Is PLM the next big thing?

Product Lifecycle Management: Antony Adshead reports on hopes for the latest money-saving management tool

Product Lifecycle Management: Antony Adshead reports on hopes for the latest money-saving management tool

Product lifecycle management is the latest business tool to promise substantial cash savings to business, and to acquire a user-friendly acronym - PLM. But whereas some firms have complained that other acronymous systems - among them ERP and CRM - have often failed to deliver on generous promises, this one may do more than fuel one-upmanship for computer consultants.

PLM is taking off in manufacturing and reaping huge rewards in design and production. It may even give a business boost to companies outside the manufacturing sector. Philips Electronics has just announced that it is shaving crucial weeks off the development time on some of its semiconductor products using PLM software from MatrixOne.

Weeks may not sound like much but semiconductors may have a lifetime of only six months, so design time is often as short as three months. Delays in the process from drawing-board to factory gate can cost many millions of pounds.

With chip factories often having a life as short as two years and a capital cost of hundreds of millions of pounds to re-equip to produce the next technological development, a delay of one day means seven-figure losses. By ensuring that, from the design stage onwards, all those who need to know about a product are involved and pulling the right levers Philips has achieved a tight fit between stimulating new orders and fulfilling them and is able to develop a consistent set of business processes from the inception of the product.

From the time an enquiry for a chip is made a complex chain of events is set in motion. Before the order is confirmed designers need data sheets for the project: availability of component materials is checked and factories are alerted. Factories have to consider tooling, equipment and capacity issues for production and the manufacture and testing of prototypes is organised. By being able to collaborate at a detailed level at the enquiry stage Philips can shave critical time off the process.

Mario Rivas, executive vice-president of communications businesses at Philips Semiconductors, said, "Visibility is invaluable. We can identify constraints at the beginning and keep cycle times short. We get a saving in time but clarification is important to us."

He added, "We have been going through a step-change in IT automation. We had gone through the implementation of SAP and i2 ERP systems and had expended a lot of hard work on cleaning up legacy data in our product and process development and manufacturing systems. We then thought, can we use a single system? Previously we had numerous legacy systems and although we could translate information between them there was always a danger that something would be lost the process."

Philips plans to roll the system out to 500 users by the year's end and to 5,000 users at its three assembly plants and 14 manufacturing plants after that. There are also plans afoot to extend it to external partners once the stability of the system is proved internally.

PLM seems to be earning prominence in complex manufacturing industries such as aeronautics, semiconductor and process manufacturing. It seems most suited to ensuring tight integration in design-heavy environments, where accurate and efficient collaboration between multiple points of contact can produce a better product more quickly.

But, according to Nigel Montgomery from analyst AMR Research, the use of PLM could extend to less obvious sectors, such as financial services. "PLM can be put to work whenever a business needs to look at a product from conception to retirement and needs to consider interaction with the rest of the product portfolio, and sourcing of the product and prototype. In manufacturing this includes computer aided design, engineering, process engineering, intellectual property, marketing and customer needs," he said.

PLM was developed as people realised that if you make improvements in supply chains but left inefficiencies at the design stage you were limiting the chance to achieve better time to market. Visibility of product data all through the process is needed. Montgomery believes the principle is applicable in other sectors - after all, time and cost pressures are not unique to manufacturing.

"Banking and insurance, for example, could also use PLM. Any business which offers a product - even if it is a service - needs to look at its conception, how it fits the market, its pricing and how it will be delivered," he said. Studying these factors using PLM can give faster time-to-market, lower cost-to-market and achieve commonality between products to boost efficiency, he believes.

But, Montgomery warned, "The most important thing is to be aware of the cultural constraints - people are used to working in ivory castles and tossing completed work over the wall, so it is important to look at the interaction between departments."  

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