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Page 1: PLM vision 2016 and beyond - PLM info vision 2016 G.pdf · 5 Introduction PLM in general is in a very interesting phase. The concept itself is much widely and deeply understood on

1

PLM vision 2016

and beyond

Antti Saaksvuori

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2 PLM vision 2016 and beyond

Copyright owned by Sirrus Capital Ltd. Helsinki Finland.

ISBN 978-952-67529-1-4

Antti Sääksvuori

PLM vision 2016 and beyond

Sirrus Publishing 2011 Helsinki

Finland

This work is subject to copyright. All rights are reserved, whether the whole or part of the material

is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation,

broadcasting, reproduction on microfilm or in any other way, and storage in data banks. Duplication of this publication or parts thereof is permitted only under the provisions of the Finnish

Copyright Law.

In its current version, and permission for use must always be obtained from Sirrus Capital Ltd.

Violations are liable to prosecution under the Finnish Copyright Law.

Product liability: The publisher cannot guarantee the accuracy of any information about dosage and

application contained in this book. In every individual case the user must check such information by consulting the relevant literature.

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Table of Contents

Introduction ......................................................................................... 5

Executive summary ................................................................................ 6

PLM today (2010) ................................................................................... 7

Most significant PLM GAP’s today ......................................................... 8

PLM in 2016 ....................................................................................... 11

PLM system usage and functionality development ............................. 11

PLM implementation approach in 2016 .............................................. 13

Industry specific development ............................................................. 16

Manufacturing ................................................................................. 16

Service sector ....................................................................................... 19

SME’s .................................................................................................... 21

SME’s in 2011 ....................................................................................... 22

SME PLM challenges ............................................................................ 23

SME’s in 2016 ....................................................................................... 24

Industries looking into PLM ................................................................. 27

Utilities sector .................................................................................. 27

Construction industry ...................................................................... 28

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Clothing, footwear and apparel industry ......................................... 29

Food, process and consumer packaged goods (CPG) industry ........ 31

Geographical expansion ....................................................................... 34

RIC- Russia, India, China ................................................................... 34

About the author .................................................................................. 36

Appendix A. Saaksvuori PLM Maturity Model .................................. 37

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Introduction

PLM in general is in a very interesting phase. The concept itself is much

widely and deeply understood on a global scale. Its potential in

business development is shared and recognized by business

management far better than 3-5 years ago.

Many countries having long tradition on continuous business

development use PLM as a standard way of working. For example in

Finland the Finnish CADCAM association executed a study in August

2010 showing that 70% companies in Finland employing more than

500 people have already invested in a PLM solution. In addition, 17%

consider the issue or they have a deployment in progress. Overall, this

makes the total adaption rate almost 90%. However, small business

companies are significantly lower in percentage, at least for now.

All in all, I see PLM in a stage where it has solid footprint in many

western economies and in certain fields of business, with extremely

high development potential and a lot of new virgin ground to cover in

the East, in the SME sector, and in completely new business verticals.

This paper is a vision on what PLM could be in 2016. It is outlook

estimation, not a scientific study. The contents of this paper is based

on 15 years of PDM/PLM experience, dozens of PLM related projects

and assignments in numerous customer companies that produce

different type of products. The content of this paper is based also on

academic collaboration, numerous seminars and events, discussions

and contacts with PLM experts all over the globe. There is also a lot of

recent research, academic and commercial, supporting the vision

presented in this paper.

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Executive summary

In most western economies manufacturing business PLM has reached

a mature phase in its evolution, some may call it PLM1.0. Most of

large, multinational, frontline manufacturing (incl. also electronics

manufacturing, pharmaceutical etc.) corporations have structured PLM

processes and a supporting PLM IT-system implemented - at least to

certain parts of the organization.

By 2016, PLM will evolve significantly and break through to new

domains within a corporation, such as executive decision making,

innovation and customer involvement and to full product lifecycle

support, not only product definition lifecycle.

By 2016, PLM will increase its footprint in the service industry and

conquer new domains; such as the SME field, utilities, construction,

fashion and footwear businesses and break into process, food and

consumer packaged goods businesses. We will also see the rise of new

PLM system solutions coming from Russia, India and China.

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PLM today (2010)

Manufacturing business PLM in most western economies has reached

a mature phase in its evolution, some may call it PLM1.0 or level3 PLM

based on the Saaksvuori 5 level PLM maturity scale. (See appendix A).

