It’s a rare moment when a corporate executive isn’t overwhelmed by the pressures of today’s business environment. As quickly as an enterprise introduces a new product it seems necessary to revamp, redesign or reengineer it. As soon as an organization gains mastery over the marketplace, the dynamics change. While standing still has never been an option, the rate of innovation and change is now mind-boggling. Organizations that don’t keep up face obsolescence… or extinction.
Yet, what makes the task so difficult is that so many complex variables enter the picture. Conception, design, engineering, marketing, supply chain management, customer relationship management, project management and quality control all play a role in determining whether a product flourishes or flounders. Product Lifecycle Management (PLM), which manages the task from cradle to grave, is an increasingly critical factor in achieving success. It taps into data, information and knowledge to manage people, tools and processes far more effectively.
No aspect of PLM is more important than innovation. Lacking a strong creative spark and new ideas, even the best-run company can find itself heading astray. “By recognizing and honoring the important role of creativity, and by encouraging people to further develop it, it’s possible to spur innovation at all levels of an organization,” says Robert B. Tucker, author of Driving Growth Through Innovation (Berrett- Koehler Publishers, 2002) and president of Innovation Resource, a Santa Barbara, California, consulting firm.
In the PLM arena, achieving a competitive advantage centers on a sophisticated product development process that puts the focus squarely on the entire enterprise. An organization must understand how the process of innovation takes place – including all the organizational complexities involved in the development, design and manufacturing of goods. Yet it’s also essential to map out a strategy that allows products, services and solutions to evolve. Only by addressing the constantly changing needs of consumers and tracking ongoing shifts in the marketplace is it possible to achieve best practice results. According to Technology Futures, Inc.’s 2006 Technology Trends forecast: “By the time a product hits the market, its shelf life is half what it used to be. So, to remain competitive, science and research time will become more intensive and innovative earlier as product development time continues to compress at an unprecedented rate. Innovation and a future focus will be necessary to remain in the game.”1
Dollars and Sense
Although many organizations are now adept at maximizing capacity and driving cost improvements deep into the supply chain, innovation frequently represents a wild frontier. What makes PLM so attractive is that it offers connections between distinct processes, operations and departments. The traditionally distinct silos of supply chain management (SCM), product data management (PDM), enterprise resource management (ERP) and customer relationship management (CRM) are suddenly pulled together into a single system. When an organization uses this approach effectively, it’s able to deliver a more seamless and comprehensive approach to managing products and solutions.
Within many companies, keeping everyone on track, and developing systems and processes that link disparate operations within a product’s lifecycle have become a daunting task. Moreover, organizations must now introduce products faster in order to gain an advantage over the competition; they must cope with rapidly changing industry standards and compliance initiatives; and they must confront constantly evolving conditions, including a focus on outsourcing and acquisitions.
An effective PLM initiative begins with an understanding of how an organization currently manages innovation, including development, design, manufacturing, sales and service. In order to achieve maximum results, input from the executive suite to the manufacturing line is paramount. “PLM must move beyond traditional discrete manufacturing areas and into the organization as a whole,”observes David Slansky, a senior analyst for PLM at ARC Advisory Group in Dedham, Massachusetts.
Unfortunately, organizations sometimes overlook a single key element of the process – and thus find an entire PLM initiative derailed. What’s more, many businesses lack the tools to conduct a thorough audit and analysis of existing business processes as well as the various technologies that must connect to one another under a PLM umbrella. Yet, in a growing array of industries – consumer packaged goods (CPG) and food and beverage are perfect examples – radically shorter product lifecycles and a smaller window of opportunity are a sobering reality.
Let’s consider the case of a typical food packaging firm. It’s necessary for the company to develop new ideas for products, create and manage recipes, design labels and other packaging, plug in cost data, handle production scheduling, oversee procurement, and manage operations, warehouse management, marketing and sales. Yet, it’s also essential to pay attention to a host of other regulatory issues. To be sure, making quick changes to a product recipe isn’t something that happens on the spur of the moment.
