PLM Strategy

PLM Vision
A PLM Vision is a high-level conceptual description of a companys product lifecycle activities at some future time. A PLM Vision represents the best possible forecast of the desired future situation and activities. A PLM Vision outlines the framework and major characteristics of the future activities. It provides a Big Picture to guide people in the choices they have to make, when strategising and planning, concerning resources, priorities, capabilities, budgets, and the scope of activities. Without a PLM Vision, people wont know what they should be working towards, so wont work effectively. Companies need a clear PLM Vision so they dont drift along, going wherever external forces are pushing them. The Vision is a useful basis for communication about PLM between all those involved with PLM, such as executives, IS managers, Product Managers, product developers, service staff, recycling managers and other stakeholders. A PLM Vision will be company-specific. A PLM Vision is built on the assumption that the company wants to carry out its product lifecycle activities as effectively as possible. A Vision must make sense to others. It has to be unambiguous and easily understandable. It must be believable and realistic A shared Vision helps everybody to move forward along the same road towards a successful situation and effective lifecycle activities. A PLM Vision is the starting point for developing a PLM Strategy, and for developing and implementing improvement plans. A Vision should be built by a team of people working part-time on this task over a period of a few months. A PLM Vision isnt an independent stand-alone entity. It has to fit with the companys overall vision of its future, its mission and its objectives. Upstream of the Vision are the companys objectives, vision, strategies and plans. The PLM objectives result from the requirements of the company. They express at a high level whats expected from PLM. we want total control of our products across the lifecycle from cradle to grave the environmental footprint of our products must be the lowest in the sector we want to be among the fastest product developers in our industry our PLM activity must rank among the 100 most successful in the world we want to eliminate four low-margin products in the next five years, and then be introducing 6 new and 10 upgraded products each year in the US Potential objectives for PLM

One of the first steps towards the PLM Vision is to understand the scope, range and content of product lifecycle activities.
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The PLM Vision will include a description of the future PLM Strategy, the way that PLM resources will be organised in the future. Once the PLM Vision has been agreed, a suitable Implementation Strategy has to be developed to achieve it. Once the Implementation Strategy has been defined, it is possible to start planning detailed activities. These plans will address IT applications, modifications to the lifecycle processes, information, organizational structures, and many other topics. When planning is complete, implementation can take place. The process of developing a PLM Vision, and the related Implementation Strategy and plan, is easier to describe than to execute. There should be a very clear and simple link between Vision and implementation.

Military Strategy
Histories of modern military strategy often start with Napoleon. Between 1796 and 1815 he dominated most of Europe. For hundreds of years before, no-one had achieved such domination. He fought more battles than other generals. Napoleon fought in the name of Liberty. Many of the generals he defeated were fighting in the name of despots. He carefully selected battlegrounds advantageous to his forces Rapidly concentrated all his forces for battle at a position where his enemy was weak Forced his enemy to fight by threatening lines of communication and supply.

Napoleons victory in war resulted from the destruction of the enemys forces on the battlefield rather than the mere occupation of territory. To achieve this he identified three targets. These were the enemy forces, their resources and their will to fight. war is nothing but a continuation of political intercourse with the admixture of different means, in other words, an extension of diplomacy. By the time of the American Civil War (18611865) the effects of the Industrial Revolution were becoming apparent. Steam power was widely used. Accurate long-range infantry rifles had been invented. The use of steam power for rail and water transport changed the military equations of space and time. As long-range rifles could wipe out a concentrated attacking force before it could get to grips with a well entrenched enemy, the tactic of frontal attack with concentrated forces was abandoned. Some of the results of these strategies were seen in the First World War. Apparently the effect of advances in technology, which had already been clear in the Civil War, hadnt been fully understood by the strategists.

Lessons Learned
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Lessons can be learned from the above examples of the application of different military strategies, and related success and failure factors. They are a useful input when developing strategies for PLM.