Most of large, multinational, frontline manufacturing (incl. also

electronics manufacturing, pharmaceutical etc.) corporations have

structured PLM processes and a supporting PLM IT-system

implemented - at least to certain parts of the organization. They

manage the lifecycle of the product definitions (product process) as

well as certain parts of the actual product unit lifecycle (installed base)

in a structured way, naturally depending on the business model in use.

The current PLM set-up in these frontline manufacturing companies

include mature methods and tools for management of product related

information, product development processes and integration of

various product development and engineering related applications.

All in all, the understanding of PLM as a concept and its level of

maturity has increased considerably during the past 5-7 years. Many

studies have also shown the ROI of PLM true. PLM brings considerable

business benefits in discreet manufacturing type of business producing

complex products, consisting of large number of components with high

rate of changes. Thorough understanding of PLM and mature PLM

processes supported with an IT-system are common nominators of

successful new product introduction, product profitability, high quality

products and altogether nominators of successful business.

However, even still today the understanding of PLM is limited, and very

much IT and PLM-system driven. Very few companies have a holistic

understanding of PLM as a way to operate in product development and

product management as well as a way to manage and lead product

portfolio and related processes. Naturally there is also geographical

variation in PLM understanding and utilization based on the

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engineering and business culture and tradition in each country. West

European countries with long engineering tradition drive the PLM

development, North America as well as some Asian countries like

Japan and Korea, again with significant engineering tradition come

close behind and in most aspects the rest of the world is at the to-be-

implemented stage what comes to PLM 1.0.

The most extensive PLM usage – process and systems coverage – with

the highest level of implementation is today in the large and global

corporations in the aerospace and automotive industry as well as some

electronics companies.

The leading service sector companies (Telco’s, IT-services and

insurance) in West Europe especially in the Nordic countries, have

fairly developed PLM processes implemented with some level of PLM-

IT-system support. In the service industry, the PLM understanding is

very much driven by a need for stable and precise product definition

and support for mass customization and product configurability in the

sales interface. International organizations in the service area, such as

Telemanagement forum, have also made an impact in the PLM

development by facilitating ongoing continuous PLM process and

standard development.

Most significant PLM GAP’s today

In general, the utilization of PLM functionality has increased relatively

quickly. In the early 2000’s PLM understanding was limited to product

development, the management of product related data in the

engineering context i.e. product definition data. Today, implemented

PLM processes and systems often cover also purchasing,

manufacturing, after sales and service parts of the organization and

processes. Leading companies have also recognized the end of life of a

product has been as a separate process.

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The most significant weakness of existing commercial PLM IT-solutions

is poor support of product lifecycle activities outside actual product

development process. The early stages of the product lifecycle, the

idea phase of the product development, when the product is very

much on a conceptual level is poorly supported. This is commonly due

to very traditional methods of managing product related requirements.

In many companies these requirements of different type are managed,

prioritized, validated and sorted then happens “something undefined”

and then we have a drawing, items and a BOM. The process of

transferring requirements directly to a drawing, BOM and items is not

easy and straightforward job and therefore not easy to standardize to

the level needed by the current IT systems.

Even though PLM and ERP systems have more functionality overlap

than ever, the PLM ERP role-play and functional set-up is extremely

hard to implement without large-scale customization. This is due to

traditional focus of ERP’s to the order-delivery and of PLM to the

product development process. Building a lifecycle management bridge

between these two systems is very demanding even today. In practical

terms this means that PLM systems manage the definition of a product

i.e. the product on a conceptual level (items, BOM set-up, drawings

and other documentation, configuration etc.) during a product lifecycle

and when the product needs to be realized i.e. manufactured, sourced

or assembled this is usually under ERP responsibility. Naturally there

are gray areas in between e.g. prototyping and 0-series production.

The lifecycle support for actual product units ends to the delivery of

the product unit. E.g. maintenance and service activities as well as

installed base management cannot be included in to the lifecycle

management set-up with current ERP systems due to the current ERP

base philosophy. ERP are designed to be transaction processing

systems and thus not designed to able to manage the evolution of a

product instance (item / BOM changes with serial numbers etc.).

Another significant gap is more on the PLM concept side. Many

companies struggle with integrating mechanic, electronic and software

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components and in some cases service elements in the PLM concept

and have hard time managing all these as items in the PLM system.

These entities, very different by nature, are hard to manage together

and if the PLM concept cannot be build to cover all of these entities, it

is obvious that the PLM system is not able to manage them either.

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PLM in 2016

PLM system usage and functionality development

The established PLM1.0 set-up is in most cases limited to the area of

product development process. The main focus of PLM 1.0 is to manage

the product definition i.e. the evolution of product definition and

related information) including the; Items and BOM’s, Drawings and

design documents, version information in some cases even supplier

items, modularity and configuration information (configuration rules),

external product documentation, product descriptions etc. In practice

this means that the PLM is known only to the engineers of the product

development organization and thus their tool.

