2 Plm Strategies

7/27/2019 2 Plm Strategies

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PLM STRATEGIES J.K.Kittur Page 1

PLM Strategy

PLM Vision

A PLM Vision is a high-level conceptual description of a companys product lifecycle activitiesat some future time.

A PLM Vision represents the best possible forecast of the desired future situation and activities.

A PLM Vision outlines the framework and major characteristics of the future activities.

It provides a Big Picture to guide people in the choices they have to make, when strategising andplanning, concerning resources, priorities, capabilities, budgets, and the scope of activities.

Without a PLM Vision, people wont know what they should be working towards, so wont workeffectively.

Companies need a clear PLM Vision so they dont drift along, going wherever external forcesare pushing them.The Vision is a useful basis for communication about PLM between all those involved with

PLM, such as executives, IS managers, Product Managers, product developers, service staff,recycling managers and other stakeholders.

A PLM Vision will be company-specific.

A PLM Vision is built on the assumption that the company wants to carry out its productlifecycle activities as effectively as possible.

A Vision must make sense to others. It has to be unambiguous and easily understandable.

It must be believable and realistic

A shared Vision helps everybody to move forward along the same road towards a successfulsituation and effective lifecycle activities.

A PLM Vision is the starting point for developing a PLM Strategy, and for developing and

implementing improvement plans. A Vision should be built by a team of people working part-time on this task over a period of a

few months.

A PLM Vision isnt an independent stand-alone entity. It has to fit with the companys overallvision of its future, its mission and its objectives.

Upstream of the Vision are the companys objectives, vision, strategies and plans.

The PLM objectives result from the requirements of the company. They express at a high levelwhats expected from PLM.

we want total control of our products across the lifecycle from cradle to grave

the environmental footprint of our products must be the lowest in the sector

we want to be among the fastest product developers in our industry our PLM activity must rank among the 100 most successful in the world

we want to eliminate four low-margin products in the next five years, and then beintroducing 6 new and 10 upgraded products each year in the US

Potential objectives for PLM

One of the first steps towards the PLM Vision is to understand the scope, range and content ofproduct lifecycle activities.


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The PLM Vision will include a description of the future PLM Strategy, the way that PLMresources will be organised in the future.

Once the PLM Vision has been agreed, a suitable Implementation Strategy has to be developedto achieve it.

Once the Implementation Strategy has been defined, it is possible to start planning detailed

activities. These plans will address IT applications, modifications to the lifecycle processes, information,

organizational structures, and many other topics.

When planning is complete, implementation can take place.

The process of developing a PLM Vision, and the related Implementation Strategy and plan, iseasier to describe than to execute.

There should be a very clear and simple link between Vision and implementation.

Military Strategy

Histories of modern military strategy often start with Napoleon. Between 1796 and 1815 he dominatedmost of Europe. For hundreds of years before, no-one had achieved such domination.

He fought more battles than other generals.

Napoleon fought in the name of Liberty.

Many of the generals he defeated were fighting in the name of despots.

He carefully selected battlegrounds advantageous to his forces

Rapidly concentrated all his forces for battle at a position where his enemy was weak

Forced his enemy to fight by threatening lines of communication and supply.

Napoleons victory in war resulted from the destruction of the enemys forces on the battlefield ratherthan the mere occupation of territory.To achieve this he identified three targets. These were the enemy forces, their resources and their will tofight.

war is nothing but a continuation of political intercourse with the admixture of different means, inother words, an extension of diplomacy.

By the time of the American Civil War (18611865) the effects of the Industrial Revolution werebecoming apparent. Steam power was widely used. Accurate long-range infantry rifles had beeninvented. The use of steam power for rail and water transport changed the military equations of spaceand time. As long-range rifles could wipe out a concentrated attacking force before it could get to gripswith a well entrenched enemy, the tactic of frontal attack with concentrated forces was abandoned.

Some of the results of these strategies were seen in the First World War. Apparently the effect ofadvances in technology, which had already been clear in the Civil War, hadnt been fully understood bythe strategists.

