The Roadmap to PLM Starts with Corporate Strategy

Product Lifecycle Management (PLM) is coming. What are you going to do about it? It is increasingly obvious that the notion of PLM as AMR Research defines it is driving a squeeze play on corporate IT strategy. From the top down, business unit leaders are looking to the convergence of the Internet communications platform and better-integrated enterprise applications to get faster to market with competitive products. From the bottom up, highly educated (and paid) employees in engineering, design, marketing, and product management are choosing and using technology tools that make their jobs easier. The net result is a potential train wreck in IT strategy. CEOs will increasingly ask IT leaders: what are we doing about PLM? If dozens of disconnected systems bought independently across the company are already in place and no concept of how a global Product System of Record will marshal it, this question will be a painful one.

Across all industries, what emerges is the simple but essential principle that PLM strategy must start with corporate strategy. One basic, but instructive cut at the problem is whether a company s competitive strategy is, in the terminology of Harvard Business School s Michael Porter, overall cost leadership or differentiation. For those aiming to win on cost, product innovation strategy is about design for supply chainthe approach taken by Dell. For those that win with differentiation, product innovation strategy is about hearing the voice of the customerthe approach taken by BMW. Examples are instructive:

Design for Supply Chain

• Bulk Chemical producers that must emphasize plant design and program management with their EPC partners
• Fast-follower Consumer Electronics manufacturers that must focus on component selection and change management across an EMS network
• Private label Consumer Packaged Goods (CPG) producers that need materials rationalization and flexible packaging/labeling execution capability

  Voice of the Customer

  • >Specialty chemical companies that need RFP collaboration support for the iterative process of helping customers

    with their product designs

  • Industrial design or pure technology-driven Electronics producers that need superior design software and rigorous portfolio management tools to maintain product leadership
  • Brand-driven CPG companies that need to discern preference patterns from point of sale and market test data.

  At our recent Fall Conference, General Motors Global Product Development Officer Kirk Gutman offered the compelling real world example of an aggressive, and successful, PLM strategy. GM has been working since 1996 to create and use a global PLM environment that comprises a common geometry foundationthe math highway as GM calls itand a massively collaborative PDM layer built on EDS PLM s that supports 18,000 users and 1,800 supplier Teamcenter connections across North America, Europe, and Asia. The business results to date are compelling: System simplification1,500 product development applications live in 1995 have been rationalized down to 500 with systems savings of $1B. A 35% reduction in overall global product development budget while expanding to 30 development programs from 19.

  Reduction in cycle time from styling freeze to production from 60 months in the early 1990s to 18 months today.

  Whatever the ROI of this effort, GMs most critical strategic goal of reclaiming its position as a great designer of cars and trucks is clearly within reach. Whether it s the Escalade, the Hummer, or the Avalanche, anyone who watches MTV can confirm that GMs products are hot.

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