History repeats itself Over time, as environment and resources change,strategies change A strategy can be offensive or defensive A small range of simple strategies The choice of strategy depends on the objectives There's a hierarchy of strategies It is dangerous to change strategy during implementation

Principles of military strategy (Rules for successful war): Objective Offensive Unity of command/co-operation Concentration of force and efforts Economy of force and efforts Maneuver/flexibility Surprise Security Maintenance of morale Administrative / logistic support

Manufacturing strategy
Like armies, manufacturing organisations need a strategy to meet their objectives, and to manage and use their resources. The latter include people, machines, methods, materials and money. For thousands of years, progress in increasing manufacturing productivity was slow. However, a few hundred years ago, mechanisation made possible a leap forward. The machines introduced in the Industrial Revolution led to an organisation of work that differed from the previous approach. Adam Smith in The Wealth of Nations (1776) advocated about division of labor between owner and worker. Workers were assigned to a particular position at which they carried out a specific task. The owner supervised the workers making sure they worked at the pace of the machines. This led to a division of labour between the owner and the workers. The owner couldnt watch over all the workers all the time, so a hierarchy of supervisors and managers was developed. Owner supervised the workers work with machine. Owner could not control the worker all the time, so hierarchy of supervisors and managers was developed.

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In the nineteenth century, machine tools changed the environment again. They enabled strategies of mass production, which has the characteristics like: High volumes Mechanization Organised material flow through various stages of manufacturing Sub-division of labour Low skill level of workers Managerial staff with specialised skills Simplification and standardisation of common parts Manufacturing enterprises grew to such a size that a large hierarchy of supervisors and managers became necessary. The increasing size and complexity of operations called for a large management staff including accountants, engineers and personnel managers. Frederick Taylor brought a scientific approach to these principles. A new discipline, industrial engineering, appeared. Taylor broke each job down into its constituent parts, analysed them to find out which were essential, and timed the workers with a stopwatch. With superfluous motion eliminated, the worker, following a machine-like routine, became much more productive. The next step, introduced to manufacturing by Henry Ford, was the assembly line, where overhead trolleys moved carcasses from one stationary worker to another. Each worker did one task, at a pace dictated by the line, minimizing unnecessary movement and increasing productivity. Ford applied these methods to the manufacture of cars, reducing the price of cars, bringing it within reach of more people. According to Ford, the assembly line was based on the planned and continuous progression of a commodity through the shop, the delivery of work to a worker (instead of leaving it to the worker to find it) and an analysis of operations into their constituent parts. Mass production increased the trend to an international division of labour. Factories often needed raw materials from other countries. Saturation of national markets led to a search for customers overseas. Some countries became exporters of raw materials and importers of finished goods, while others did the opposite. The introduction of computers in Manufacturing in the mid-twentieth century led to strategies of Shop Floor Automation (NC machines, CNC machines, robots, and Flexible Manufacturing Systems). It also led to the introduction of MRP and ERP systems for planning and control of manufacturing and logistics. In the 1960s and 1970s, Total Quality and Just in Time (JIT) strategies were introduced to cut out waste in Manufacturing. Stocks were reduced, and nonvalue- adding activities eliminated. Assembly lines were simplified by focusing on a particular product line. Later in the twentieth century, these ideas were extended, and Lean Manufacturing strategies were developed. The skills needed by assembly-line workers are easily acquired. Standards of living in many developing countries exporting raw materials are so low that wages can be kept below those of already industrialised countries. As a result, developing countries can adopt strategies of industrialisation and export of manufacturing goods. In response, manufacturers in developed countries outsource, getting
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parts made in low-cost countries. In the early 1990s, original equipment manufacturers (OEMs) in the electronics industry faced pressure to get products to market faster than their competitors. They took to outsourcing in a big way, with parts or whole products made or assembled in developing countries. This started with outsourcing of printed circuit board assembly to electronics manufacturing services (EMS) providers, and eventually led to an EMS industry which offers design, manufacturing and related services to the OEMs. The logical ultimate in the evolution of strategies seems to be the re-configurable Lights-out Factory producing customised products in a batch size of one. This implies elimination of all manual labour and the introduction of flexible manufacturing and assembly machines with automatic controls providing accuracy and quality beyond human skill levels. From the above, it can be seen that, as in the military environment, when resources and technologies change in the manufacturing environment, strategies also change.