Lessons Learned


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Lessons can be learned from the above examples of the application of different military strategies, andrelated success and failure factors. They are a useful input when developing strategies for PLM.

History repeats itself Over time, as environment and resources change,strategies change

A strategy can be offensive or defensive

A small range of simple strategies

The choice of strategy depends on the objectives

There's a hierarchy of strategies

It is dangerous to change strategy during implementation

Principles of military strategy (Rules for successful war):

Objective Offensive

Unity of command/co-operation

Concentration of force and efforts

Economy of force and efforts

Maneuver/flexibility

Surprise

Security

Maintenance of morale

Administrative / logistic support

Manufacturing strategy

Like armies, manufacturing organisations need a strategy to meet their objectives, and to manage anduse their resources. The latter include people, machines, methods, materials and money.

For thousands of years, progress in increasing manufacturing productivity was slow. However, a fewhundred years ago, mechanisation made possible a leap forward. The machines introduced in theIndustrial Revolution led to an organisation of work that differed from the previous approach. AdamSmith in The Wealth of Nations (1776) advocated about division of labor between owner and worker.

Workers were assigned to a particular position at which they carried out a specific task. The ownersupervised the workers making sure they worked at the pace of the machines. This led to a division oflabour between the owner and the workers. The owner couldnt watch over all the workers all the time,so a hierarchy of supervisors and managers was developed. Owner supervised the workers work withmachine. Owner could not control the worker all the time, so hierarchy of supervisors and managers wasdeveloped.


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In the nineteenth century, machine tools changed the environment again. They enabled strategies ofmass production, which has the characteristics like:

High volumes

Mechanization

Organised material flow through various stages of manufacturing

Sub-division of labour Low skill level of workers

Managerial staff with specialised skills

Simplification and standardisation of common parts

Manufacturing enterprises grew to such a size that a large hierarchy of supervisors and managersbecame necessary. The increasing size and complexity of operations called for a large management staffincluding accountants, engineers and personnel managers.

Frederick Taylor brought a scientific approach to these principles. A new discipline, industrialengineering, appeared. Taylor broke each job down into its constituent parts, analysed them to find out

which were essential, and timed the workers with a stopwatch. With superfluous motion eliminated, theworker, following a machine-like routine, became much more productive .

The next step, introduced to manufacturing by Henry Ford, was the assembly line, where overheadtrolleys moved carcasses from one stationary worker to another. Each worker did one task, at a pacedictated by the line, minimizing unnecessary movement and increasing productivity. Ford applied thesemethods to the manufacture of cars, reducing the price of cars, bringing it within reach of more people.According to Ford, the assembly line was based on the planned and continuous progression of acommodity through the shop, the delivery of work to a worker (instead of leaving it to the worker to findit) and an analysis of operations into their constituent parts.

Mass production increased the trend to an international division of labour. Factories often needed rawmaterials from other countries. Saturation of national markets led to a search for customers overseas.Some countries became exporters of raw materials and importers of finished goods, while others did theopposite.

The introduction of computers in Manufacturing in the mid-twentieth century led to strategies of ShopFloor Automation (NC machines, CNC machines, robots, and Flexible Manufacturing Systems). It alsoled to the introduction of MRP and ERP systems for planning and control of manufacturing andlogistics.

In the 1960s and 1970s, Total Quality and Just in Time (JIT) strategies were introduced to cut out wastein Manufacturing. Stocks were reduced, and nonvalue- adding activities eliminated. Assembly lineswere simplified by focusing on a particular product line. Later in the twentieth century, these ideas wereextended, and Lean Manufacturing strategies were developed.

The skills needed by assembly-line workers are easily acquired. Standards of living in many developingcountries exporting raw materials are so low that wages can be kept below those of alreadyindustrialised countries. As a result, developing countries can adopt strategies of industrialisation andexport of manufacturing goods. In response, manufacturers in developed countries outsource, getting


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parts made in low-cost countries. In the early 1990s, original equipment manufacturers (OEMs) in theelectronics industry faced pressure to get products to market faster than their competitors. They took tooutsourcing in a big way, with parts or whole products made or assembled in developing countries. Thisstarted with outsourcing of printed circuit board assembly to electronics manufacturing services (EMS)

providers, and eventually led to an EMS industry which offers design, manufacturing and related

services to the OEMs.The logical ultimate in the evolution of strategies seems to be the re-configurable Lights-out Factoryproducing customised products in a batch size of one. This implies elimination of all manual labour andthe introduction of flexible manufacturing and assembly machines with automatic controls providingaccuracy and quality beyond human skill levels.

