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observation It is time to continue with my posts about ROI and the need for measuring. I described in previous posts the concept phase and planning phase and will touch in this post the development phase.
But before doing so, there are two points I want to share before.

Queen’s Day in the Netherlands 2009

First as a Dutchman (although many times virtual) I enjoy April 30,  as a special day, as it is our Queen’s Day.
People around the world celebrate the 1st of May, we Dutch celebrate Queen’s Day the day before.

It is a celebration of the people, with free flee markets, concerts and activities all around the country and at some special locations our royal family contributes to the atmosphere by participating amongst us. We celebrate this day not because the Dutch are so royalty minded, it is also a good excuse to celebrate our existence together, and there is always the discussion if a president of the country would bring more to the country as compared to the royal family.

This year Queens Day however became the blackest Queens Day ever. A lunatic apparently decided to make a statement and tried to drive his car into the bus with the royal family. However to get there he drove through the cheering crowd – 7 people died, including the driver because of this attempt. It makes you realize that in the modern society innocence is gone and that life is not as obvious as it is.

Hopefully Queen’s Day will be again a day of the people celebrating , with respect to the victims, still  we should not change our lives because we fear.

Concurrent Engineering around the BOM

idea Next point, back to PLM again, I read an interesting discussing on two blogs regarding the need for the BOM – For me the shared and consolidated BOM, is the major object (placeholder / entry point) for a company to share developed data, so it is an interesting discussion.

Read these posts at: vuuch.com and plwtwine.com – they give points to consider, and I support the observation that although we try to do concurrent engineering already for many years, I haven’t seen many successful implementations, mainly due to the human behavior. Classically PDM and PLM require the BOM for collaboration and we might stay with this concept for a long time. Knowing the mid-market, I believe alternative solutions have to come up as a boom embraced by everyone  (and conquer the market within a few years) or we will stick to what we know and what we are doing – changing habits and culture is hard. For the moment I stick to the current situation.

To PLM or Not to PLM – Measuring the development phase

So what happens in the development phase.> We have a concept and a plan and now we need to develop or change the product. In the past this was much easier. Companies worked mainly locally and around a single discipline. Now product development has the typical challenges of collaboration between different locations (many times around the globe), different disciplines (mechanical, electrical, software), integrate suppliers (as we focus on core competence) and meanwhile comply to (local) regulations. A lot of activities in parallel that should run coordinated to a single goal, the developed product. The phase where a lot of data is created and need to be shared among along the enterprise.

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

  • How many review cycles does a product introduction require in general?
    Measure: time spent on getting a joined status on development and plan next detailed steps
    Analyze: Can we improve the quality of the status information to better plan next steps
  • How much time does it take to prepare a product status review
    Measure: the amount of time and people spent to collect information to make a status review
    Analyze: Can this process of collecting data be shortened and (semi-) automated
  • How do we make sure we select the right parts and solutions for a certain function / system ?
    Measure: The amount of changes during  the development phase or after this phase 
    Analyze: Why were these changes needed ? Missing information, obsolete/redundant parts, failed solutions ?
  • How do we make sure our products comply to local regulations
    Measure: At which state of the development process compliance is checked and how it affects development / go to market time.
    Analyze: Can we verify compliance earlier than current  – and how
  • How much effort does it take to communicate around an engineering change
    Measure
    : What does it take to communicate and implement a change during the development phase. How much time, many resources are involved around this communication process (and how reliable is it)
    Analyze: Can we improve by doing things different ?  Implementing processes, push technology, ….?

Most of the above points focus on facilitating (global) processes  and making information available anywhere needed. This brings me to my previous post, where I talked about Can ERP vendors do PLM ?  The ERP vendors that do PLM, will claim they are addressing these points in their PLM offering too.  The major difference however is that (and I am generalizing) ERP based systems score low on usability as their systems are not planned to work from within an application (CAD or Office for example) . This is the major difference with PLM systems, closely related to CAD systems. Through their CAD integrations, the PLM environment will be embedded in the day-to-day user / design environment (immersive is the term).

An immersive integration has the benefit that collecting data is much more natural and the chance of having more accurate data available all the time is higher. So most of the point mentioned above will have a higher ROI when working from an integrated PLM environment.  And in addition to that, in the mid-market users have a voice – their acceptance is also part of the ROI.