By 2016 we will see PLM break through to new domains with in a

corporation:

First of all, in 2016 PLM will facilitate the executive decision

making. Top management of every company producing

tangibles, software or services wants to be able make more

informed lifecycle decisions of their product portfolio than

today i.e. they want to have more, better and more coherent

information regarding their products. In this sense, PLM will

provide better reporting and information consolidation

features. Using PLM (standardized processes and product

information (including KPI’s) and PLM system) executive

management and business control functions are able to

monitor the performance of their products in the market,

make comparisons between the products in the portfolio,

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monitor and steer the performance of the product

development, analyze different e.g. BOM costing alternatives

or up-sell scenarios of certain product upgrades based on

installed base information etc.

Secondly in 2016 PLM will facilitate innovation and customer

involvement in product development. This is something PLM

has promised for number of years. However, companies using

PLM and companies providing PLM systems have had no idea

how to use the possibilities brought by PLM to leverage the

product innovation and customer involvement in Product

development. Today many PLM 1.0 companies operate in the

traditional way of collecting requirements to be the basis of a

new product version or a completely new product. The process

of collecting requirements usually has far too much emphasis

on the technical issues and evaluating the value of an

individual requirement. Companies are not able to build a

bridge between these crumbles of requirements and customer

experience. The breakthrough of social media and other

electronic forums make it possible to involve existing and

possible to-be-customers in more inspiring way. In 2016 PLM

will connect crowds in these electronic forums and social

media to the product development and innovation of product

and service producers using PLM functionality and such

concepts as bill of functions – BOF (rather than bill of

materials) representing the to be product under evaluation.

Another possibility that will be utilized in this respect is the

possibility to create 3D models and illustrations (animations)

with the modern 3D design systems in generic view formats

and have them analyzed, commented and even further

innovated by the crowds in the social media.

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Thirdly, in 2016 PLM will facilitate the lifecycle aspect a

product in more depth. A set of closely integrated PLM

processes, practices and tools (more advanced PLM-ERP

integration) will facilitate making important product related

analyses such as the forecasting and control of lifecycle costs,

or the compliance of products with existing and upcoming

regulations and legal constraints for example regarding certain

raw materials and recycling of raw materials. Legal frameworks

like TREAD Act in the USA, REACH for the chemical industry in

EU, Regulators like FDA and EFSA require companies to ensure

that the processes and documentation of product is done

according set regulations.

Another set of PLM functionality in this area will support the

assessment of resources and energy consumption throughout

the lifecycle, for example EU regulated energy certificates or

risks analyses to executed.

The above described development will be led by the manufacturing

and electronics industries in the B-to-C and in some cases B-to-B

business due to nature of the products and processes in question

(stable definition, moderate level of configurations). However, the

service industries have all the possibilities listed, on their behalf as well

as, but first they need to reach the PLM1.0 level.

PLM implementation approach in 2016

Today PLM process and product information standardization and

harmonization is ongoing process in many companies. The practical

outcome of the trend is that the common and harmonized company

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best practices in the PLM area will be implemented throughout large

corporations causing PLM system down scaling. Up today, many large

corporations have had number of PLM or product information related

system in use. The drive towards one PLM scales down the existing

PLM systems and in the end, most companies are looking for 1-2

systems used throughout the entire corporation. Implementation vise

this means that in 2016 we will see less PLM system instances running

the companies on PLM1.0 level.

Most companies are not planning to reduce the number to only one

PLM system. Due to very practical reasons, lack of corporate wide PLM

concepts and limited PLM system capabilities, there are no systems

currently available that can manage simultaneously HW, electronic and

SW and service related information efficiently. One other practical

reason for not having only one PLM system in place is the challenge of

having corporate wide master data and product development

paradigms implemented simultaneously in only one system.

The introduction of PLM is a very complex process involving numerous

organizational units and roles, processes and resources and IT-systems.

The PLM 1.0 implementation has been in most companies’ laborious

process lasting 24-36 months in many cases executed by trial and error

method. This is in a sense very understandable, before the first PLM

implementation wave the understanding of PLM was very low and was

in the hands of very few individuals, even is a large corporation. The

main focus of many PLM 1.0 implementations has been in the

harmonization of the organization, processes, complex and scattered

product data. The scale of the transformation as well as its complexity

usually was underestimated and the harmonization is often realized for

only one site e.g. the HQ-site. Brach sites and subsidiaries in other

cities or countries often have a different perception of terms, methods,

processes and data structures. This is often a result of company

takeovers and acquisitions.

