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The ROI of PLMThe ROI of PLM“Validating the Possible”April 2011April 2011
John MacKrell Vice President ‐ j mackrell@cimdata comJohn MacKrell, Vice President ‐ [email protected]: +1.734.668.9922
CIMdata’s MissionStrategic consulting for competitive advantage in global markets
CIMdata is the leading independentCIMdata is the leading independent global strategic management consulting and market research authority focused
l i l PLMexclusively on PLM.
We are dedicated to maximizing our clients’ ability to design and deliverinnovative products and servicesinnovative products and services through the application of PLM.
For maximum benefit, can t optimize any one factor!For maximum benefit, can t optimize any one factor!
ROI Balance: Costs vs. BenefitsA real and quantifiable analysis is required
Costs are real
Benefits must be real tooBenefits must be real tooSo benefits should, if possible, be estimated in the same method of meas rement Moneof measurement—Money
Guiding Your PLM ProgramIndicators of program progress provide direction
PLM project metrics track the PLM program’s progress
PLM business metrics help you understand how well the PLMPLM business metrics help you understand how well the PLM program is supporting the enterprise’s business objectives, e.g.,Cost
Quality
Time to marketTime‐to‐market
Both indicate how to adjust the PLM program’s scope & timing to maximizeprogram s scope & timing to maximize your return on investment
Benefits for Business PerformanceQuality Initiatives
PLM enables Quality Assurance Uphold a reputation for excellence and reliability through product lifecycle
Quality impacts legal, contractual, liability, cost savings, competitive, human resource, and environmental issues
Support total quality management initiatives & other initiativesSupport total quality management initiatives & other initiatives
ISO 9000 Objectives:ISO 9000 Objectives:ISO 9000 Objectives:ISO 9000 Objectives:“To supply quality products that don’t come back, to “To supply quality products that don’t come back, to
customers who do.”customers who do.”David HoyleDavid Hoyle——ISO 9000 HandbookISO 9000 Handbook
Support TQM:Support TQM:Total Quality ManagementTotal Quality Management
Adapted from Knowledge Management by Gene Bellingerhttp://www.systems-thinking.org/kmgmt/kmgmt.htm
( te s)
Data Reuse Creates ValueYour intellectual assets need to be leveraged
Allow product developers to easily re‐use parts, designs, & processes
“Up to 80% of the work done in an engineering department is“Up to 80% of the work done in an engineering department isidentical or very similar to work done previously”identical or very similar to work done previously”identical or very similar to work done previouslyidentical or very similar to work done previously
From Research by Arthur D LittleFrom Research by Arthur D Little
The more your data is used and reused the more value it produces for your enterpriseRe‐use proven designs with confidence
Avoid prototyping and testing
Avoid re using failures and repeating the same old mistakes
Benefits for the Product or ServiceFacility production and maintenance
Facilitate longer production runsCut time‐to‐production, time‐to‐commissioned
Benefit from profit margin on additional production
Gain value from larger market share for the product
Cut plant down‐time with PLM and project managementIf the “product” is a plant or facility, cut non‐productive time
Opportunity to improve planned maintenanceOpportunity to improve planned maintenance
Facilitate hand‐off of product dataA petrochemical plant owner‐operator estimates the cost of movingA petrochemical plant owner operator estimates the cost of moving information between hook‐up & commissioning into operations at $10 million
Benefits for Business Process Streamline design reviews and approvals
Provide a formal mechanism to evaluate product developments at major milestones
Allow many users to see product data and make comments on that dataReview the design rather than merely its documentation
Allow users to see product definition information
Supports review teams having a collective competency greater than that of the designersE g include representatives ofE.g., include representatives of marketing, purchasing, manufacturing, servicing, test, inspection, reliability, quality assurance
Benefits for Business Process Improve change processing (1 of 2)
Make changes earlier in the processImproved access to design information
Work with more up‐to‐date information
Support concurrent processes
Reduce cost of managing and tracking changes
Establish & maintain procedures for the identification, d & l f ll hdocumentation, review & approval of all changes across whole product life cycleEngineering Change RequestEngineering Change Request
Minimize cost of PLM licensesLower capital expense for PLM shortens payback period & lowers up‐front risksrisks
Be clear that just because you don’t have to buy PLM licenses, you don’t have to buy the infrastructure (database operatingyou don t have to buy the infrastructure (database, operating environment, visualization tools, other product design software, etc.)
Reduce software maintenance & tailoring costs
Reduce Total Cost of OwnershippDecrease initial start‐up costs & ongoing costs
Result is improved ROI, achieved more quickly with better