead of investing energy and time to digest the full impact of a digital transformation. These companies might invest in the buzz-words you hear in the market, IoT, Digital Twins and Augmented Reality/Virtual Reality, all very visionary topics, however of low value when they are implemented in an isolated way.

In this paragraph, I also need to mention the small and medium enterprises that are in the hands of an investment company.  Here I feel sorry as the investment company is most of the time trying to optimize the current ways of working by simplifying or rationalizing the business, not creating a transformative vision (as they do not have the insights. In this type of companies, you will see on a lower scale the same investments done as in the other category of small and medium enterprises, be it on a lesser scale.

Do people need to change?

Often you hear that the problem with any change within the companies is because people do not want to change. I think this is too much a generalization. I have worked in the past five years with several companies where we explored the benefits and capabilities of PLM in a modern way, sometimes focusing on an item-centric approach, sometimes focusing on a model-based approach. In all these engagements there was no reluctance from the users to change.

However, there were two types of users in these discussions. I would characterize as evolutionary thinkers (most of the time ten years or more in the company) and love-to-change thinkers (most of them five years or less in the company). The difference between these groups was that the evolutionary thinkers were responding in the context of the existing business constraints where the love-to-change thinkers were not yet touched by the “knowledge how good everything was”.

For digital transformation, you need to create the love-to-change attitude while using the existing knowledge as a base to improve. And this is not a people change, it is an organizational change where you need to enable people to work in their best mode. It needs to be an end-to-end internal change – not changing the people, but changing the organizational parameters: KPIs, divisions, departments, priorities. Have a look at this short movie, you can replace the word ERP by PLM, and you will understand why I like this movie (and the relaxing sound)

The Middle Management dilemma

And here comes my last observation. At the C-level we can find inspiring visions often outcome-based, talking about a more agile company, closer to the customer, empowered workers, etc.  Then there is the ongoing business that cannot be disrupted and needs to perform – so the business units, the departments all get their performance KPIs, merely keeping the status quo in place.

Also, new digital initiatives need to be introduced. They don’t fit in the existing business and are often started in separation – like GE Digital division, and you can read Jeff Immelt’ s thoughts and strategy how this could work. (The Only Way Manufacturers Can Survive). However as the majority of the business runs in the old mode, the Digital Business became another business silo in the organization, as the middle management could not be motivated to embed digital in their business (no KPIs or very low significance of new KPIs)

I talked about the hybrid/bimodal approach several times in my blog posts, most recently in The Challenges of a Connected Ecosystem.  One of the points that I did not address was the fact that probably nobody wants to work in the old mode anymore once the new approach is successful and scaled up.

When the new mode of business is still small, people will not care so much and continue business as usual. Once the new mode becomes the most successful part of the company, people do want to join this success if they can. And here the change effort is needed. An interesting article in this context is The End of Two-Speed IT from the Boston Consultancy Group (2016). They already point at the critical role of middle management. Middle management can kill digital transformation or being part of it, by getting motivated and adopting too.

Conclusion

Perhaps too much text in this post and even more content when you dive more in-depth in the provided content. Crucial if you want to understand the digital transformation process in an existing company and the critical place of middle management. They are likely the killers of digital transformation if not give the right coaching and incentives.  Just an observation – not a thought 😉

clip_image002At this moment I am finalizing my session for PDT2016 where I will talk about the importance of accurate data. Earlier this year I wrote a post about that theme: The importance of accurate data. Act now!

My PDT session will be elaborating on this post, with a focus on why and how we need this change in day-to-day business happen. So if you are interested in a longer story and much more interesting topics to learn and discuss, come to Paris on 9 and 10 November.