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The PLM understanding has developed a lot in 2016. This results to

shorter PLM project durations. This is mainly due to the change from

big projects to smaller, more focused projects. Project implementation

is accompanied by permanent process re-engineering. Companies

have realized that there is a lot of undeveloped potential in the

harmonization of the organization

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Industry specific development

Manufacturing

In 2016 PLM in the manufacturing business especially in the capital

goods manufacturing / engineer to order area will focus to:

1. Solution business model support – product <> service

convergence

A critical success factor in 2016 in the manufacturing industry will the ability to provide more profitable services in addition to the tangible good i.e. to create meaningful packages resolving ever larger business challenges in the customers daily business. However, this combination of tangible and intangible items such as services and software in terms of the extended product increases the complexity in managing the product lifecycle. The creation, delivery and maintenance of customer solution combine tangible products, software and pure services in a challenging way in PLM sense. These entities, very different by nature, need to be designed and managed together. This puts pressure on PLM concept, process and system development as well as to development of solid product architectures covering all different product types. In order to make it possible to design and manage this kind of entities efficiently together companies will need more advanced information models, which will cover both tangibles and intangibles. In practical terms this means that services and software need to be productized to the detail hardware has been productized, defined and documented. Only

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through this kind of development, it will be possible to manage software and services in a PLM system with conjunction to hardware.

2. Innovations

Companies see systematic and continuously ongoing innovation as

one key success factor of their future. PLM processes must support

ongoing innovation as well as VOC (voice of customer) and VOM

(voice of market) implementation to the product portfolio. The

practical outcome of in the PLM sense must be more agile and

better controlled product development facilitating the systematic

transformation of customer inputs, requirements, innovations to

product features. In 2016 this transformation process also will

include transparent decision making and customer input allocation

to product features and functions i.e. traceability of how the

requirements or inputs ended up to be product functions and

which of the inputs did not end up to the product road map at all

and why. This kind on transparent and traceable chain of inputs

and events is necessary in order to analyze the decisions and their

impact to the product performance later on.

Social media and customer involvement

To support the continuous innovation and to integrate customers

better into the product development we will see in the coming

years a breakthrough in the modelling and design tools of product

development. There is a huge potential out there. Customers and

crowds know many things better than design engineers. The big

problem issue at hand up to this day has been – how to involve

customers and crowds to the design process in an efficient and

meaningful way. One of the practical real life problems has been

how to visualize and concretize the feature / function under design

in order gather feedback on the design. The new 3D design tools

with animation and highlight features make this possible. Design

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engineers are able the create draft designs and ask the crowd or

selected reference group or lead customer their feedback through

electronic channels or even social media. These drafted designs

with comments and feedback can be turned into final designs

extremely quickly and much ripe for the markets when examined

from the customer perspective.

3. Sustainability / Re-cycling / Closed loop PLM and material

contents management

Refurbishing is already very important business for many capital

goods manufacturers having large installed base. In the installed

base management and design for refurbishing PLM can be a

tremendous support. Exact product information and

documentation, the knowledge of the product to be refurbished is

a key enabler the successful implementation of refurbishing

business.

National and international regulators put constantly more and

more pressure on the management of hazardous materials.

The trend is quite obvious; we will experience a constant growth of

the level of information management of certain materials in

product BOM’s as well as the product specifications. Companies

across different business verticals need to manage this information

with efficient and precise manner with easy reporting and analysis

possibilities.

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Service sector

In the service sector we will see the gradual expansion of PLM 1.0. The

leading service companies with high volume standard services are

struggling with their product definitions, product changes, demands

for product configurability. For example, a teleoperator having 100

million mobile subscriptions and 50 million broadband subscriptions

simply cannot afford simple change management problems in the

product definition. A minor mistake in the product change

management and version compatibility can result an immediate

landslide of 10000 additional support calls per day.

All in all, service production and delivery is becoming more and more

industrialized. The global megatrend towards a service society and the

ever-growing demand for services in the market, especially in the

European and American economies, puts pressure to develop new

services, produce and deliver the services more efficiently and with

lower cost. In addition to the growing need of service volume, the

need to customize service for the individual customer remains.

The spectrum of various service products is extremely vast. It is

obvious that if the volume of service delivery is small and the variation

of the service content is large regarding a certain service, it is not

feasible to put huge effort in creating very comprehensive service

definitions and making a standard and automated service delivery

process.