Company Strategy
Both military and manufacturing strategies change in response to the changing environment of resources and technologies. The strategies that companies adopt are also subject to change. Two main strategies have been used by companies to meet their objectives. One of these is the low-cost, cost leadership strategy. The other is a high-value strategy based on differentiation. A cost-leader aims for the lowest product cost in a particular industry. This usually requires a high market share and a high volume of standard products. It implies substantial capital for large continuousflow production runs and facilities. By selling a low-cost product in large numbers, the costs of product development and manufacturing equipment are spread over a large number of products and become relatively insignificant. Usually its the manufacturing cost thats most important, so this type of company focuses on reducing the cost of manufacture. This implies strong abilities in facility engineering, manufacturing engineering and purchasing. High-value differentiation strategies are based on having a product or service that differs significantly (for example, by virtue of its design, or technology, or customer service) from those of competitors. Higher prices can be charged because of the uniqueness of the product and the few available alternatives. To make the product special usually requires skills in identifying customer needs, and in defining the product correctly

Other strategies include niche, trend-leader and follower. A niche strategy serves a particular market segment, or particular type of customer, or particular geography, or particular part of a product range. Within a given niche, a company can hope to succeed with either a cost-leadership or a differentiation strategy. A company with a trend-leader strategy will constantly innovate in an attempt to lead the market and be the first to produce a particular product or service, and gain the associated benefits. This type of leader is unlikely to be a cost-leader, due to the difficulty of getting products to market first. Instead, revenue is
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generated from sales to customers who are anxious to be early adopters, and are willing to pay the additional costs this entails. This strategy requires good product development skills so that a market-leading product can be brought to market quickly. A follower is a company that enters the market when the leader has moved on to the next generation of products, or when the leader can be attacked through cost or quality features. A follower could aim to be a cost-leader. The follower doesnt aim to sell to one of the few early adopters of the product (who often represent less than 10% of the market) but aims to sell to the main market (the other 90%). For a follower, its less important to have skills to develop new products than to be able to understand and improve what has already been developed. This calls for skills in reverse engineering and in reducing product costs. The above description of strategy may seem theoretical. In reality, the strategies of many companies dont fall nicely into one of the above categories. Many companies pick and mix, taking elements of different strategies to create their own strategy. Recent years have seen the introduction of new strategies such as low-cost variety, fast response time, partnering, and process-based strategies (rather than product-based strategies) such as capabilities-based competition and Concurrent Engineering. The driving force behind many of these new strategies was Japanese companies using manufacturing excellence to gain competitive advantage. They put new concepts into production quickly, reduced manufacturing times to the minimum, and continuously pumped out new and innovative products. Manufacturing and engineering were equals with marketing and finance in the eyes of top management, and considered essential in the process of developing strategy. The performance of Japanese companies showed that activities in the product lifecycle can provide a competitive advantage. For example, a company which is better at developing new products and services can use this advantage to gain market share. While competitors are busy developing the same abilities, the leading company introduces new products and features faster, and also develops new abilities. When a competitor reaches its targeted level of improved competence, the leader is ready with a newly developed advantage and the competitor is again behind. It spends money to build competence which doesnt provide the needed return on implementation, because the environment has changed. Strategies such as fast response time have been introduced because, as a result of technological advances and changing customer behaviour, products have increasingly short lives. To make money on a short-life product its important to bring it to market quickly and give it the longest life possible. This also means that product offerings will be fresher. And the latest technology can be included because less time passes between definition of the product and its arrival on the market. Less time in development means less labour and less cost. The company responds quicker to customers, gets more sales, and sets the pace of innovation. A company like this is going to need a strategy that allows it to develop new products quickly, and get them into production quickly, to change production volume quickly as demand builds up, and to switch to production of other products when demand drops. Partnering is often driven by the need for innovation and the limited resources available for developing new products. Partnerships between companies allow greater value and features to be offered to customers, while allowing each partner to concentrate efforts on things it does well.