Dreaming is free

Recently I found a cartoon on LinkedIn and shared it with my contacts, illustrating the optimistic view companies have when they are aiming to find the best solution for their business, going through an RFI phase, the RFP phase, and ultimately negotiation the final deal with the PLM solution provider or vendor. See the image below:

clip_image003

All credits to the author – I found this image here

The above cartoon gives a humoristic view of the (PLM) sales process (often true). In addition, I want to share a less optimistic view related to PLM implementations after the deal has been closed. Based on the PLM projects if have been coaching in the past, the majority of these projects became in stress mode once the stakeholders involved only focused on the software, the functions and features and centralizing data. Implementing the software without a business transformation caused a lot of discomfort.

clip_image005Users started to complain that the system did not allow them to do their day-to-day work in the same way. And they were right! They should have a new day-to-day work in the future, with different priorities based on the new PLM infrastructure.

This cultural change (and business change) was often not considered as the PLM system was implemented from an IT-perspective, not with a business perspective.

Over time, a better understanding of PLM and the fact that vendors and implementers have improved their portfolio and implementation skills, classical PLM implementations are now less disruptive.

A classical PLM implementation can be done quickly is because the system most of the time does not change the roles and responsibilities of people. Everyone remains working in his/her own silo. The difference: we store information in a central place so it can be found. And this approach would have worked if the world was not changing.

The digital enterprise transformation.

With the upcoming digitization and globalization of the market, enterprises are forced to adapt their business to become more customer-driven. This will have an impact on how PLM needs to be implemented. I wrote about this topic in my post: From a linear world to fast and circular. The modern digital enterprise has new roles and responsibilities and will eliminate roles and responsibilities that can be automated through a data-driven, rule-based approach. Therefore implementing PLM in a modern approach should be related (driven) by a business transformation and not the other way around!

Benefits realization

In the past two years, I have explained this story to all levels inside various organizations. And nobody disagreed. Redefining the processes, redefining roles was the priority. And we need a team to help people to make this change – these people are change management experts. The benefits diagram from Gartner as shown below was well understood, and most companies agreed the ambition should be to the top curve, in any case, stay above the red curve

clip_image007

But often reality relates to the first cartoon. In the majority of the implementations I have seen the past two years, the company did not want to invest in change management, defining the new process and new roles first for an optimum flow of information. They spent the entire budget on software and implementation services. With a minimum of staff, the technology was implemented based on existing processes – no change management at all. Disappointing, as short-term thinking destroyed the long-term vision and benefits were not as large as they had been dreaming.

Without changing business processes and cultural change management, the PLM team will fight against the organization, instead of surfing on the wave of new business opportunities and business growth.

Conclusion

If your company is planning to implement modern PLM which implicit requires a business transformation, make sure cultural change management is part of your plan and budget. It will bring the real ROI. Depending on your company´s legacy, if a business transformation is a mission impossible, it is sometimes easier to start a new business unit with new processes, new roles and potentially new people. Otherwise, the benefits will remain (too) low from your PLM implementation.

I am curious to learn your experience related to (the lack) of change management – how to include it into the real scope – your thoughts ?

Addition:
As a reaction to this post, Oleg Shilovitsky wrote a related blog post: PLM and the death spiral of cultural change.  See my response below to this post as it will contribute to the understanding of this post

Oleg, thanks for contributing to the theme of cultural change. Your post illustrates that my post was not clear enough, or perhaps too short. I do not believe PLM is that difficult because of technology, I would even claim that technology is a the bottom of my list of priorities. Not stating it is not important, but meaning that when you are converging with a company to a vision for PLM, you probably know the kind of technologies you are going to use.

The highest priority to my opinion is currently the business transformation companies need to go through in order to adapt their business to remain relevant in a digital world. The transformation will require companies to implement PLM in a different manner, less silo-oriented, more focus on value flows starting from the customer.

Working different means cultural change and a company needs to allocate time, budget and energy to that. The PLM implementation is supporting the cultural change not driving the cultural change.

And this is the biggest mistake I have seen everywhere. Management decides to implement a new PLM as the driver for cultural change, instead of the result of cultural change. And they reason this is done, is most of the time due to budget thinking as cultural change is ways more complex and expensive than a PLM implementation.