Service sector PLM in 2016 includes re-thinking the service-“product”

and the service product development process. This requires – Service

is a ”product” mindset – adaption and understanding in the product

management and product development organizations. The people

responsible service development and management need to

understand that services can be developed and defined as precisely

and carefully as f. ex. in manufacturing business.

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In practice this means that in the service development and

management of leading service sector companies in 2016 we will see:

Emergence of new service definition methods and

tools, including structural service definition utilizing

manufacturing type of product definition methodology

like BOF – bill of functions type of presentation of

product functionality and functionality hierarchy. The

reuse of existing service functions / modules across

various products.

Emergence of new processes and tools for creating,

documenting and maintaining service definition,

including PLM systems and formal product

development and change management processes

covering the entire service portfolio in a common and

harmonized way

management practices and models. A set of new

product management methods become enabled when

more formal and common (i.e. not only verbal)

product definition is in use. The allocation of product

revenue and cost to certain modules and products.

Portfolio management, product comparison and e.g.

what if analyses based on structural and formal

product definition

The outcome of the described development in the area of a new

service product development process is a carefully defined and

documented, modular, configurable and easily repeatable service

product that can be managed using a standard PLM system. One of

the most important tools in the service PLM systems will be the BOF –

Bill of functions management, which will used to manage the service

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product content and functionality, configurability as well as the

changes in the service product.

SME’s

It is quite obvious that we will see expansion of PLM 1.0 (as described

above) in the SME sector. In order to see large scale expansion of PLM

systems in the SME sector we need lighter business models from PLM

system providers and more straightforward implementation processes

as well as ready to be implemented PLM concepts to facilitate the

overall PLM thinking in the company. SME’s do not have the

development muscle themselves; they need readymade solutions for

their problems. Most of the PLM system providers and their VAR’s

have not been able to put forward clear and simple product

management frameworks and templates to be supported by the PLM

systems. For example in the CRM area many system providers are able

give ready-made segmentation models and customer information

management models scaled to fit for the business in question to be

used as baseline templates for the system implementation. Until we do

not have this kind of support for the SME’s in the PLM side the PLM

expansion will be slow. However by 2016 we will not see

Salesforce.com type of cloud computing explosion in the PLM sector

due to the fact that the this level of standardization cannot be reached

in the product development area , products are hugely different in

different companies and the needs and requirements for PLM process

support varies a lot between business verticals.

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SME’s in 2011

Today the SMEs face the same increasingly complex product

management environment most of the larger businesses. In many

cases the SME’s are not OEM’s, they don’t own the end product, they

are rather suppliers to multiple OEM’s i.e. they are in the downstream

in the value chain. In practice, this means that they need to collaborate

with number of large partners having somewhat different business

approaches and ways to operate and naturally different systems and

product information set-up.

The basic PLM benefits are available to SMEs, but the SME’s are much

slower in adapting new business processes. SMEs tend to be more

conservative, often waiting for new solutions to be well proven before

adopting them. While being conservative still the SME’s want to

secure their basic success factors – agility and cost efficiency in order

to stay in the game with increasing sourcing from the low cost

countries.

In this development work, PLM is an excellent tool for the agile and

development oriented SME’s. Basically a vary standard out of the box

type PLM 1.0 implementation can improve their performance directly

in:

Product information management. Complex product

information in a networked business environment requires

automated methods for information management.

Improved product development execution. Faster product

development project through put times, use of cross-

functional teams, and networked resources require excellent

control and communication and information management in

order to prevent mistakes and rework. Management of

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deliverables, approvals, and status extend core product

information management with business process automation

and project management capabilities to coordinate activities in

addition to just information. Quick response to market and

OEM demands with very limited resources are critical to SMEs.

Collaborative design. The increased focus on optimizing

product lifecycle impacts earlier in the design process – for

example, design for manufacture, design for sourcing activities,

design for refurbishing and design for lifecycle services – are

creating a demand for broader participation in design

processes. In addition, many companies are including suppliers

and other third parties in the design process to leverage

external expertise.

SME PLM challenges

SMEs face challenges when considering or implementing PLM,

however, that are common for smaller-sized organizations. They

simply do not have the same resources available than large

corporations. For a SME looking in to PLM the most significant

challenges are:

Lack of available internal resources with deep enough PLM

understanding. Smaller companies may be able to approve

funding for software and implementation, but face problems in

assembling the resources for the task. Usually SMEs also lack

the depth in technical resources required to implement a new

solution. These resources, however, are more readily available

from the outside because they do not need the same level of

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familiarity with the business and the industry as functional

resources.

