Nearly every manufacturing firm has embraced product lifecycle management (PLM) software, which is geared to bring...
clarity to every function that touches the creation, development and manufacture of products. Now companies are integrating PLM with supply chain management to provide visibility into the whole ball of wax: engineering, manufacturing and business applications.
"There is a lot of overlap between PLM and SCM," said Ken Versprille, PLM research director at CPD Associates LLC, a research firm that helps organizations create and implement roadmaps for engineering and manufacturing technologies. "The very essence of PLM is trying to integrate engineering and manufacturing applications with business applications. When you look broadly at the supply chain, you are really dealing with both of those areas."
According to Versprille, applications incorporated within a PLM system must be able to pass data back and forth to ensure that all affected managers have visibility into the technical details of a product as well as supply chain factors, such as the existence of preferred suppliers. "Unless the two sides are fairly integrated, that won't happen," he warned.
Joe Barkai, an analyst at research firm IDC's Manufacturing Insights website, makes the point more forcefully: "If PLM is about the lifecycle, there is no way it can't embrace SCM, whether you're talking about design, delivery or end of life."
Manufacturer improves product traceability with PLM-SCM integration
One manufacturer aligning PLM and SCM is Crystal Technology Inc., a Palo Alto, Calif., maker of oxide single crystals and optical components. Fred Garderes, director of supply chain management, said that prior to deploying Omnify Software's Empower PLM software less than two years ago, almost all engineering information – including that which was shared with suppliers – was on paper.
But, according to Garderes, they now enter all purchasing data into the PLM system at the time of the parts creation process. All parts data is also pushed to the company's Infor Baan IVc4 ERP system upon release – a total of about 130 fields. They enter all subsequent changes into the PLM application, and then push it to the ERP system. "In truth, we have one change process, and depending on the originator, we call changes ECOs [engineering change orders] or SCOs [SCM change orders].
"SCOs also enable control and [provide] traceability of Approved Supplier List and Approved Manufacturer List, which is great for supply base management activities," he said. And, according to Garderes, prior to the PLM implementation, "only Document Control was updating our master data as we didn't want to enable engineers to update purchasing parameters [or] vice versa." He added, "Having key SCM info available at the time of design or when cutting ECOs is important. In that regard, we are also updating key ERP/SCM information in the PLM through a batch job every night."
PLM-SCM integration enhances supplier communication
PLM also has been at center stage for several years at Landis+Gyr, which supplies metering products for electricity, gas and water utilities. Jim Jacobus, an engineering documentation specialist, oversees the operation of the company's PLM function, which is built around software and services from Arena Solutions Inc.
The business unit that Jacobus belongs to at Landis+Gyr was formerly an independent company called Cellnet Technology. The business unit currently uses QAD Inc.'s ERP software but is planning to move to SAP for its ERP system so it can be in sync with the rest of the company.
PLM has a long history at Landis+Gyr. Cellnet originally took a home-grown approach to PLM through GEMS ERP, a system from GEMS ERP Dot Net Ltd., which was also employed to provide bill of materials (BOM) information and other PLM product information. But the capabilities available through GEMS were limited and stopped at the walls of the company. Then in 2004, the company began using a BOM and Engineering Change Management package from Arena Solutions.
By contrast, the Arena BOM software package, which is Web-based, helped Landis+Gyr do a better job of coordinating with its suppliers because, according to Jacobus, being Web-based, it can be accessed from anywhere in the world and is simple to learn. Arena BOM provides an interface between Landis+Gyr and all of the contract manufacturers it uses. "We use Arena to move our data to these manufacturers -- that is where they get their data and it is the way that they submit change requests to us," Jacobus said.
Indeed, the PLM functionality afforded by the Arena software is now so central to operations that Jacobus said email correspondence between individuals regarding anything having to do with design or production is forbidden -- everything has to go through the PLM tool. Any supply chain functions not handled by Arena are handled by the ERP system, he said.
Benefits of PLM-supply chain integration
In fact, analysts say that organizations adopting PLM should make integration with SCM front and center. Marc Halpern, a Gartner Inc. analyst, said the three biggest benefits that a company should attain from integrating PLM and SCM are:
- the ability to leverage volume pricing,
- better regulatory compliance, and
- the information needed to support green/sustainable design.
For example, a process manufacturer might be able to lower costs by sharing procurement of ingredients; a discrete manufacturer could achieve the same result with components. However, if engineering groups are working independently, they may gravitate toward different suppliers based on geography, personal connections or other factors.
This kind of fragmented buying can reduce the potential for volume discounts, clutter inventory and even impede quality and reliability goals. By contrast, if you can achieve a tighter coordination among those that design products and procurement through linking PLM and SCM, "you start to aggregate buying across geographies and can consolidate suppliers," noted Halpern.
Through compliance mandates, such as Restriction of Hazardous Substances (RoHS) or End of Life Vehicle (ELV) as well as Registration, Evaluation, Authorization and Restriction of Chemical (REACH)substances, companies need to ensure that their sourcing meets these various requirements and even that components can and will be recycled or disposed of safely when the product goes out of service.
"In a PLM environment, therefore, you want to be able to roll up all the constituent materials and chemicals in all these parts and make sure that your use of certain hazardous chemicals is within total limits," Halpern said. Likewise, from a green/sustainability vantage point, PLM should provide visibility into many of the same factors but also to externals such as materials or chemicals needed in maintenance. "An example would be the oil that's changed in your car every few thousand miles," he noted.
But integration won't happen overnight. A lot of systems and applications and business procedures are so formally established and have been around so long, Versprille said, "it is hard to move people off that dime and into the benefits implicit in a PLM vantage point."
Nor is buying software, by itself, likely to change things.
"Typically the business side, including procurement, reports to one side of the organization while engineering reports to another side," Versprille said. "Within those fiefdoms they may not see a reason to change." The answer? "People in the organization need to step back and intellectualize so they can see the issues, and then maybe the CEO needs to get involved to ensure that change happens," he said.
Then, said Barkai, you can begin the work of focusing on software. There's no particular advantage to having SCM and PLM from the same vendor, nor does any one vendor have unambiguous superiority to another. "What you need to do is look carefully at the business processes and business need and then determine for yourself which software tools can help provide PLM capability to your organization," he said.
About the author: Alan Earls had his first exposure to computer programming on one of Digital Equipment Corp.'s PDP-8 minicomputers. He went on to serve as editor of the newspaper Mass High Tech and is the author of the book Route 128 and the Birth of the Age of High Tech, a photographic essay on a key part of Massachusetts economic history. He currently is a freelance writer, covering many aspects of IT technology and writing regularly for SearchManufacturingERP.com.