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A capability is a clearly-identified and well-defined set of business processes. Capability-based companies achieve competitive success by making their key business processes (the ones that make them leaders) as effective as possible. Process-based strategies are based on the belief that we know how to do things well. Its not the particular product that counts, but the successful way it can be got to customers. This type of company needs to have a good understanding of its processes, and the ability to adjust them to handle different products. According to the Bible, What has been will be again, what has been done will be done again; there is nothing new under the sun. This can be applied to strategy development. Company strategies bear similarities to military strategies. New business strategies draw on elements of old business strategies. The Napoleonic strategy of focusing resources and attacking on a weak point in the enemy line can be compared to a niche strategy of a company, focusing resources on a particular part of the market. The military strategy of Attack with overwhelming speed corresponds to the fast response time business strategies. Strategies for PLM can be expected to share characteristics with military, company and manufacturing strategies.

Military environment
Control of the seas Control of the air Control of a land region Attack in overwhelming strength Attack with overwhelming speed Destroy the enemys will to fight Divide the enemys resources Cut the enemys supply lines Siege

Business environment
Cost leadership Differentiation Niche Leader Follower Low-cost variety Fast response time Partnering Process-based

Principles for PLM strategy

The following set of principles can be used to help in the development of the PLM strategy: Focus on the Product Involve the Customer, listen to Product Feedback Remember the Planet and Mankind Simple slim-line organisation Highly-skilled people Use of modern technology Coherent PLM Vision, Strategy and Plan Continually increase sales and quality, reduce time cycles and costs Watch the surroundings Maintain security
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The PLM Strategy

Once the PLM Vision has been defined, people will want to know what the organisation will look like in five years. They will ask how the resources in the product life cycle should be deployed, structured and used in the next five years to achieve the vision. A strategy describes: the way to achieve objectives; how resources will be organised, managed and used; policies governing use and management of resources. This general definition leads to requirements for a PLM Strategy. A PLM Strategy describes how resources will be organised and used. PLM Strategies arent generic. Theyre specific to individual organisations because they depend on the particular circumstances and resources of the individual organisation and on its particular environment. A PLM Strategy will be company-specific. Without knowing a particular organisation in detail, its not possible to say what its strategy should be. For example, the PLM Strategy of an organisation that develops and manufactures high-performance aircraft engines can be expected to be different from that of an organisation that develops low-cost plastic toys. PLM Strategies change. Todays PLM Strategy describes how PLM resources are used in todays environment. A PLM Strategy for the future shows how they will be used in the future. The PLM Strategy has to be documented and communicated to everybody likely to be involved in the future environment or impacted by it. It wouldnt make sense to have a Strategy that nobody, apart from its developers, knows about, understands or approves. The PLM Strategy shouldnt be changed frequently. It can take several years to implement a new PLM Strategy. And it can take several years for the effects of a new PLM Strategy to become apparent. A good, well-defined and well-communicated PLM Strategy is important because it: shows how PLM objectives will be achieved; makes sure resources and capabilities will be used to their best; makes sure everybody knows what is happening; and makes sure all resources are aligned in the right direction. To achieve the PLM Vision, two strategies need to be developed. These are the PLM Strategy and the Implementation Strategy. The PLM Strategy shows how PLM resources will be organised in the future, envisioned environment. The Implementation Strategy shows how resources will be organised to achieve the change from todays environment to the future environment. The Implementation Strategy is sometimes referred to as a Change Strategy or a Deployment Strategy.