Lack of suitable external resources to support the PLM

implementation. The large-scale PLM implementations have

been traditionally the domain of the large, global,

multinational consulting firms. In too many cases, a SME

looking for a skilled implementation partner cannot find a

suitable partner having enough skills and vision what is needed

in a case of a lean SME implementation. The global giants are

not able to downscale their operation and the local and

smaller consultants simply do not have the skills and

experience.

Cost and complexity of implementation. Implementations of

enterprise software solution suites are in many cases far too

heavy for SME needs. To achieve successful adoption,

companies must assess their business processes, identify the

changes to be targeted and the solutions to be deployed, and

train users to take advantage of them. An implementation may

also involve integration with existing systems although many

smaller companies choose to integrate PLM solutions relatively

loosely in early implementation phases.

SME’s in 2016

Because so many of the leading large-scale manufacturing companies

have the PLM 1.0 implemented, the PLM system suppliers see the SME

sector much more potential customer than in the early 2000’s. This

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puts pressure in developing new approaches and new solutions and

business models for smaller companies.

By 2016 the development oriented SME’s (in Europe) mostly in the

manufacturing sector have PLM 1.0 implemented. This has happened

through new PLM solutions focusing on solving the SME related

implementation problems mentioned in the chapter SME PLM

challenges. These new PLM system solutions have SME specific

business approach, licensing, SaaS cutting the initial cost of

implementation. The new system solutions have ready to be

implemented templates and best practice models for the most

beneficial areas of SME type of PLM implementation; management of

complex product data in highly collaborative supply chain.

The consultants supporting the SME’s in the implementation of PLM

system solutions also have also a set of new methods in use. The global

Accentures, HP’s, TCS’s are not traditionally the most suitable

implementation partners to the SME’s looking for a quick, ready and

lean implementation. By 2016 there will be more local, skilled

implementation partners available with a pragmatic set of tools to

fulfill the fairly standard and simple SME needs.

In 2016 there are cloud solutions available also in the PLM area, the

cloud computing capabilities in the PLM area will develop in the SME

sector first. The most significant obstacles in the expansion of cloud

computing in the PLM area are:

Variation in the product definition – the products are

and will defined in some many different ways that

having a relatively standard approach is quite

demanding

Integrations – In the PLM area, most of the

implementations need quite extensive integration to

multiple CAD’s and ERP. Standalone PLM does not

meet the needs of many companies.

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26 PLM vision 2016 and beyond

Product configurability needs – in many cases products

are configured at least to some extent. It is very

demanding to have standardized approach to the

configurations.

Information security – product IPR’s are in the core of

each company. Having them in the cloud is and will be

for some companies a mental barrier.

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Industries looking into PLM

By 2016 we have seen the fact that PLM as a business concept and an

IT-system is not only usable in the manufacturing and electronics

industries. In late 1990’s We have already seen PLM moving to

Utilities sector

In the Utilities, sector companies typically possess assets in the field

worth billions. In most cases their view to PLM is twofold:

1. Fault free operation of very complex systems and regulation

compliance using carefully defined processes and practices. In

practice this means precise and smooth management of the

installed base information.

2. On time, in budget construction of new facilities with

numerous contributors in the process. EPC (Engineering,

Procurement & Construction) firms responsible for plant

design and construction, regulators introducing new and strict

regulatory standards and dozens of suppliers supplying very

important components.

At the moment PLM1.0 is not widely in use in the utilities sector. Most

of the companies have many dedicated systems per site, in many cases

build in house for their specific purposes. However, standard PLM

solutions could bring tremendous boost in efficiency in both of the

challenges.

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Due to the fact that Utilities sector companies have steady and highly

regulated business they are slow to adapt new concepts. Despite this

the companies are under pressure to increase efficiency. By 2016 we

will see not PLM breakthrough but PLM emergence in much larger

scale in the utilities sector as well.

By 2016 the most innovative utilities companies we use have PLM in

use in the installed base management managing the factory site

information including process equipment information, equipment

traceability, supplier information, spare part and consumables

compatibility information, maintenance history etc.

On very significant supporting factor enabling the PLM development in

the utilities sector, is that the engineering companies designing the

plants, the system and equipment providers providing the plant

equipment are using more and more advanced PLM approaches. In the

field of plant design, modeling, delivery and O&M (operation and

maintenance) we are also experiencing entirely new methods and

standards such as f. ex. IEC 81346 created for plant lifecycle

management.

Construction industry

On one hand, the PLM challenges of the construction industry are a lot

like in the utilities business: On time, in budget construction of new

facilities, apartment houses, offices, commercial centers, factories, and

warehouses with numerous contributors and component suppliers in

the process.