Systems and strategies that help a business manage PLM in a more complete way can pay huge dividends. As PLM evolves, there’s a growing emphasis on achieving a comprehensive project management portfolio view. Systems from UGS, EDS, Dassault, Oracle and SAP, to name a few, make it possible to tie together various departments, divisions and business units while securing intellectual property. Project managers can elicit input at every stage of the design, production and sales cycle – even from employees or independent contractors located halfway across the world. This “stage gate” process automates the management of all the pieces and provides alerts and workflow to ensure that a business doesn’t overlook any step along the way. It merges product design and product data management in a single environment and eliminates the divide between engineering technology and information technology.
At Procter & Gamble, which sells over 300 different brands in 160 countries, the integration of 3D and computer-aided design (CAD) tools has fueled knowledge-sharing. It’s now possible for employees across the company to view product and package models, label artwork, equipment, analysis and layout diagrams, process schematics and other details on any PC. Employees also collaborate via shared calendars, schedules, workflow, virtual meetings, instant messaging and virtual conferencing. This approach enables input from people and departments that previously landed outside the loop.
These PLM systems are growing more sophisticated all the time. Plant simulation and intelligent manufacturing systems help executives explore how numerous, complex processes might play out – and what systems, equipment and even subassembly systems are necessary within different scenarios. They can help an organization predict 80 percent to 90 percent of development costs. Using this approach, it’s also possible to develop 3D simulations and virtual environments that provide clues to probable outcomes. In addition, process manufacturing systems are helping organizations tackle product development, production optimization, compliance, quality and costs in a more holistic manner.
When an organization uses digital design and collaboration tools effectively, PLM can achieve tremendous precision. Each action and every step become integrated and intertwined. Within this highly synchronized environment, it is possible to create an incubator for innovation. Yet, it’s also possible to achieve impressive bottom line results. Suddenly, an organization finds itself able to develop outstanding products that match the demands of the marketplace – and are produced within an optimal market window.
Putting Innovation to Work
In today’s competitive business environment, the slogan “innovate or die” has gained far greater meaning. When designers, engineers, product managers and others communicate and collaborate in realtime, they are able to monitor the progress of a product at any given point in its lifecycle. The result is order-of-magnitude gains. New ideas – and fresh twists on existing concepts – become the rule rather than the exception. Moreover, it’s possible to understand which ideas are practical and plausible, and which push up against the limits of internal resources, supply chain limits, customer requirements and market constraints.
Yet, taking knowledge-sharing beyond the four walls of a company and into the domain of vendors, suppliers, partners and customers is vital. Developing real-time connectivity, integration and agility is essential. In order to reap the rewards of innovation, an organization must create links to all members of a value chain – across times zones and boundaries. “A broad PLM environment offers an advantage by helping a company become more efficient and more creative in the definition, design and execution of a product strategy,” observes Marc Halpern, research director for product lifecycle management at Gartner, Inc.
The foundation for this new world order is a collaborative business infrastructure (CBI). It provides a system of hardware, software and services that routes messages from multiple sources to multiple destinations; translates between protocols and data structures; offers triggers for exchanging data and business processes as needed; facilitates the development and use of Web services; provides a management framework; connects to partner systems; and offers accessibility through multiple channels such as portals, Web pages, e-mail and mobile devices.
The end goal, of course, is to drive innovation through an ability to share product knowledge and new ideas across all levels of an enterprise and deep into the value chain. As the complexities of manufacturing and product development grow, cooperation and coordination become essential ingredients in achieving success. Executing the right strategies throughout the entire lifecycle of a product can ratchet up efficiency while keeping costs under control.
Embracing innovation and making it part of a company’s DNA are easier said than done. Not only must an enterprise cope with the ongoing challenges of product development and changes to the marketplace, it must construct a culture that fosters creativity and embraces innovation. Sophisticated IT systems and leading-edge business management philosophies do no good if an organization’s workforce can’t capitalize on possibilities and opportunities, and transform them into real-world results.
“Systems don’t innovate, people do,” observes Chris Trimble, an adjunct associate professor at Dartmouth University’s Tuck School of Business and author of 10 Rules for Strategic Innovators: From Idea to Execution (Harvard Business School Press, 2005). “When employees feel empowered to try new things and approach problems from a different direction, great results often ensue.” Building a framework of innovation requires the right management approach, incentives and metrics. “It’s often necessary to test core assumptions and rethink issues on the fly,” he explains.