From the above, it can be seen that, as in the military environment, when resources and technologieschange in the manufacturing environment, strategies also change.

Company Strategy

Both military and manufacturing strategies change in response to the changing environment of resourcesand technologies.The strategies that companies adopt are also subject to change. Two main strategies have been used bycompanies tomeet their objectives. One of these is the low-cost, cost leadership strategy. The other is a high-valuestrategy based on differentiation.

A cost-leader aims for the lowest product cost in a particular industry. This usually requires a highmarket share and a high volume of standard products. It implies substantial capital for large continuous-flow production runs and facilities. By selling a low-cost product in large numbers, the costs of productdevelopment and manufacturing equipment are spread over a large number of products and become

relatively insignificant. Usually its the manufacturing cost thats most important, so this type ofcompany focuses on reducing the cost of manufacture. This implies strong abilities in facilityengineering, manufacturing engineering and purchasing.

High-value differentiation strategies are based on having a product or service that differs significantly(for example, by virtue of its design, or technology, or customer service) from those of competitors.Higher prices can be charged because of the uniqueness of the product and the few availablealternatives. To make the product special usually requires skills in identifying customer needs, and indefining the product correctly

Other strategies include niche, trend-leader and follower. A niche strategy serves a particularmarket segment, or particular type of customer, or particular geography, or particular part of a productrange. Within a given niche, a company can hope to succeed with either a cost-leadership or adifferentiation strategy.

A company with a trend-leader strategy will constantly innovate in an attempt to lead the market and bethe first to produce a particular product or service, and gain the associated benefits. This type of leader isunlikely to be a cost-leader, due to the difficulty of getting products to market first. Instead, revenue is


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generated from sales to customers who are anxious to be early adopters, and are willing to pay theadditional costs this entails. This strategy requires good product developmentskills so that a market-leading product can be brought to market quickly.

A follower is a company that enters the market when the leader has moved on to the next generation

of products, or when the leader can be attacked through cost or quality features. A follower could aim tobe a cost-leader. The follower doesnt aim to sell to one of the few early adopters of the product (whooften represent less than 10% of the market) but aims to sell to the main market (the other 90%). For afollower, its less important to have skills to develop new products than to be able to understand andimprove what has already been developed. This calls for skills in reverse engineering and in reducing

productcosts.

The above description of strategy may seem theoretical. In reality, the strategies of many companiesdont fall nicely into one of the above categories. Many companies pick and mix, taking elements ofdifferent strategies to create their own strategy. Recent years have seen the introduction of new

strategies such as low-cost variety, fast response time, partnering, and process-basedstrategies (rather than product-based strategies) such as capabilities-based competition andConcurrent Engineering. The driving force behind many of these new strategies was Japanesecompanies using manufacturing excellence to gain competitive advantage. They put new concepts into

production quickly, reduced manufacturing times to the minimum, and continuously pumped out newand innovative products. Manufacturing and engineering were equals with marketing and finance in theeyes of top management, and considered essential in the process of developing strategy. The

performance of Japanese companies showed that activities in the product lifecycle can provide acompetitive advantage. For example, a company which is better at developing new products and servicescan use this advantage to gain market share. While competitors are busy developing the same abilities,the leading company introduces new products and features faster, and also develops new abilities. Whena competitor reaches its targeted level of improved competence, the leader is ready with a newlydeveloped advantage and the competitor is again behind. It spends money to build competence whichdoesnt provide the needed return on implementation, because the environment has changed.