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As the utilities business, the construction industry is slow to adapt new

processes and concepts in their way to operate. Today in 2011 PLM is

not widely used in the construction business. Despite this fact it is

quite obvious that standard PLM system solutions could make a huge

impact in the collaboration network of dozens of suppliers, designers,

engineers, sub-contractors and regulators in simplifying change

management, offering view tools to latest designs and design changes,

keeping track on approved suppliers and standardizing components.

PLM systems with PLM1.0 type of functionality could be easily

launched to manage in-work product structures, digital mockups,

engineering BOMs available to construction planners or customers

before a design release, providing valuable early insights to on-going

project development.

By 2016 the most innovative construction companies will have PLM in

use in the project based change and documentation as well as BOM

management. The companies will have PLM implemented for the

management of approved suppliers and standard components, as well

as, in the collaboration network information sharing.

Clothing, footwear and apparel industry

Clothing, footwear and apparel industry is lot like all other component

- assembly based industries with certain clear and industry specific

characteristics. There is a huge need for precise and up-to-date

product definition, the products are constantly changing, the new

designs need to be introduced to markets within months and there are

many collaboration partners in the process.

One of the most important PLM drivers in the clothing industry today is

virtualization and 3D design. Virtual 3D designs and prototypes make it

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possible to shorten the design cycle of many products in this industry

due to the fact that so much of the traditionally Europe and America

based manufacturing has shifted to Asia bringing in new challenges

related to design and prototyping. Using 3D models and virtual

prototypes it is considerably quicker to finalize the designs than

sending goods back and forth between continents.

The utilization of social media and customer involvement is the other

major driver of PLM development in the clothing industry. In this trend

the virtualization plays an important role as well. Cloth and footwear

manufacturers need to involve their customers – i.e. in many cases the

consumers to the design process. The new virtual 3D tools make this

possible. Designers draft designs and ask the crowd or selected

reference group their feedback through social media. These drafted

designs with comments and feedback can be turned into final designs

extremely quickly and much ripe for the markets when examined from

the customer perspective. Other dimension to the same issue is the

possibility to create individual designs to shoes for example to create

unique set of sneakers though manufacturer website using virtual 3D

tools.

By 2016 we will see expansion of PLM1.0 to the large multinational

clothing, footwear and apparel companies with fairly standard item,

BOM and change management features added with industry

characteristic functionality such as use of 3D models in prototyping,

virtual showrooms designed for distribution channels and B-to-B e-

commerce as some cases directly to consumers.

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Food, process and consumer packaged goods (CPG) industry

The characteristics of PLM in CPG and process industries are quite

different from in the discrete manufacturing. Discrete manufacturing

is characterized by individual or separate unit production with low

volume and very high complexity or high volumes of low complexity,

with high emphasis on part and assembly quality, NPI and time-to-

market speed and cost cutting. In process manufacturing, the relevant

factors are ingredients, not parts; formulas, not bill of materials; and

bulk, not individual units or configurations. In many areas of process

industry f. ex. In the food and drug processing the packaging,

traceability and regulation compliance has very high emphasis

In 2011 there are still very few CPG companies that have

“implemented” PLM to the same level than manufacturing industry.

Part of the reason is that the CPG industry is still a technologically

reactive industry and developed ideas through scientific

experimentation. Many process companies have culture of exploring,

testing and analyzing using scientific methods rather than streamlined

processes and product development funnels, large number of front

line companies still use laboratory notebooks to manage and

document the R&D results.

Fierce price competition, battle of the top of mind of consumers, continuous efforts of increasing R&D productivity, increased safety and traceability requirements drive the product innovation of development of PLM in the process and CPG area. Many process and CPG companies have taken note of the vast improvements PLM has brought into manufacturing industries. CPG companies are beginning to understand how they can also benefit from such solutions to help them drive product innovation.

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32 PLM vision 2016 and beyond

In 2016 we will see much larger PLM penetration if the process and CPG industries. PLM implementations will facilitate product success excellence in three areas:

1. 1 reducing product development cycle time and increasing productivity

2. Increasing product development innovation and again facilitating the use of social media in crowd sourcing and consumer based innovation

3. Reusing information related company assets. By 2016 we will see PLM solutions supporting the following processes in the process and CPG industries:

Product development and design: streamlined and carefully designed development processes producing precise product definitions are in use in leading process and CPG companies. PLM solutions manage the Product Data Records (PDR) and IT-supported information management facilitates sampling, approvals, regulation and traceability of decisions and documentation for regulative purposes

Packaging design and labeling: Leading companies have integrated packaging design and labeling functions to product design, virtual design tools are standard to every company.