 

 

econimist

Image and article related to the article “The Onrushing Wave” in the Economist Jan 18th, 2014

When PLM is discussed at management level, often the goal is to increase efficiency, which translates into doing the same with fewer people. And it is the translation that is creating worries inside the company. The PLM system is going to cut down the amount of jobs in our company.

The result: People, who fear their job is at risk, will make sure PLM will fail and become blockers. These people will be the ones defending the “good old way of working” and create a mood of complexity for the new PLM system.
I wrote some time ago a post about PLM and Blockers

At the end there is frustration at all levels in the company and PLM systems are to blame.

How to address the fear for disappearing jobs block a PLM implementation?

First of all if you implement PLM now, do not target efficiency only. There is a digital revolution ongoing, radically changing standard businesses and markets. The picture at the top says it all. If you are still not convinced, read the “old” article from the Economist or more related to PLM, I just read this article from Accenture consulting talking about Digital PLM. I liked the opening sentence from that article:

“It’s time to adopt a digital model for product lifecycle management – or get left behind.”

dataThe digital revolution forces companies to become extremely flexible and agile. Business models can rapidly change. Where perhaps your company was the market leader, a few years you can be in trouble, due to the decoupling of products and services in a different business model. There are a few places where you do not have to worry (yet). If you are in a governmental type of business (no competition – you are the only preferred supplier) the less worried you might be for the upcoming digital revolution. Other types of companies need to make a strategic plan.

Making a strategic plan

roadmapThe strategic plan starts at the board level and has, of course, elements of efficiency. However, the major strategic discussion should be: “How will we differentiate our company in the future and stay in business and profitable”. This cannot be by competing on price only. It requires you can excite your future customers and who these customers are might not be clear yet either.

Different business models can give the company a better position in the market. The current trend in competitive markets is that the value does not come from selling products. Selling services or operation capacity (OPEX instead of CAPEX) are currently upcoming new business models and they need constant anticipation to what happens in the market or at your potential customer base.

Digitalization of information and being able to work with real-time information, instead of information hidden in documents, handled by document controllers, creates the opportunity to change. For example the potential of “The Internet of Everything” is huge.

At the board level, you need the vision where the company should be in the next 5 to 10 years. It will not bubble up automatically in an organization. And when talking about PLM, it should be digital PLM.

Next communication

It is not easy to communicate the above if you have not lived through the whole process in your mind. Management needs to be able to explain the vision and its impact on the organization in such a way that it empowers people instead of making them afraid of change. We all know the examples of charismatic CEOs, like Steve Jobs, who could energize a company and its customers. However, it is clear that not every CEO is like Steve Jobs.
Once you are able to communicate the vision, it will be logical that the organization needs new processes and in modern digital processes create different responsibilities and need different management styles.

Disappearing jobs

When you start implementing PLM in a modern approach (digital PLM according to Accenture) there will be jobs disappearing. There is no need to be secretive about that; it is a result of the vision that should be known to everyone in the company.

Disappearing jobs are:

  • jobs where people are processing data (from one format to the other) and checking follow-up processes (from on Excel to the other). If your daily job is collecting data and filling spreadsheets with data your job is at risk. In a digital environment, the data will be real-time available and can be filtered and presented in automatic reports or dashboards.
  • Jobs where team managers have the major task to decide on priorities for the team and fight with other discipline team managers on priorities. In a digital environment, empowered employees will understand conflicting activities and they will be able to discuss and decide immediately with the relevant people. No need for an intermediate layer of people handling escalations only. It is true that this modern approach requires a different management style and people who can deal with being empowered. In general, empowered people feel more motivated that employees who are just doing what their managers tell them to do. The business change from hierarchical and siloed organizations towards networked organizations is critical and challenging – all depending on trust and the right change management.
  • The classical fire-fighters. At first glance they are considered as crucial as they solve all the issues with great energy, do not run away when work needs to be done and make it happen. From the management perspective, these people are blocking change as they flourish from the chaos and do not fix or prevent new issues coming up.

