DESIGN AND CONQUER
PLM claims to speed manufacturing, cut R&D costs, and boost sales.
By Doug Bartholomew

While ERP systems are often viewed as all-encompassing, particularly for companies in the manufacturing sector, new software is emerging that tackles a broad range of functions largely untouched by traditional applications. Dubbed PLM, for product life-cycle management, the software manages products from conception to manufacturing to service and retirement.

For the most part, the companies that use PLM make things: the automotive, aviation, high-tech, and apparel industries are among the early adopters. But the software also can be useful for construction firms and other companies that deal with complex designs. Even such "products" as power plants, which have a long life cycle, can benefit from software that aggregates the reams of data related to repair, maintenance, and other aspects of their life cycle. PLM, as Kevin O'Marah, vice president of PLM at consulting firm AMR Research, notes, is "the system of record for your products - it's the documentation of everything that constitutes the product."

But PLM is more than just a documentation system. Like ERP, PLM is a set of interconnected modules, each of which addresses a specific function. But whereas ERP is designed to handle primarily transactional data, PLM manages all the unstructured data associated with product design and manufacture. It includes basic computer-aided-design (CAD) data, the foundation of most products designed today, but goes beyond drawings to provide, for example, a digital, collaborative project environment that allows computer-based design to extend well beyond one person's desktop. Post-design, product specs can be shared with suppliers and customers. PLM software can also simulate the manufacturing process so that mechanical designers and engineers can try out virtual manufacturing workflows to see which will prove most efficient.

Like ERP, PLM software can be used by finance, sales, manufacturing, and service groups - any constituency that needs product information, including cost per unit and service history: the software presents a customized set of views and associated data to each type of user.

Of special importance to financial executives is PLM's ability to act as a digital bloodhound, sniffing out wasteful or excessive spending on, for example, research and development. "Companies are extremely haphazard in the way they measure the results of R&D spending," reports O'Marah. Despite the fact that "R&D budgets are a sacred cow," he adds, in today's climate no arena is immune to cuts.

PLM can save money in the product-development process by encouraging engineers to make smarter decisions about which parts should be "standard" and which should be custom-designed.

IBM, which offers its own PLM portfolio with Dassault Systemes, its business partner of 22 years, claims to have saved its customers more than US$1 billion while doubling on-time delivery for some customers and reducing cycle time from 72 to 16 weeks for new products. "We're real believers in this technology because it's worked for us," says Edward Petrozelli, general manager of IBM's PLM division.

One of PLM's strongest selling points is enhanced collaboration. "We can check dimensions and engineering valuations online in real time with customers or among our own support engineers around the world," says Rich Marando, director of advanced engineering and technology at automotive supplier Dana's Structural Solutions Group, based in Pennsylvania. "This technology is the wave of the future. It compresses our new vehicle programs by a phenomenal amount of time."

Pricey Pricetag

Although they may work wonders for those trying to design products concurrently with suppliers, most full-bore PLM systems don't come cheap. "A company could buy a piece of PLM technology for US$50,000," says O'Marah. More likely, though, companies looking to install a comprehensive package are facing a multiyear rollout with a price tag ranging from a couple of million to tens of millions of dollars, depending on company size and the number of employees using the system. Most companies have so much data, so many functions to include, so many processes to integrate, and so many interconnections to make that the ROI of a broad PLM implementation can be hard to measure.

That's the rub for PLM: it appears to be just a bit too big and too sweeping for most companies to take the full plunge. Instead, many businesses tend to buy pieces of the software in the hope of connecting them someday. At auto supplier ThyssenKrupp Budd (TKB), for example, Harold Hoffman, vice president of IT, admits: "We have not implemented pure PLM, because the cost is so high." The Michigan-based company projected the cost of a total PLM package for 500 active users across two divisions at US$3 million over three years, including installation and operating costs. But TKB does use a CAD system and Web-based visualization software from EDS for various tasks, including production-line simulation. Not only do products have to be designed, but so do the production lines on which they will be built. Some PLM modules are specifically tailored to do assembly-line simulations to achieve the optimum arrangement of robots, welders, presses, operators, and so on. The software essentially allows the company to do a sophisticated "what-if" analysis on various facets of the production process, a far more efficient approach than trial and error on the factory floor.

As one example, the company found that it could deploy forklift trucks rather than parts trains, cutting costs by 50 percent. Similarly, the Cessna aircraft unit of Textron is employing PLM one piece at a time. "It is a challenge to communicate the cost savings," says Jeff Schiesser, director of business integration. "Our strategy has been to demonstrate the benefits to management and to keep reinforcing to them why we're spending all this money on technology." Cessna began with a product data system, which keeps track of all product drawings, specifications, and engineering design changes. "We're still in the midst of integrating the design-and-build processes," says Schiesser, "but we have already connected six or seven different systems into a PLM suite."

The system now extends to such areas as inventory control and tracking Federal Aviation Administration certification requirements. Already nearly one-third of Cessna's employees use various PLM modules, but, says Schiesser, "we're just progressing down the chain to see how this [PLM] all works together."