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Building a business case for PLM

Product Lifecyle Management (PLM) can be a smart investment for manufacturers. Learn how to build a PLM business case, perfect a PLM strategy and assemble your PLM team.

Just as there is no one-size-fits-all strategy for where to start with Product Lifecycle Management (PLM), there...

is no single prescription for building a business case for the enterprise platform. Since a PLM strategy is all about transforming how a company designs, manufactures, services and improves its product offerings, often the telltale sign that an investment in PLM is warranted stems from acknowledgment that one or many of a company's business processes are broken.

For example, if a manufacturer is struggling with ongoing quality issues -- frequent breakages in the field or skyrocketing warranty costs -- it's generally an indicator that more controls are required in the engineering and manufacturing process. Likewise, a consistently high rate of engineering change orders (ECOs) late in the development cycle, or problems meeting compliance directives, all point to larger issues with product development that can be resolved by implementing a PLM strategy.

"A lot of times, you can justify these systems on how [many engineering] changes a company does and how much those cost them," said Peter Bilello, vice president at CIMdata Inc., a market research firm specializing in PLM. "If there are a lot of last-minute changes, those are very expensive. Companies that see their value to the market as their ability to deliver new and complex products are the ones that tend to understand the value of intellectual assets as much as physical assets -- if not more so."

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Understanding the core business objectives and where the business is going is the first step to building a sound argument for PLM, Bilello said. Once they clarify that vision and identify any gaps, companies can then determine specifically where PLM can deliver value.

Unlike other enterprise applications such as ERP or SCM, in which the business case is generally made around taking cost out of the equation, PLM (if leveraged effectively) can be justified for both slashing operational expenses as well as fostering revenue growth. For instance, a basic collaborative product data management (PDM) system, a core PLM foundation, can deliver cost efficiencies related to reducing the number of ECOs, eliminating rework activity and helping to reduce project overruns, all by centralizing product-related data in a common repository. Simultaneously, that same system has merit for driving revenue growth, helping to improve time to market and promoting parts and design reuse, along with fostering innovation for increased profitability.

"If you're always late to market with products, if you've got so much product complexity in terms of the number of variants and SKUs, if you've got inventory out of control -- these are all indicators of a problem [that can be addressed with PLM]," said Mike Burkett, vice president of PLM research for manufacturing consulting firm AMR Research. "You've got to look at what's causing the problem, and you've got to look at the process until you finally get to the definition. Then, once you define the pain in the process, you know what to address first."

Who's on the PLM case? Building a PLM team

There are different ways to make an argument for PLM, but most experts agree there is only one way to successfully drive a PLM business case: by enlisting the backing of a cross-functional team.

"The process of bringing products to market and supporting them through end of life is a cross-functional process," Burkett said. "The problem with not enlisting a cross-functional team is that you can focus on one part of a bigger process, and you might end up optimizing something that wasn't the total problem."

It goes without saying that getting representation from the engineering organization is mandatory, but companies also need to recruit backers from marketing, procurement, manufacturing, field service and maintenance, as well as other areas of the business. Ultimately, top-level management, while not in the trenches of making the business case, has to be driving a relevant enterprise strategy, to boost innovation or to streamline operations, in order for PLM to really get its due.

"It needs to be people driving the business," CIMdata's Bilello said. "They might not make the decision on what tool to buy, but PLM has to fit into the vision they have as a company."

Beth Stackpole is a freelance writer.

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