For all other people in the company, digital PLM should bring relief – see the Gartner quote below.

GartnerWorkforce

Digital business jobs imply spending less time in searching for information. Less work in a reactive mode as information in the right context in real-time will be available. End to end visibility of information combined with transparency will lead to higher performance and motivation. It requires changing behaviors, motivation must come from the inspiration of the management and the understanding that your company is becoming more flexible and more competitive than before. And for that reasons keeping you in business and providing you an interesting place to work.

Conclusion: Do not use PLM to improve efficiency only and ROI discussions. There is a strategic need to be ready and stay in business for the future. Modern PLM is an enabler, however, requires a vision, inspiring communication and a path for employees to be empowered.

I am curious about your opinion – will this happen to your company / industry?

PxMDid I choose the wrong job? Busy times still and the past 15 years I have focused on PLM and every year I had the feeling there was progress in the understanding and acceptance for PLM. Although the definition of PLM is a moving target, there are probably thousands of PLM experts around the world. From my recent blog posts, the past two years you might share my opinion that PLM is changing from an engineering, document-centric system towards a beyond PLM approach where a data-driven, federated platform leads to (yet unknown) benefits.

So where to draw the border of PLM?

Is there a possibility that somewhere a disruptive approach will redefine PLM again? PLM is considered complex (I don´t think so). The complexity lies first of all in the rigidness of PLM systems not being able to excite people. Next the desires from implementers to provide services to satisfy users and, as a result, make it more complicated. Finally and the most important reason the lack of understanding that implementing PLM requires a business change.

Change (don´t mention the word), which does not happen overnight.

Oleg Shilovitsky wrote about PLM and organizational change. He is leaving it for further discussion if the difficulty is related to the PLM technology or the resistance towards change for people in business. Read his conclusion:

Change is hard. We should re-think the way we implement PLM and exclude process alignment from PLM implementation. Stop changing people and stop forcing people to take complicated decisions during PLM sales process. Future PLM products will become a foundation for agile change management that will be done by companies.

Edward Lopategui is even more provocative in his blog post: The PLM Old Fart Paradox. Have a read of his post including the comments. Edward is somehow sharing the same belief, stating PLM has an identity crisis

PLM has an identity crisis. Talking PLM at a random networking event tends to engender one of two reactions. The first is from anyone who recognizes the acronym, spent 5 years consulting for company X, and begins a vigorous head-nod that instills fear their neck may unhinge in agreement. The other reaction is quite the opposite; you can almost sense a capillary dilation of the so-called blush response. Fluctuation of the pupil… Involuntary dilation of the iris… it’s the Voight-Kampff test for interest expiring at the mere utterance of the acronym. You don’t get this kind of reaction when you talk Cloud or Internet of Things, which while overused, tend to at least solicit questions and interest among the uninitiated. There’s public relations work to be done.

Both Oleg and Edward believe that new technology is needed to overcome the old PLM implementation issues: a need for change, a need to break down the silos.

Meanwhile in Europe

Meanwhile in Europe, an international research foundation for PLM (http://www.plm-irf.org/) has been initiated and is making itself heard towards the United States. What is the mission of this research foundation? To define the future of PLM. Read the opening statement:

The PLM International Research Foundation (PLM-IRF) initiative aims to establish a central mechanism to support global research into the most advanced future capabilities of PLM.

This is the first initiative ever to ask the question:

What research does the world need, to achieve the future PLM capabilities that the world wants?”

This simple question highlights that fact that the PLM industry needs coherent view of the future. Without a clear sense of direction, PLM development is likely to fall far short of what it could be.