Traceability: Traceability is an essential requirement for CPG companies. They must manage product information with the objective of consistently meeting or exceeding regulatory standards to avoid or quickly manage any crisis that could damage their brand. The PLM system supported lifecycle management ensures compliance by enabling full traceability throughout the development phases and manufacturing, through to suppliers. This gives companies a process to react quickly during product recalls.

Regulatory issues, sustainability and environmental issues and safety: PLM will make it possible to manage and access product related information coming from various sources, such

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as developers, analysts, toxicologists, microbiologists, and procurement for regulative purposes and in order to support ever growing demand in the consumer base for sustainability and environmental issues.

Procurement: PLM systems enable the delivery of real-time

raw material costs to the formulators at the point when they select the supplier from which they will source the ingredient for this product formula. By selecting the lowest ingredient cost when the product is first formulated, formulators lock in the cost for the life of the product.

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Geographical expansion

RIC- Russia, India, China

PLM-system software solutions have traditionally been alma mater of

Europe and USA based software companies, many of them having

roots in the CAD software business. This set-up is changing also on a

fast pace as we have seen the change in the bulk manufacturing. A lot

of things are happening the emerging countries what comes to PLM

software engineering.

With the manufacturing and low cost country sourcing many Europe

and USA / Canada based manufacturing OEM’s in the PLM1.0

utilization level have expanded their PLM implementations to cover

their own subsidiaries in Asia as well as their suppliers and contract

manufacturers. In practice this means that the same PLM software

solutions, the Enovias, Oracles, Siemens, PTC software suites used by

the OEM are used in the Asian sites and by Asia suppliers as well.

Many of the large and most innovative manufacturing companies

owning product IPR’s the RIC area are facilitating the development of

RIC based new PLM software suites through venture capital funds and

direct investments. In Europe and USA we have seen a lot of

consolidation recently in the PLM system software field. There are

fewer PLM system providers the western countries than before.

By 2016 we will see new PLM systems developed in the RIC countries

with high software development capability taking large market shares

in the larger manufacturing companies RIC area as well penetrating the

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SME sector with light business models, low cost licenses, local support,

local language and GUI experience and significant cultural advantage.

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36 PLM vision 2016 and beyond

About the author

Antti Saaksvuori is a management consultant focusing on product

lifecycle management, product and service development, product

management, product and portfolio strategies as well as service

development and service productization.

Antti Saaksvuori is the author of a widely acclaimed book on Product

Lifecycle Management (Springer; 3rd edition ISBN 978-3540781738),

he has performed consulting work for a variety of companies in

industries as diverse as telecommunications, manufacturing, software,

logistics, insurance and healthcare. He has an engineering degree from

Helsinki University of Technology.

For more information on the subject – check: www.plm-info.com /

[email protected]

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Appendix A. Saaksvuori PLM Maturity Model

Saaksvuori PLM maturity model

Unstructured

The PLM topic has been recognized and its importance agreed. Work must be done to define

and develop the PLM concept and standards. However, at present, there are no defined

approaches concerning lifecycle management; all lifecycle and product management issues

are resolved by individuals on a case-by-case basis.

Repeatable but

intuitive

Lifecycle and product management processes have developed to the stage where similar

procedures are followed by different people undertaking the same task within one

organization (i.e. the processes function on ad hoc bases, corporate wide procedures or

definitions do not exist). There is no formal development, definition, training, or

communication of standard processes; all responsibility is left to individuals. There is a high

degree of reliance on individual knowledge and therefore errors occur.

Defined

Processes and basic concepts are standardized, defined, documented, and communicated

through manuals and training (on corporate level, in all business units – geographical,

functional units). However, the human factor is important, there is no end-to-end PLM

process supporting IT systems, all work is completely or partially manual from the process

point of view. IT systems support individual parts of processes. The PLM processes or basic

PLM concepts are not best-of-the-breed, nor are they uniform throughout the corporation,

however they are formalized. There is common understanding of the to-be model how PLM

shall be executed in the future.

Managed and

measurable

It is possible to monitor and measure the compliance between processes and to take action

where processes are not functioning well. Processes and concepts are under constant

improvement and provide best practices. IT systems support PLM processes well. Process

automation is used in a partial or limited way. Processes and concepts are developed through

clear vision throughout the corporation. The state of uniformity of processes is clear.

Optimal

Processes and concepts have been refined to the level of best practice, based on continuous

improvement and benchmarking with other organizations. IT is used in an integrated manner

and process automation exists on an end-to-end basis.