Strategies such as fast response time have been introduced because, as a result of technologicaladvances and changing customer behaviour, products have increasingly short lives. To make money on ashort-life product its important to bring it to market quickly and give it the longest life possible. Thisalso means that product offerings will be fresher. And the latest technology can be included because lesstime passes between definition of the product and its arrival on the market. Less time in developmentmeans less labour and less cost. The company responds quicker to customers, gets more sales, and setsthe pace of innovation. A company like this is going to need a strategy that allows it to develop new

products quickly, and get them into production quickly, to change production volume quickly as demandbuilds up, and to switch to production of other products when demand drops.

Partnering is often driven by the need for innovation and the limited resources available fordeveloping new products. Partnerships between companies allow greater value and features to be offeredto customers, while allowing each partner to concentrate efforts on things it does well.


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A capability is a clearly-identified and well-defined set of business processes. Capability-basedcompanies achieve competitive success by making their key business processes (the ones that makethem leaders) as effective as possible.

Process-based strategies are based on the belief that we know how to do things well. Its not the

particular product that counts, but the successful way it can be got to customers. This type of companyneeds to have a good understanding of its processes, and the ability to adjust them to handle differentproducts.

According to the Bible, What has been will be again, what has been done will be done again; there isnothing new under the sun. This can be applied to strategy development. Company strategies bearsimilarities to military strategies. New business strategies draw on elements of old business strategies.The Napoleonic strategy of focusing resources and attacking on a weak point in the enemy line can becompared to a niche strategy of a company, focusing resources on a particular part of the market. Themilitary strategy of Attack with overwhelming speed corresponds to the fast response time

business strategies. Strategies for PLM can be expected to share characteristics with military, company

and manufacturing strategies.

Military environment Business environment

Control of the seas Cost leadership

Control of the air Differentiation

Control of a land region Niche

Attack in overwhelming strength Leader

Attack with overwhelming speed Follower

Destroy the enemys will to fight Low-cost variety

Divide the enemys resources Fast response time

Cut the enemys supply lines Partnering

Siege Process-based

Principles for PLM strategy

The following set of principles can be used to help in the development of the PLM strategy:

Focus on the Product

Involve the Customer, listen to Product Feedback

Remember the Planet and Mankind

Simple slim-line organisation

Highly-skilled people

Use of modern technology

Coherent PLM Vision, Strategy and Plan

Continually increase sales and quality, reduce time cycles and costs Watch the surroundings

Maintain security


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The PLM Strategy

Once the PLM Vision has been defined, people will want to know what the organisation willlook like in five years.

They will ask how the resources in the product life cycle should be deployed, structured and used

in the next five years to achieve the vision.

A strategy describes: the way to achieve objectives; how resources will be organised, managedand used; policies governing use and management of resources. This general definition leads torequirements for a PLM Strategy.

A PLM Strategy describes how resources will be organised and used. PLM Strategies arentgeneric. Theyre specific to individual organisations because they depend on the particularcircumstances and resources of the individual organisation and on its particular environment.

A PLM Strategy will be company-specific. Without knowing a particular organisation in detail,its not possible to say what its strategy should be. For example, the PLM Strategy of an

organisation that develops and manufactures high-performance aircraft engines can be expectedto be different from that of an organisation that develops low-cost plastic toys.

PLM Strategies change. Todays PLM Strategy describes how PLM resources are used intodays environment. A PLM Strategy for the future shows how they will be used in the future.

The PLM Strategy has to be documented and communicated to everybody likely to be involvedin the future environment or impacted by it. It wouldnt make sense to have a Strategy thatnobody, apart from its developers, knows about, understands or approves.

The PLM Strategy shouldnt be changed frequently. It can take several years to implement a new

PLM Strategy. And it can take several years for the effects of a new PLM Strategy to becomeapparent.

A good, well-defined and well-communicated PLM Strategy is important because it: shows howPLM objectives will be achieved; makes sure resources and capabilities will be used to their

best; makes sure everybody knows what is happening; and makes sure all resources are alignedin the right direction.

To achieve the PLM Vision, two strategies need to be developed. These are the PLM Strategyand the Implementation Strategy.

The PLM Strategy shows how PLM resources will be organised in the future, envisioned

environment. The Implementation Strategy shows how resources will be organised to achieve the change from

todays environment to the future environment. The Implementation Strategy is sometimesreferred to as a Change Strategy or a Deployment Strategy.