Trimble believes that it’s important to think about how an organization is structured and how it defines relationships between key groups. Other factors include how an enterprise measures performance and how it rewards it, both individually and collectively. Lacking the right checks and balances, corporate politics can blot out innovation or the law of unintended consequences can take hold. For example, designers might use marketing data to develop a product that’s a hit with focus groups. However, the margins might not appeal to distributors or retailers, who allow the product to languish.
Ultimately, Halpern says, “It takes teamwork, it takes accountability, it takes an ability to put egos aside.” What’s more, despite the opportunities and efficiencies gained by using software that’s capable of tracking a project and managing stage gate processes, it’s sometime necessary to break the rules. “Individuals have to feel as though they have ownership in the processes, so that they don’t wind up ‘throwing it over the wall.’ The problem for many companies is that processes become so rigid that there’s no room for innovation,” he explains.
In real terms, this means establishing defined processes and rules, but not imposing unbending laws. Ideally, an organization defines how business practices will work and evolve, it designs and builds products around established parameters but it also offers an environment where change is acceptable. One important tool for helping this type of environment flourish is a “publish-subscribe” communication model. “You allow some level of organic development and provide room for honest, open communication,” Halpern explains.
On the publish side, this means giving each stakeholder the right to decide who might need the information and include these groups or individuals on a distribution list. On the subscribe side, anyone interested in a particular project might request to be added to a list in order to receive information and updates that pertain to a job or function. Within this type of collaborative environment, an organization can construct a complex set of relationships – and interrelationships. Equally important, the pattern of communication, as well as the manner in which it evolves, can provide clues about how an enterprise can utilize PLM to maximum advantage.
Another powerful tool is set-based concurrent engineering (SBCE). The late Allen Ward, a professor of mechanical engineering and applied mechanics at the University of Michigan and a leading expert on lean manufacturing, championed this concept. It grew out of management practices at Toyota Motor Corp. Although, at first glance, Toyota’s development process seems incredibly cumbersome, Ward noted that it’s actually a blueprint for how to make cars faster, better and cheaper.
Here’s how it works: Toyota’s engineers and managers delay decisions and provide suppliers with partial information, while they explore numerous prototypes. They systematically eliminate weaker alternatives until they arrive at a final solution. This process, which isn’t widely used in industry, has propelled Toyota to the top of the automotive world. Not only will the firm eclipse GM as the world’s largest automaker within the next few years, Toyota builds high- quality products at a lower cost than other manufacturers.
Three components of SBCE are crucial:
- The simultaneous mapping of the design space according to functional expertise. This allows different groups to develop different solutions, which the company can then pare and morph into a single product.
- The “integration by intersection” of mutually acceptable functional refinements introduced by various design and manufacturing engineering groups. Through collaboration, the organization is able to build the best possible product.
- Establishing feasibility before making any commitment to design and construction of a product. Simply put, the organization understands which alternative or approach will yield the best results before it makes a major investment. This can include examining different metrics centering on speed and quality of production, the availability of components from suppliers, product lifespan and much more.
Breaking through an innovation plateau and achieving cross-functional coordination requires strong management, training and development, and rewards and recognition that create an ongoing incentive. When an enterprise uses SBCE effectively, every individual and component in the design, engineering, manufacturing and sales process are linked together in a delicate ecosystem.
Moreover, tight integration between SBCE and stage-gate or phase-gate development creates both structure and flexibility. “A company establishes priorities, but they do not become unquestionable law,” says Halpern. The organization – and all the people working on the project – is conscious of the processes and deliverable dates but the there’s no getting locked into a particular approach. Ultimately, SBCE can serve as a powerful engine within a PLM initiative. It can lay out an infrastructure – and template – for success.
Achieving Bottom Line Gains
Today, sharing knowledge is the Holy Grail of manufacturing. It can help companies in a value chain boost innovation and market success but also transfer and share expertise across a portfolio of projects. According to Product Development Consulting, Inc., a Boston, Massachusetts, firm, the effective use of collaboration can reduce time- to-market by 25 percent. At the same time, it can reduce travel costs and overall product development costs significantly.
Although innovation is the first step in the complex web of PLM practices, it serves as the foundation for constructing a healthy and robust enterprise. It’s also the starting point for engineering change, and developing processes and practices that can ultimately deliver greater performance and profits.