Conclusion
The keywords for the development phase are global collaboration and visibility of actual data and affected changes. To make data available, integration with the data creator’s desktop is important as then it will be available straight from the source. I keep it here to ‘classical’ PDM / PLM as new concepts like PLM 2.0 will drastically change the way we work, however getting there will take years

point Note: It might be misleading to talk about ROI benefits per phase, as other and additional benefits may come from doing the whole process different.  I will stick to my initial approach as it will give you a baseline to start working from. Remember in order to understand– you need to start measuring even if it is not the ultimate approach

And closing with Queen’s day how it could be (2008 – learning Dutch is not required)

shout_leftI am writing this week’s post on my way to a customer to finalize an implementation and in parallel describing the Return On Investment of this project. But before that, I would like to have a short note about my previous post ‘Free PLM software does not help companies“.
The reason I wrote this post was because I wanted to assure that companies do not believe that ROI for implementing PLM is based on the software costs. PLM implementations are a combination of software, business skills and the company culture. Specially in the current economical situation, I wanted to make clear that these factors are not overlooked. Also I did not want to say Open Source PLM is bad, I made my points on the messaging, however in functionality and usage I do not see a big difference between other types of PLM systems. I got some interesting comments on this post and I advise all of you, who have read the post to go through the comments to get a broader perspective. Once I have had some more opportunity to investigate this area deeper, I will come with a more in-depth post on this topic.

To PLM or Not To PLM

But now back to: To PLM or Not To PLM, where I wrote in a first post on this topic that before judging the costs and ROI of PLM, we should start analyzing our current processes and situation and use this as a baseline to guesstimate the PLM benefits.

The first PLM phase to analyze is the concept phase, where new ideas are picked up (or not). Actually this is the phase where we define the future of the company. The economical recession in a way forces companies to rethink their strategy and fortunately all of the competition is in a similar position. downturn means  less activities, the company might be in the position to allocate time to address these analysis for PLM ROI. Instead of making people redundant, use these people to work on a new and optimized product strategy.

think Existential questions to ask yourself as a company

The basic questions to ask about the concept phase:

  • Do we know where our products are currently in their lifecycle ?
    Measure: quantity, sales trends, margin
    Analyze: is our portfolio healthy ?
  • How do customer rate our products ?
    Measure: market share, market awareness, customer satisfaction, quality, field issues
    Analyze: will customers keep on buying from us ?
  • Where are we different from the competition ?
    Measure: where do we win/ where do we loose and compare per quarter ?
    Analyze: how can we improve the success ratio ?
  • In case of bidding
    Measure: how many bids do we handle per quarter and with which effort
    Analyze: What is the win percentage and how to influence this ?
  • Who are our customers ?
    Measure: does the 80-20 rule apply – does 80 % of the revenue come from 20 % of the customers ?
    Analyze: What is the trend specially in relation to the current market situation
  • Where does innovation come from ?
    Measure
    : the amount of new ideas, the source (people, customers) and the ones that reach it to the portfolio
    Analyze: Do we have a guarantee for innovation ?

Additional questions to be asked due to current financial and global situation: PARIS

  • How do we strive for climate neutral products – sustainable development ?
    Measure: the amount of energy used to build the products but also to recycle and what remains
    Analyze: How can we change our products and production process ?
  • How do we capture our company’s IP due to the aging workforce in most of the countries
    Measure: How many people with the specific knowledge will  retire in 5 – 10 years ?
    Analyze: Where and how can I assure this knowledge remains in the company ?

For many of the above questions you might say that you know how to conduct your business as you are doing most of these activities and even more.  However the question you should ask yourself also is: How long does it take to answer these questions and to react on these trends ?

Because all the above topics are positively influenced by PLM – here it the PLM ROI !

eb Project and Portfolio Management, company wide workflow process allow the company to measure, to run analysis and to have information within hours (or worse case in days), where in a company where every department and discipline has their own environment, the effort to collect this information becomes huge and not natural. And as it will take a lot of time to collect the information,  people tend to react on their guts or intuition, which might be wrong if you are among the wrong people or if the world changes in a way never seen before.

Additional capturing product and process knowledge allows companies to contain their IP. And just to make this point clear: Product knowledge is not only CAD and Bills of Materials. It is all collected information: issues during design, during production, coming from field services, best practices used and more. The challenge anyway for every PLM system is to provide an environment, user-friendly enough for all users, to start managing their total product IP in a single environment.

Conclusion
PLM as a total approach brings a lot of value and control in the concept phase, the phase where the company’s future is merely defined. And it is obvious that the future should be green and sustainable. Use the current downturn to shape the future – the questions in this post and your analysis should be the base.

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