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Developing a PLM strategy A Five-step Process:

1. Collecting information

2. Identifying possible strategies

3. Selecting a strategy

4. Communicating the selected strategy

5. Implementing the strategy

Step 1: Collecting information:

Internal: Company, organisation, resources, capabilities, strengths and weaknesses

Environment: Competitors, PLM strategies of competitors, market trends, technology

forecasting, Government rules & regulations, etc

Key factors for success, trends, opportunities and threats

Step 2: Identifying possible strategies:

Strategy elements: Best functionality, customisation capability, most sustainable products, fastest

time to market, bundled solutions rather than individual products

Policies: technology, quality, suppliers, equipment purchase, culture, etc

Step 3: Selecting a strategy:

Short listing potential strategies

SWOT analysis

Does the strategy address key issues

Does this strategy exploit our strengths

Does it help against threats?

What are profit and loss implications?

What are the implications for investment?

Step 4: Communicating the selected Strategy:

Select a simple name for the strategy Express the strategy in simple language which is easily understood

Test the strategy with a control group

Select the appropriate channels and media for communicating the strategy

Step 5: Implementing the strategy:


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PLM STRATEGIES J.K.Kittur

Implementation plan

Feed back and control

Corrective actions and rephr

Five steps of strategy de

Step 1: Gathering Informatio

A very good understanding of thedevelop the PLM Strategy. This undopinions. The required informationobjectives, details of resources,opportunities and threats. This indescribed in previous sections.

Step 2: Identifying Strategies

In the second step of strategy devedescribed in terms of the organisatiidentify and describe several possistrategy since the most obvious strat

The strategy chosen for PLM has todifferent objective, as well as diffedevelops will be different in some rPLM Strategy selected will containsome additional elements.

The exact meaning of a strategy elstrategy elements of fastest tiimplemented in many ways. Fastdefined stock of solutions, by indevelopment process by removing n

sing the strategy

elopment:

n

activities and the resources in the product lierstanding must be based on factual informationcludes the Vision and associated targets, custcapabilities and the environment, strengtormation should be available after the Vis

lopment, several potential strategies are identin and policies to be applied to the resources.

ble strategies. This will improve the chancesegies arent necessarily the most appropriate.

meet the objectives of the company. As eachent resources and a different environment, theespect from that of any other company. Its toome elements of one (or more) of the basic stra

ement will differ from one company to anothe-to-market and lowest-cost competito

est time-to-market could be implemented breasing the number of engineers, or by shn-value-adding activities.

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of finding the best

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be expected that thetegies, and also have

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building up a pre-rtening the product


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Lowest-cost competitor could be implemented with cost reduction programs, capital expenditurecuts, headcount reductions, or by improving the effectiveness of the product development process. Thecriteria for selecting strategy elements, and deciding how theyll be implemented, will be made clear tosome extent by the objectives provided by the business strategy, and to some extent by the application ofPLM principles

Step 3: Selecting the Preferred Strategy

In the third step of strategy development, potential strategies are tested, and the most appropriatestrategy is selected and detailed. It will be useful to investigate three or four alternative strategies. Thisshould lead to an in-depth understanding of the possible strategies. The strengths and weaknesses of a

particular strategy often become clear when examining the strengths and weaknesses of other strategies.

The analysis of the different strategies is often called SWOT analysis. The acronym stands for strengths,weaknesses, opportunities and threats. These are the four factors that have to be described and comparedfor each of the possible strategies.

The SWOT analysis should be as complete as possible, looking into all areas of relevance to theorganisation. A partial list would include customers, competitors, suppliers, technology, products, costs,cycle times, quality, information, computer systems, management of change and human resources.After the SWOT analysis has been carried out in the third step, one strategy must be selected. It shouldthen be documented in detail.