2050I consider this as a mission impossible. In May this year I will be blogging for seven years about PLM and looking back to my early posts the world was different. Interesting some of the predictions (PLM in 2050 – predictions done in 2008) I made in the past are still valid however for every right prediction there might be a wrong one too.

And now this International Research Foundation is planning to define what PLM should offer in the future?

What happens if companies do not agree and implement their business approach? It reminded me of a keynote speech given by Thomas Schmidt (Vice President, Head of Operational Excellence and IS – ABB’s Power Products Division) at PLM Innovation 2012 (my review here). Thomas was challenging the audience explaining what ABB needed. Quoting Thomas Schmidt:

“And if you call this PLM, it is OK for me. However, current PLM systems do not satisfy these needs.”

So you can imagine the feeling I got: PLM has an identity crisis.

Or do I have an identity crisis?

changeI believe we are in a transition state where companies have to redefine their business. I described this change in my earlier post: From Linear to fast and circular. Implementing this approach first of all requires a redefinition of how organizations work. Hierarchical and siloed organizations need to transform towards flat, self-adapting structures in order to become more customer-centric and reactive to ever faster-changing market needs.

For that reason, I was surprised by a presentation shared by Chris Armbruster that same week I read Oleg´s and Edward´s posts. In many ways, Chris and I come from the opposite sides of PLM.

My background European, with a classical start from engineering, a focus on the mid-market. Chris according to his Slideshare info, US-based, Supply Chain Executive and focus on the Fortune 500.

Have a look at Chris´s presentation – rethinking business for Exponential times. It is amazing that two persons not connected at all can come to the same conclusions.

This should be an indication there is a single version of the truth!

Conclusion:

You might say PLM has an identity crisis. We do not need a better definition of PLM to solve this. We need to change our business model and then define what we need. PLM, ERP, SLM, MES, SCM, ….. There are enough unused TLAs for the future. And I am still happy with my job.

 

 

 

… and you ? Looking for a new job or changing too ?

imageSome weeks ago PLMJEN asked me my opinion on Peter Schroer´s post and invitation to an ARAS webinar called: Change Management: One Size Will Never Fit All. Change Management is actually a compelling topic, and I realized I had never written a dedicated post to such an essential topic. The introduction from Peter was excellent:

Change management is the toughest thing inside of PLM. It’s also the most important.

For the rest, the post elaborated further into software capabilities and the value of having templates processes for various industry practices. I share that opinion when talking to companies that are starting to establish their processes. It is extremely rare that an existing company will change its processes towards more standard processes delivered by the PLM system when implementing a new system. The rule of thumb is People, Processes and Tools. This all is nicely explained by Stephen Porter in his latest blog post Beware the quick fix successful plm deployment strategies. As I was not able to attend the webinar, here are my more general thoughts related to change management and why it is essential for PLM.

Change Management has always been there

It is not that PLM has invented change management. Before companies started to use ERP and PDM systems, every company had to deal with managing changes. At that time, their business was mostly local and compared with today slow. “Time to market” was more a “Time to Region” issue. Engineering and Manufacturing were operating from the same location. Change management was a personal responsibility supported by (paper) documents and individuals. Only with the growing complexity of products, growing and global customer demands and increasing regulatory constraints it became impossible to manage change in an unstructured manner.

Survival of the fittest change organization

imageI have worked with several companies where change management was a running Excel business. Running can be interpreted in two ways. The current operation could not stop and step back and look into an improvement cycle, and a lot of people were running to collect, check and validate information in order to make change estimates and make decisions based on the collected data.

When a lot of people are running, it means your business is at risk. A lot of people means costs for data (re)search and handling are higher than the competition if this can be done automatically. Also in countries of low labor costs, a lot of people running becomes a threat at a certain moment. In addition, running people can make mistakes or provide insufficient information, which leads to the wrong decisions.

Wrong decisions can be costly. Your product may become too expensive; your project may delay significant as information was based on conflicting information between disciplines or suppliers. Additional iterations to fix these issues lead to a longer time to market. Late discoveries can lead to severe high costs. For certain, when the product has been released to the market the cost might be tremendous.