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Developing a PLM strategy A Five-step Process:

1. 2. 3. 4. Collecting information Identifying possible strategies Selecting a strategy Communicating the selected strategy 5. Implementing the strategy

Step 1: Collecting information:

Internal: Company, organisation, resources, capabilities, strengths and weaknesses Environment: Competitors, PLM strategies of competitors, market trends, technology forecasting, Government rules & regulations, etc Key factors for success, trends, opportunities and threats

Step 2: Identifying possible strategies:

Strategy elements: Best functionality, customisation capability, most sustainable products, fastest time to market, bundled solutions rather than individual products Policies: technology, quality, suppliers, equipment purchase, culture, etc

Step 3: Selecting a strategy:

Short listing potential strategies SWOT analysis Does the strategy address key issues Does this strategy exploit our strengths Does it help against threats? What are profit and loss implications? What are the implications for investment?

Step 4: Communicating the selected Strategy:

Select a simple name for the strategy Express the strategy in simple language which is easily understood Test the strategy with a control group Select the appropriate channels and media for communicating the strategy

Step 5: Implementing the strategy:

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 Implementation plan Feed back and control Corrective actions and rephrasing the strategy

Five steps of strategy development:

Step 1: Gathering Information

A very good understanding of the activities and the resources in the product lifecycle is needed to develop the PLM Strategy. This understanding must be based on factual information, not on guesses and opinions. The required information includes the Vision a and nd associated targets, customer and innovation objectives, details of resources, capabilities and the environment, strengths and weaknesses, opportunities and threats. This information should be available after the Vision-related Vision activities described in previous sections.

Step 2: Identifying Strategies

In the second step of strategy development, several potential strategies are identified, formulated and described in terms of the organisation and policies to be applied to the resources. Its always useful to identify and describe several possible strategies. This will improve the chances of finding the best strategy since the most obvious strategies arent necessarily the most appropriate. The strategy chosen for PLM has to meet the objectives of the comp company. any. As each company will have a different objective, as well as different resources and a different environment, the strategy a company develops will be different in some respect from that of any other company. Its to be expected that the PLM Strategy selected lected will contain some elements of one (or more) of the basic strategies, and also have some additional elements.

The exact meaning of a strategy element will differ from one company to another. For example, the strategy elements of fastest time time-to-market and lowest-cost cost competitor could both be implemented in many ways. Fastest time time-to-market market could be implemented by building up a prepre defined stock of solutions, by increasing the number of engineers, or by shortening the product development process by removing non non-value-adding activities.
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Lowest-cost competitor could be implemented with cost reduction programs, capital expenditure cuts, headcount reductions, or by improving the effectiveness of the product development process. The criteria for selecting strategy elements, and deciding how theyll be implemented, will be made clear to some extent by the objectives provided by the business strategy, and to some extent by the application of PLM principles

Step 3: Selecting the Preferred Strategy

In the third step of strategy development, potential strategies are tested, and the most appropriate strategy is selected and detailed. It will be useful to investigate three or four alternative strategies. This should lead to an in-depth understanding of the possible strategies. The strengths and weaknesses of a particular strategy often become clear when examining the strengths and weaknesses of other strategies. The analysis of the different strategies is often called SWOT analysis. The acronym stands for strengths, weaknesses, opportunities and threats. These are the four factors that have to be described and compared for each of the possible strategies. The SWOT analysis should be as complete as possible, looking into all areas of relevance to the organisation. A partial list would include customers, competitors, suppliers, technology, products, costs, cycle times, quality, information, computer systems, management of change and human resources. After the SWOT analysis has been carried out in the third step, one strategy must be selected. It should then be documented in detail.
Strengths: R and D almost complete Basis for strong management team Key first major customer acquired Initial product can evolve into range of offerings Located near a major centre of excellence Very focused management/staff Well-rounded and managed business Weaknesses: Over dependent on borrowings Insufficient cash resources Board of Directors is too narrow Lack of awareness amongst prospective customers Need to relocate to larger premises Absence of strong sales/marketing expertise Overdependence on few key staff Emerging new technologies may move market in new directions Opportunities:

Threats: Major player may enter targeted market segment New technology may make products obsolescent Economic slowdown could reduce demand Euro/Yen may move against $ Market may become price sensitive Market segment's growth could attract major competition

Market segment is poised for rapid growth Export markets offer great potential Distribution channels seeking new products Scope to diversify into related market segments

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Step 4: Communicating the Strategy

In the fourth step of the five-step strategy development process, the chosen strategy is communicated to the people who will be affected by it, or involved in its implementation. Communication of the strategy is essential. A strategy is useless unless the people who are going to be involved are fully aware of it, can understand it and can implement it. The name given to a strategy must be so short and simple that everyone (not just strategy developers in company headquarters) can understand it. A strategy has to be realistic. It has to be expressed in language that everyone can understand. Its important to have general agreement on vocabulary. Otherwise, if the members of a group of people are asked to describe the strategy theyll all give different answers. Before communicating the strategy, make sure that everybody understands the meaning of the terminology. Decide who the strategy needs to be communicated to before starting to communicate it. Product developers, field engineers, customers, company management, suppliers, regulatory organisations, other companies ? Communicate the strategy to everyone involved with PLM. The more they understand it, the more chance it has of being implemented successfully. Make sure people understand why its important to understand the strategy. Make sure they understand why the strategy is necessary for the organisation. Make sure people can see where it takes them as individuals

Step 5: Implementation Strategy:

The Implementation Strategy (also known as the Deployment Strategy or the Change Strategy) shows how to get from the current use of PLM resources to the future use of PLM resources. There are many ways to get from the current use of PLM resources to the future use of PLM resources. These options should be documented and analysed. Again, SWOT analysis is appropriate. The best option is selected. This is the Implementation Strategy. It should be documented in detail and communicated.

Implications of Strategy Elements:

Different companies will develop different strategies. These strategies may have very different implications for the resources used in the activities of the product lifecycle. Consider the two strategies of value-adding lifecycle and the lowestcost product. Value-adding lifecycle focuses on the key lifecycle activities that differentiate a company from its competitors. This often means outsourcing lifecycle activities that arent strategic. The main activities of an organisation with a valueadding lifecycle strategy could be defining customer requirements, system engineering, simulation, and management of suppliers.

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Implications of Principles:
Implications cations of focus on the product

Implications of involve the customer, listen to product feedback

Implications of watch the surroundings

Implications of maintain security

Policy:
A policy is a general rule or set of rules laid down to guide people in making their decisions. For example, when faced with a situation of type A, then do X. A policy is a general guideline that will help people in the company to make decisions without co continually ntinually referring back to top management for guidance. Typical subjects of policies include use of technology, supplier relationships, management span, quality, investment in new equipment, recruitment, salaries and benefits, and training.

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Policy statements could address areas such as those shown in Fig. A strategy addresses the key areas where the organisation will strive to gain competitive advantage. A strategy has to be simple and concise, otherwise it will be impossible to implement successfully. A strategy doesnt aim to describe all the detailed issues that may arise in the product lifecycle environment. The issues which arent explicitly addressed in the strategy document can be addressed with policy statements. A policy is a general guideline that will help the people in the company to make design without continually referring back to top management. Typical subjects of policies include use of technology suppliers relationship, management span, and quality, investment in new equipment, recruitment, salaries, benefits and training. No single strategy works for all products all of the time. Flexible The future PLM Strategy will show how PLM resources will be organised in the future, envisioned environment. The Implementation Strategy will show how resources will be organised to achieve the change from todays environment to the future environment.

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