Strengths: Weaknesses:

R and D almost completeBasis for strong management team

Key first major customer acquiredInitial product can evolve into range ofofferingsLocated near a major centre of excellenceVery focused management/staffWell-rounded and managed business

Over dependent on borrowingsInsufficient cash resources

Board of Directors is too narrow

Lack of awareness amongst prospectivecustomersNeed to relocate to larger premisesAbsence of strong sales/marketing expertiseOverdependence on few key staffEmerging new technologies may movemarket in new directions

Threats: Opportunities:

Major player may enter targeted marketsegmentNew technology may make products

obsolescentEconomic slowdown could reduce demandEuro/Yen may move against $Market may become price sensitiveMarket segment's growth could attract majorcompetition

Market segment is poised for rapid growth

Export markets offer great potentialDistribution channels seeking new productsScope to diversify into related marketsegments


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Step 4: Communicating the Strategy

In the fourth step of the five-step strategy development process, the chosen strategy is communicated tothe people who will be affected by it, or involved in its implementation. Communication of the strategyis essential. A strategy is useless unless the people who are going to be involved are fully aware of it,

can understand it and can implement it.

The name given to a strategy must be so short and simple that everyone (not just strategy developers incompany headquarters) can understand it. A strategy has to be realistic. It has to be expressed inlanguage that everyone can understand.

Its important to have general agreement on vocabulary. Otherwise, if the members of a group of peopleare asked to describe the strategy theyll all give different answers. Before communicating the strategy,make sure that everybody understands the meaning of the terminology.

Decide who the strategy needs to be communicated to before starting to communicate it. Product

developers, field engineers, customers, company management, suppliers, regulatory organisations, othercompanies ? Communicate the strategy to everyone involved with PLM. The more they understand it,the more chance it has of being implemented successfully. Make sure people understand why itsimportant to understand the strategy. Make sure they understand why the strategy is necessary for theorganisation. Make sure people can see where it takes them as individuals

Step 5: Implementation Strategy:

The Implementation Strategy (also known as the Deployment Strategy or the Change Strategy) showshow to get from the current use of PLM resources to the future use of PLM resources. There are many

ways to get from the current use of PLM resources to the future use of PLM resources. These optionsshould be documented and analysed. Again, SWOT analysis is appropriate. The best option is selected.This is the Implementation Strategy. It should be documented in detail and communicated .

Implications of Strategy Elements:

Different companies will develop different strategies. These strategies may have very differentimplications for the resources used in the activities of the product lifecycle. Consider the two strategiesof value-adding lifecycle and the lowestcost product. Value-adding lifecycle focuses on the

key lifecycle activities that differentiate a company from its competitors. This often means outsourcinglifecycle activities that arent strategic. The main activities of an organisation with a valueaddinglifecycle strategy could be defining customer requirements, system engineering, simulation, andmanagement of suppliers.


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PLM STRATEGIES J.K.Kittur

Implications of Principles:

Implications of focus o

Implications of involve

Implications of watch th

Implications of mainta

Policy:

A policy is a general rule or set oexample, when faced with a situatio

people in the company to make deguidance. Typical subjects of policspan, quality, investment in new equ

the product

he customer, listen to product feedback

e surroundings

in security

f rules laid down to guide people in makingof type A, then do X. A policy is a general gu

cisions without continually referring back toies include use of technology, supplier relatioipment, recruitment, salaries and benefits, and t

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their decisions. Forideline that will helptop management fornships, managementaining.


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Policy statements could address areas such as those shown in Fig. A strategy addresses the key areaswhere the organisation will strive to gain competitive advantage. A strategy has to be simple andconcise, otherwise it will be impossible to implement successfully. A strategy doesnt aim to describe allthe detailed issues that may arise in the product lifecycle environment. The issues which arent explicitlyaddressed in the strategy document can be addressed with policy statements.

A policy is a general guideline that will help the people in the company to make design withoutcontinually referring back to top management.

Typical subjects of policies include use of technology suppliers relationship, management span,and quality, investment in new equipment, recruitment, salaries, benefits and training.

No single strategy works for all products all of the time. Flexible The future PLM Strategy will show how PLM resources will be organised in the future,

envisioned environment. The Implementation Strategy will show how resources will be organised to achieve the change

from todays environment to the future environment.

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2 Plm Strategies