NoChangeFrom the other side if making changes becomes difficult because the data has to be collected from various sources through human intervention, organizations might try to avoid making changes.

Somehow this is also an indirect death penalty. The future is for companies that are able to react quickly at any time and implement changes.

The analogy is with a commercial aircraft and a fighter plane. Let’s take the Airbus 380 in mind and a modern fighter jet the Joint Strike Fighter (JSF). The Airbus 380 brings you comfortable from A to B as long as A and B are well prepared places to land. The flight is comfortable as the plane is extremely stable. It is a well planned trip with an aversion to change of the trajectory.

The JSF airplane by definition is an unstable plane. It is only by its computer steering control that the plane behaves stable in the air. The built-in instability makes it possible to react as quickly as possible to unforeseen situations, preferable faster than the competition. This is a solution designed for change.

Based on your business you all should admire the JSF concept and try to understand where it is needed in your organization.

Why is change management integrated in PLM so important?

If we consider where changes appear the most, it is evident in the early lifecycle of the product most of the changes occur. And as long as they are in the virtual world with uncommitted costs to the product they are relative cheap. To my surprise many engineering companies and engineering departments work only with change management outside their own environment. Historically because outside their environment connected to prototyping or production costs of change are the highest. And our existing ERP system has an Engineering Change process – so let’s use that.

whyworryMeanwhile, engineering is used to work with the best so far information. At any moment, every discipline stores their data in a central repository. This could be a directory structure or PDM systems. Everyone is looking to the latest data. Files are overwritten with the latest versions. Data in the PDM system shows the latest version to all users. Hallelujah

And this is the place where it goes wrong. A mechanical engineer has overlooked a requirement in the specification that has been changed. Yes, the latest version of the 20 page document is there. An electrical engineer has defined a new control system for the engine, but has not noticed that the operating parameters of the motor have been changed. Typical examples where a best so far environments creates the visibility, but the individual user cannot understand the impact of a change anymore (especially when additional sites perform the engineering work)

Here comes the value of change management in PLM. Change Management in PLM can be light weighted in the early design phases, providing checks on changes (baselines) and notifications to disciplines involved. Approval processes are more agreements to changes to implement and their impact on all disciplines.

sel_aPLM supports the product definition through the whole product lifecycle, change management at each stage can have its particular behavior. In the early stages a focus on notifications and visibility of change, later checking the impact based on the maturity of the various disciplines and finally when running into production and materials commitment towards a strict and organized change mechanism. It is only in a PLM system where the gradual flow can be supported seamless

Change Management and ERP

As mentioned before, most manufacturing companies have implemented change management in ERP as the costs of change are the highest when the product capabilities are committed. However, the ERP system is not the place to explore and iterate for further improved solutions. The ERP system can be the trigger for a change process based on production issues. However the full implementation of the change requires a change in the product definition, the area where PLM is strong.

NOTE: on purpose I am not mentioning a change in the engineering definition as in some cases the engineering definition might remain the same, but only the manufacturing process or materials need to be adapted. PLM supports iterations, not an ERP execution matter.

Change Management and Configuration Management

cmiiSo far we have been discussing how the manufacturing system would be able to offer products based on the right engineering definition. As each specific product might not have an individual definition checked at any time, there is the need for configuration management (CM). Proper implemented configuration management assures there is a consistent relationship between how the product is specified and defined and the way it is produced. Read a refined and precise explanation on wiki

In one of my following posts I will focus on configuration management practices and why PLM systems and Configuration Management are like a Siamese twins

Conclusion:

Storing your data in a (PLM) system has only value if you are able to keep the actual status of the information and its context. Only then a person can make the right decisions immediately and with the right accuracy. The more systems or manual data handling, the less completive your company will be. Integrated and lean change management means survival !

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