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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 ?
    Measure
    : 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)

observation 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: 

question “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 ?

myplm 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.

point 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

22112007178In the past year I shared with you my thoughts around PLM. Most of the post were based on discussions with customers, implementers, resellers and peers around the world. I learned a lot and will keep on learning I assume, as PLM has many aspects:

 

– the products, there are many products with the label PLM

– the concept, how do we interpret PLM per industry

– the customers, what do they want to achieve, without buzz-word

– the world, people and economic trends drive us sometime to irrational decisions

In this post I will give an overview from the 2008 posts, categorized by topic. I am looking forward to further suggestions in the comments if you are interested in more depth in certain areas. In parallel I will continue to share my experiences and provide an overview of best-practices and terminology experienced in the PLM space.

PLM concepts

Managing the MBOM is crucial for PLM

Is there a need for classification – and how should it be done ?

Is the PLM concept applicable for mid-market companies too ?

What will happen with PLM – looking towards 2050

 

PLM and ERP

PLM and ERP – the culture change, continued

Connecting PLM and ERP – part 1, part 2, part 3

 

PLM and ROI

Implementing PLM is too costly ?

Implementing PLM takes too long ?

Why implement PLM next to an ERP system ?

How is PLM different from CAD data management ?

Too busy to implement PLM ?

Economical crisis creates the opportunity for change

 

Business Process Change

PLM in SMB requires a change in thinking

The management is responsible to initiate a change towards PLM

The change in automotive/aero supply chains to more advanced partners

How will mid-market companies pick-up the benefits from implementing PLM ?

 

Experiences

European Enovia Customer Conference (ECC)

PLM in Greece – does it exist ?

Is the concept for PLM mature enough ?

Don’t expect a bottom up PLM implementation to become successful

 

Conclusion

I would like to conclude with a quote from my favorite scientist, who taught us everything is relative, however:

“We can’t solve problems by using the same kind of thinking we used when we created them.”

Looking forward to your feedback, wishes in 2009 !

8years

Jos Voskuil

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